commonwealth.com
For Advisor Use Only
17
Wealth Management
/ Insurance
At this stage of life, debt combined with dependents creates
a significant and often unmet need for life insurance. The
32-year-old with two kids, a mortgage, student loans, and
529 and 401(k) plans to fund faces a host of obligations
contingent on his or her ability to earn an income. From
an insurance standpoint, the value of the client’s life is at
its peak, yet he or she may have little to no coverage. These
clients need more life insurance, and you could be their
only hope of getting it.
Are Your Clients at Risk?
Clients’ evolving coverage needs can be illustrated with two
arcs, as shown in our Who Depends on You? client-approved
marketing piece (see Figure 1). The larger arc rises with
increasing responsibilities to home, family, and business
as the client proceeds through life. As the client nears
retirement, a second, smaller arc rises, representing the
potential desire to leave a legacy through wealth transfer.
At the peak of the first arc, recent studies have shown, clients
are woefully underinsured and realize they need coverage;
they just need someone to help or ask for the business.
Consider these startling facts from Genworth’s
2012 LifeJacket Study
:
•
Of Americans with household incomes between
$50,000 and $250,000, 44 percent do not have
life insurance. (That’s 53 million people without
life insurance.)
•
Even for those who do own life insurance, the average
amount of coverage is only $152,000, offering just
a few years of income replacement at most.
•
43 percent of married mothers lack life insurance,
compared with 34 percent of married fathers.
Combine these statistics with the fact that 50 percent
of U.S. households say they need more life insurance
(according to LIMRA’s
Facts About Life 2013
), and
you have a population with substantial and potentially
disastrous risk.
Why It Matters for You
If you work primarily with pre-retirees and retirees on the
other side of the arc, it’s easy to dismiss this risk as not
Meeting Clients’ Life Insurance Needs at the Top of the Arc
BRIAN HARRISON, CFP®, CLU®, CHFC®, CLTC
When it comes to planning for retirement and other goals, advisors often hear
about taking advantage of a client’s “peak earning years.” Rarely, however, do
you hear about the “peak debt years,” which typically arrive in a client’s 30s.
RESPONSIBILITY
TIME
Self
Term Insurance
Disability Insurance
Liability Insurance
(Auto, Home/Renters Insurance)
Spouse/Family
Life Insurance
(Term or Permanent)
Disability Insurance
Liability Insurance
(Auto, Home/Renters Insurance)
Home/Family/Business
Disability Insurance
Life Insurance
(Term or Permanent)
Long-Term Care Insurance
Liability Insurance
Property and Casualty Insurance
Umbrella Insurance
Building a Legacy
Survivorship Life Insurance
Long-Term Care Insurance
Getting Started
Retirement
Figure 1. Who Depends on You?
