The Life Cycle…

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

People obtain life insurance for 2 main reasons:
• To meet final expenses so their family isn’t burdened at the time of death
• To replace lost income within the event of an unexpected death

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

Regardless of why they buy it, the result will be same - life insurance pays a certain benefit amount upon the policyholder’s death. When he purchases the policy, the customer can choose the benefit amount that is right for his family based on his individual needs and circumstances, in other words, where he is inside the life cycle.

There are a couple of main categories 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 usually 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 the limited period of time. After this period, the policyholder generally pays increased premiums to keep the coverage. Term life, however, is often less expensive than whole life and is appropriate 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 coverage. But, life insurance is not something he consciously thought about for the following few decades while growing up. When he became an adult, however, that likely changed as he hit new milestones in the life cycle. Is he married? Does he have children? Does he own a home? Does he have someone dependent upon him for income? If he answers, “yes,” to any of these questions, the necessity for life insurance rises dramatically. After all, life can change in a heartbeat! Your customer needs to be prepared!

Will his death and the loss of his income negatively impact those who rely upon him financially? You bet it would! Having appropriate life coverage in place will help to take care of his family financially. Adding a term policy towards a whole life policy may also help if ever the policyholder dies during peak earning years when he is 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 live on and his children aren't financially dependent upon him. From retirement on to the end of life, your customer generally doesn’t need term coverage if he has an appropriate whole life product set up that will help pay final expenses.

What matters most is that your customers purchase life insurance - regardless of 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.