Universal Life: Selling The Client
Universal life has impressive benefits to be sure. But how does a p-c agent bring up the benefits of the insurance policies with clients? Mortality is not exactly fodder for cocktail party banter.
Perhaps the easiest, most logical first step toward meeting a clients life insurance needs is to start with a policy review. Lets face it, most clients already own life insurance, but few of them really know if their coverage is still adequate.
In some instances, a policy review would simply confirm that a clients life insurance coverage is still meeting his or her needs. But if the client hasnt reviewed his or her coverage in several years, its possible that a current policy no longer provides adequate coverage or is expensive.
Of course, the agent needs to perform a detailed analysis to consider the effects of surrender charges (fees charged by the prior insurance company to the policyholder for relinquishing the policy under a scheduled time period), outstanding loans, death benefit needs and cash values. Critical to this process is working with a knowledgeable life insurance account executive or wholesaler who can help the p-c agent with the coverage review, policy design and point-of-sale service.
Although regular policy reviews are important, certain life events have a bigger impact on a clients life insurance coverage than others. Changing jobs or being promoted, getting married or divorced, the birth or adoption of a child, buying a new home, inheriting property, money or other valuable assets, and increasing or decreasing debts can all impact how much life insurance a client needs.
There are many other circumstances that can affect a clients life insurance coverage, so reviewing each individual situation is critical.
Once done, an agent should consider the following factors:
Is the death benefit adequate?
If the clients goal is income protection, then the question that needs to be asked is if the policys death benefit large enough for his or her family to maintain todays standard of living. If the policy was purchased for wealth preservation then the question becomes is the death benefit adequate to cover current estate settlement costs.
Are the premiums the client is paying too high?
Sometimes, clients can pay less for the same amount of coverage. Or, he or she may be able to obtain additional coverage for the same price.
Is the policys ownership structured correctly?
The ownership of a life insurance policy can have an adverse effect on its taxation. Its important to review if the policys current ownership designation helps a client meet his or her goals.
Are the clients beneficiary designations up to date?
Birth, deaths, marriages and divorces all have an impact. Agents would be amazed at how many of their clients fail to update this critical piece of information.
Has a client who owns a business considered how the company would be affected by their death?
A recent LIMRA study shows that only 34 percent of small business owners have drawn up a business continuation plan or have purchased life insurance as part of it. A business owner needs to develop a properly structured plan to help ensure the companys continuation.
Performing policy reviews can help ensure that the clients life insurance protection needs are being fulfilled.
They also demonstrate that the agent is a true insurance professional.
Clients are also sure to appreciate the convenience of having a wider range of their insurance needs addressed by a single professional.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, January 20, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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