Over the past few months, we’ve witnessed a lot of turmoil. From social impact to economic disruption, things that may have been taken for granted at the start of the year are no longer as certain as they were.
Part of that has been volatility in the market.
Financial professionals should be prepared to have conversations that may have seemed off the table a few months ago. Here are a few topics you should consider bringing up today to help set your clients up for a successful future.
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Right now, safety is of the utmost concern. When you’re 30, your time horizon is long and you can afford to take greater risks with your financial strategies. Historical rates of return for equities are in your favor, and you can see significant growth over decades.
But there is still a potential downside, as the past few months have shown. There are no guarantees in the stock market.
It’s a new world now, with risks and dangers people often don’t consider suddenly front and center. We are seeing historic levels of unemployment. Every day the news presents us with a rising death toll and few assurances that things are going to get better any time soon. And if someone is retired with an income dependent on a stock portfolio, they may have watched their retirement strategy for the next 10, 20 or 30 years be disrupted.
Right now, clients may be looking for less risky vehicles, because they’re seeing how quickly things can turn around. A client whose retirement strategy has been 100% in the stock market might ask about putting 10%- 20% in a less volatile product, like life insurance and annuities.
Now may be the time to discuss downside protection and guarantees so your clients can be prepared for whatever the future might throw at them.
The Value of Life Insurance
Insurance is the business of safety and protection. Many people use insurance for two reasons — love or greed. You buy insurance because you want to protect (or get more of) what you have, or to protect the people you love (to leave them money or to help provide resources in a health crisis).
Life insurance isn’t something we like to think about. Typically, it comes to mind in times of change or crisis — birth, death, marriage and divorce are some of the big triggers that pique interest in life insurance products. But as I’ve already said, people are thinking about their own mortality now more than usual.
Now is the time to start thinking about the value of purchasing life insurance.
Term life policies might be a good place to start the life insurance conversation. With term life, a policyholder rents a death benefit, with a low price and low risk. Term policies often don’t require medical screening, so at a time when people may want to minimize unnecessary interpersonal contact, term policies can be purchased without face-to-face interaction.
An additional benefit to term policies is that some can be converted to permanent life policies within a year, without the requirement of an additional physical exam. As a permanent product, a whole life policy never expires, as long as premiums are paid. A lot of financial professionals are selling term insurance policies and converting them to whole at a later date.
Although term policies offer lower commissions and less sales revenue for financial professionals, if it’s what is best for the client, then it’s absolutely the best financial product to recommend. Knowing they may offer the ability to convert to a permanent policy in the future could provide future benefits for your customers.
Whether you plan to pursue these questions, or any others, with your clients and prospects and you’d like to talk with someone about your approach, send me a direct message. Helping brokers and businesses is what I do best.