Wealth Management
/ Insurance
18
For Advisor Use Only
March/April
2014
your problem. But think about it: who will these exposed
millennials and Gen Xers depend on if they lose an income?
Likely, just as it was when they moved home post-college,
it’s your clients.
Fortunately, covering clients in this demographic with term
life insurance can be easier—and more profitable—than
you might think. Consider the average term premium of
$1,200 per client. With payouts up to 100 percent, a married
couple with equal coverage could generate a $2,400
commission. And with Commonwealth’s Insurance team
here to quote, prequalify, fill out paperwork, and usher a
case through to delivery, you stand to earn more than your
hourly rate to write that “unprofitable” term insurance.
Getting Started
It all starts with a very simple conversation. For each
client, determine the following four numbers with regard
to life insurance:
•
How much do they have? (Shockingly, many don’t know.)
•
How much do they need?
•
How much can they get?
•
How much do they want?
From there, you need to know about any health issues the
client has—simply asking what medications he or she takes
can be an easy way to find out. Then, the Insurance team
will work with you on a proposal. Note that several carriers
will write up to $250,000 without paramedical exams,
with that number expected to rise to $1 million in 2014.
“How much do you want?”
At our 2013 National
Conference, Penn Mutual’s Allan Sternberg talked about
the value of insuring clients for the most they can get.
Throughout his career, Allan has used the following chart
(Figure 2), showing the amount of coverage a client can
get as a multiple of income at each age. His message to
clients is straightforward: “Here’s how much you can get;
how much do you want?”
Figure 2. Insurance Coverage Available by Age
Age
Income Factor
18–30
30x
31–40
25x
41–50
20x
51–60
15x
61–70
10x
71+
Individual consideration
Allan also shared a personal story that brought the point
home. He was sitting on a flight when an alarm rang out,
the cabin filled with smoke, and the pilots began preparing
for an emergency landing. After making what could have
been his final phone call home, he felt at peace knowing
that, no matter what happened, his family would be taken
care of because he’d maxed out his life insurance coverage.
True Peace of Mind
“Peace of mind” is the ultimate goal of many financial
planning activities. But truthfully, with many aspects of
planning (particularly those with long time horizons), the
variability of results prevents a true feeling of security.
With the risk management aspect of a plan, however, you
can make a real promise to your clients and their families,
locking in security if the worst happens.
Remember, it’s at the top of the arc that your clients need
you most.
Brian Harrison is the director of insurance and
financial planning marketing. He is available at x9174 or
at
