Life insurance could be one of the easiest or trickiest things to market. On one hand, it's an expense that few people can justify, but on the other, everyone must eventually face the fact that death is inevitable for all of us. However, those who want to ensure their loved ones are protected know the importance of life insurance. Such a policy not only covers funeral costs, but other expenses associated with losing a caregiver and income earner.
Insurance agents know to tread carefully when selling life insurance and many people today are seeing the importance of having such a policy ready if and when the time comes. Younger people, however, may not see the benefits of having life insurance or bundling all of their policies with you. This is where you, as a concerned insurance agent, come in. We all know that things like inflation, recessions, and other economic factors may end up depleting payouts. That's why you should strive to ensure your clients are properly covered. As an insurance agent, you should know when your clients need to increase their policies based on their insurance and financial review. Let's look at the 3 major reasons to increase a life insurance policy.
Reason #1: Getting Married
Getting married is perhaps the biggest life event for many people, and it's not just about having a big party and wearing fancy outfits. For most couples, marriage brings about many life changes, including those of a financial nature. Marriage can bring about many benefits. Pooling your resources together means lower expenses, and you can get better loans and lower tax rates. However, this also means you'll have legal obligations to each other. If you co-signed loans together and one of you dies, then the surviving spouse will have to pay those debts by him- or herself. So, while talking about such circumstances will definitely put a damper on such happy occasions, it's still an important conversation for newlyweds.
Reason #2 Having Children
Children are a true joy, but they can also be quite expensive. According to the Wall Street Journal, it costs over $200,000 to raise a child from infancy to adulthood (and this was for 2013, the most recent available data from the U.S. Department of Agriculture.) Housing, food, clothing, education, health, transport (plus extra-curricular activities) all add up, especially if you plan to have several children. Some families already have trouble keeping up with the expenses of raising one or several children even with two incomes, what more if they were to suddenly lose one parent? While the loss of a partner is tragic, the people left behind are left to pick up the pieces, but they can at least have the comfort of knowing that the kids won't have to worry about their financial future include their college education.
Reason #3 Buying a House
Some people may be scratching their heads - what does having life insurance have to do with buying a house? Doesn't home insurance already cover any disasters that could happen to a home? Well, it all goes back to the primary purpose of life insurance: protection against financial loss if a primary breadwinner dies. A person who doesn't have dependents but owns a house probably won't need to increase his or her life insurance (or any at all, as long as they have a will, or living trust, to dictate what happens to the house after they pass on), but someone who does should definitely re-evaluate their situation. Homeowners should think about what happens if one of them or the primary bread winner dies - would the surviving spouse or child / children be able to to keep payments on the house, as well as other maintenance costs? If not, then the surviving dependents will be forced to sell the house or let it go into default.
By now, it should seem obvious - you should definitely encourage clients going through or have gone through a major life event to increase their life insurance policies. Aside from marriage, children, and buying a house, there may be other similar circumstances - if they suddenly become a single parent through death or divorce, if they need to take care of an ailing or aging parent, or maybe if they switch to a more dangerous career.
Of course, there is a right time to upsell to your clients, so make sure you time your pitch correctly. Maybe, they might mention their upcoming nuptials or new arrival next time you meet them. Go ahead and make a mental note, and then call them up in a few months and ask if they've thought about increasing their life insurance. Your clients may not have even realized that such major changes (life events) in their light would necessitate such a move. As an agent, you need to anticipate your clients' needs to ensure their happiness and security. Life insurance is something that everyone hopes they never have to use, but it always helps people sleep better at night.