Countless studies and surveys show that most Americans carry far less life insurance coverage than what's needed to accomplish their goals and meet their needs. The challenge for producers is to get this message across in terms that consumers can understand; using everyday examples to explain complex ideas can help you connect with their clients and stimulate action.
For starters, have you ever asked your clients about their life insurance deductible? The question is guaranteed to generate a lot of curiosity since most people don't associate a deductible with life insurance. Clients have been conditioned to look at various coverage options when it comes to their homes, automobiles, or even health, based on what a claim would cost them out of pocket. Life insurance, however, is just as important as any of these things -- and probably even more fundamental to a family's well-being.
In order to help lower the number of small claims and save premium dollars for their clients, property and casualty agents often recommend raising deductibles. They describe a policy deductible as the amount the client self insures.
While clients consider these deductibles as out-of-pocket cash, you must also make them aware of the lifestyle deductible inherent with life insurance. While an automobile accident may cost somebody $500 out of pocket, death without proper life insurance planning can cost a college education, a home, or even a loved one's standard of living. The life insurance deductible is the difference between what a family needs and the amount they will receive at the death of a breadwinner.
If a client has a very high life insurance deductible, there probably won't be other monetary sources to help them make up the shortfall. You can ask if your client expects that money will be available from an inheritance, a winning lottery ticket, gifts from family members, or another source. Almost without exception, those alternatives do not exist. You can then ask if their plans include a spouse returning to work or taking two jobs to make ends meet. What about the teenaged children working extra hours in order to supplement family income needs?
Even with additional income sources, it is
nearly impossible to cover the life "deductible" without addressing where the money will go. Without proper coverage, many needs will remain unmet. You can help your clients understand the shortfall and how it could affect them in the future. A simple question might be, "What do you plan to eliminate -- weddings, college educations, braces for the kids?"
How do you make certain that your clients understand that they already have a life insurance "deductible," as well as what they can do to fill in the gaps it creates? An effective strategy includes the following steps:
- Discuss the life insurance "deductible" concept with every client and prospect.
It could help to have a sample needs analysis on hand at the beginning of the conversation. Explain to them that this is the type of work you do. It will allow you to present a visual example of the size of the need and jump-start a conversation about the impact of the death of a family member.
This concept will help generate more conversations with clients about their life insurance needs by using the client's own experiences to bring home the concept that inadequate protection could affect their loved ones' standard of living. A breadwinner's death is tragic enough for the family. When you help them complete a comprehensive needs analysis, you can also help prevent their loved ones' from suffering unnecessarily because of a high life insurance "deductible."
Thomas Jurek is the field sales manager at Financial Brokerage Inc. He can be reached at firstname.lastname@example.org or 402-697-9998.