The Life Cycle…

When you talk about life insurance with your customer, use a Bell Curve illustration to aid him visually to understand the concept of the life cycle and the way it relates for the changing need for life insurance. The need for insurance along with the benefit amounts should increase or decrease - like the shape of the Bell Curve - as your customer’s earning potential and responsibilities increase or decrease. This provides Agents an opportunity to sell additional products to existing customers throughout their lives.

People obtain life insurance for 2 main reasons:
• To cover final expenses so their family is not burdened at the time of death
• To make up for lost income in the event of an unexpected death

But those aren’t the only reasons to buy life insurance. Others are:
• To pay off the mortgage so a family won’t lose their home on account of the loss of a breadwinner’s income
• To finance a child’s higher education if the household loses the breadwinner’s income

No matter why they buy it, the outcome will be same - life insurance pays a certain benefit amount upon the policyholder’s death. When he purchases the policy, the client can choose the benefit amount that’s right for his family according to his individual needs and circumstances, in other words, where he is inside the life cycle.

There are 2 main forms of life insurance - whole life and term life. Whole life provides coverage for his entire life and builds cash and loan value as he pays his premiums. Premiums don't increase, but whole life is mostly more expensive because coverage lasts a lifetime. It provides the best overall protection for his family, however, and covers final expenses.

Term life provides coverage only for a limited period of time. After this period, the policyholder generally pays increased premiums to maintain the coverage. Term life, however, is frequently cheaper than whole life and is acceptable for all those with limited financial resources or who want the coverage only in a limited time period.

From the day your prospect was born he developed a need for final expense insurance. But, life insurance is not something he consciously thought about for the next few decades while growing up. When he became an adult, however, that likely changed as he hit new milestones during the life cycle. Is he married? Does he have children? Does he own a house? Does he have someone dependent upon him for income? If he answers, “yes,” to any of these questions, the necessity for life insurance increases dramatically. In fact, life can change in a heartbeat! Your customer needs to be prepared!

Will his death as well as the loss of his income negatively impact people who rely upon him financially? You bet it will! Having appropriate life coverage set up can help to take care of his family financially. Adding a term policy towards a whole life policy can also help if ever the policyholder dies during peak earning years when he's accumulating assets and debts.

As your customer nears retirement, the necessity for term insurance dwindles. By that point, he likely has accumulated enough money to retire on and his children are no longer financially dependent on him. From retirement on to the end of life, your customer generally does not need term coverage if he has an appropriate whole life product in place that may help pay final expenses.

What matters most is that customers purchase life insurance - no matter where they are in the life cycle! But, by educating customers on their changing needs, it is easy to present additional products throughout their lifetime.