For many people, life insurance is a means of providing peace of mind for themselves and loved ones. However, individuals usually don’t start thinking about buying a policy until they reach a certain age.
IS THERE A “RIGHT AGE” FOR LIFE INSURANCE?
If your clients think that it’s “too early” for life insurance, the fact is that it can offer financial benefits at any age. Not only that, but buying a policy earlier rather than later will save them money in the long term.
In this article, we’re going to break down the various ages when people buy life insurance and illustrate the various factors that can lead to this decision. Understanding your client’s motivations and hesitation can enable you to help them make the right choice.
WHY BUYING YOUNG IS IMPORTANT
The general rule with life insurance is to buy it as soon as possible. Unfortunately, many young people choose to forgo this protection, feeling that it is an unnecessary expense. If some of your clientele skews younger, it can be harder to convince them that a policy is a valuable investment.
WHY DON’T YOUNGER PEOPLE BUY LIFE INSURANCE?
Generally, the top reasons that young people don’t buy life insurance coverage for the following reasons:
Limited Income: insurance seems too expensive
Excellent Health: younger individuals aren’t as worried about getting sick or dying
Fewer Dependents: most young people aren’t married or have kids, so no one is counting on their income
WHY SHOULD A YOUNG PROFESSIONAL BUY LIFE INSURANCE RIGHT NOW?
Although it can seem like an unnecessary expense, the fact is that you should encourage your younger clients to get a policy. Here are the top reasons why now is the best time.
Build Cash Value: whole life insurance can accumulate value over time, which pays off during retirement
Lower Premiums: because your clients are younger, they can qualify for preferred plus rates
Future Planning: if your client is planning on getting married or having a child in the near future, life insurance is a must
RECOMMENDED STRATEGY FOR YOUNG PROFESSIONALS
Buy Term and Invest The Difference: ‘Buying term and investing the difference’ is a strategy which compares the cost of a permanent life insurance policy to a term life insurance policy with the same death benefit. Then the cost difference is invested in the stock market instead of accumulating cash value within the life policy.
The problem with this strategy is that most young people buy term and spend the difference. Entire companies have been built on this principle but it rarely works because of unforeseen events.
Replacing a wrecked car.
Unforeseen medical bills
Losing a job by one or both people
The list goes on and on.
While in theory, I support the principle….it simply isn’t practical for 95% of young people. There are so many better options.
BUYING LIFE INSURANCE BETWEEN 36 AND 55
Typically, individuals start thinking about life insurance once they reach middle age. It’s easy to assume that time has made them wiser and more knowledgeable about such things, but there can be some mitigating factors at play, too.
WHY BUY NOW?
Here are some compelling reasons that your clients between 36 and 55 will want a life insurance policy.
Financial Security for the Family: having kids can make one think about the future a lot more
Business Planning: this is the age where entrepreneurs are starting their business. Life insurance can protect their investment
Potential Health Problems: if your clients are worried that they will fail a medical exam, they need to secure a policy as soon as possible
WHAT’S A GOOD STRATEGY FOR THIS AGE GROUP?
Comparison of Alternatives: Ideal for those looking to save money for retirement and looking to provide financial security for themselves and their families. This strategy looks at taxable investments, deferred accumulation vehicles, and indexed universal life insurance.
BUYING LIFE INSURANCE BEFORE RETIREMENT
Once your clients near retirement age, they may start thinking more and more about life insurance. Here are some factors that they should consider first.
LIFE HAS CHANGED, BUT A NEED FOR INSURANCE HAS NOT
Typically, by 65, your clients may be divorced and remarried. They might have children that are grown and out of the house. All of these milestones can cause your clients to re-evaluate their insurance needs. While buying a whole life insurance policy now may not pay off for retirement, it can provide peace of mind for the future. Also, term insurance is an excellent way to prepare for potential health risks that come from old age. Overall, as long as your clients have people they care about, life insurance is still a good idea.
BENEFITS OF BUYING LIFE INSURANCE AFTER 65
No matter what, the older your clients are, the more they will have to spend on life insurance. During retirement, they will likely think that coverage is unnecessary or too costly. However, there are still options available.
WHY THEY STILL NEED LIFE INSURANCE
At this age, the primary benefit of having a policy is to provide financial security for end-of-life expenses. Burial insurance is a cost-effective option for most retirees, and it can cover the costs of a funeral and memorial service. Additionally, if your clients are in poor health, they can apply for guaranteed acceptance coverage to still get peace of mind.
STRATEGY TO CONSIDER PRE AND POST RETIREMENT
Insured Family Legacy: If your clients are aged 60-75 and have grandchildren, it could be beneficial to provide them with insight into where their wealth will go once they are gone. The Insured Family Legacy strategy is a great solution because it accumulates cash value more quickly on the younger beneficiary of the plan, also creating a higher death benefit, and giving the client security that their family will be okay.
If you want to know which straworks best for you….schedule a free consultation today at www.thepimpleton.agency