- 3-Minute Article
The Best Time to Talk to Your Clients about Life Insurance
Important times to introduce the subject of life insurance with your clients.
One of the tougher tasks for financial advisors is to introduce subjects to clients they'd rather not discuss — like death, disability, and the possible need for long-term care.
Most people tend to think bad things won't happen to them, so the need to remind clients of the possibility of unforeseen events — and the financial impact on their loved ones — often falls on the financial professional.
Timing is critical in introducing the subject of life insurance with current and prospective clients — so is compassion. It's important for clients to understand that one of the best ways to protect their family's future is by having adequate life insurance in place.
A natural time to approach this topic is during a transitional moment in a client's life. These moments may include marriage, the birth of a child, a graduation, retirement, divorce, or the death of a parent or loved one. These events often illuminate a need to buy life insurance or to update current policies with a new beneficiary or added financial limits of protection.
In the Best of Times
Many of these events are happy moments in a client's life. Marriage and the birth of a child are causes for celebration. Financial professionals can express their best wishes on such occasions, reminding the newly married, for instance, that now is an optimal time to strongly consider a life insurance policy. Some people feel they won't need life insurance until they have kids, but if a spouse unexpectedly passed away, would the other be able to handle a mortgage, car loan, or other financial necessities?
Certainly, if clients choose to have children, life insurance is a crucial form of financial protection. In the event of a death, the family's financial obligations will need to be met on a single income. If a client is expecting a child, this is another opportune time for a financial professional to delicately point out the importance of providing a financially secure future for that child.
In the Worst of Times
More difficult circumstances, like a divorce or the death of a parent may require more difficult conversations. By expressing sincere compassion and condolences for the client's loss, financial professionals can open the door to a discussion about life insurance. If the client is now a single parent, they should be gently reminded that the family's financial future is now solely their responsibility, but that life insurance and a trusted advisor can help lessen this burden.
Many people also think they don't need life insurance once they've retired. But if they want their heirs to enjoy the fruits of their labors after they've passed away, life insurance is a key component. Depending on the size of the person's estate, a significant percentage of it could be lost to estate taxes. Clients should understand that life insurance proceeds can often cover these taxes.
The bottom line is that reaching new life stages are often when people are most likely to realize the value of life insurance. These milestones are a great opportunity for financial professionals to discuss any potential financial ramifications. By expressing kinship, understanding, and a genuine personal connection, advisors can undertake these important conversations to their clients' benefit.