Updated: Dec 21, 2022
As a life insurance agent one of the most common things, you may hear from your leads is “I don’t need life insurance”. You may also hear them ask why they would need it in the first place. As a seasoned agent, it is your job to help your clients see the light. You’ve seen firsthand the devastation that not having a good policy in place can sow. To help your clients overcome these objections, we’ve collected the top 6 reasons why having life insurance is so important.
To Cover End-Of-Life Expenses
First and foremost, life insurance provides a source of financial support for your loved ones in the event of your untimely death. This can include covering the costs of a funeral and burial, as well as any other end-of-life expenses. For example, if you have a life insurance policy in place, your loved ones can use the proceeds to pay for a funeral director, flowers, and a casket, as well as any other related expenses.
Additionally, some life insurance policies include a provision for a "burial benefit" or "funeral benefit," which is a specific amount of money set aside specifically to cover funeral and burial expenses. This can be a helpful way to ensure that these expenses are taken care of without requiring your loved ones to pay out of pocket.
To Provide Financial Security
Life insurance can provide a source of income for your loved ones in the event of your untimely death. If you are the primary breadwinner for your family, your death could leave them without a source of income to pay for living expenses such as mortgage payments, tuition fees, and other bills. Life insurance can provide a financial cushion to help your loved ones maintain their standard of living and meet their financial obligations even if you are no longer able to provide income.
To Pay Off Debts
One of the primary purposes of life insurance is to provide financial support for your loved ones in the event of your untimely death. This can include paying off outstanding debts, such as a mortgage or credit card balances. By having a life insurance policy in place, you can ensure that your debts are paid off and your loved ones are not left with the burden of these debts after your death.
To Fund A Child's Education
Some life insurance policies offer the option to include a scholarship fund as part of the policy. This means that a portion of the life insurance proceeds will be set aside specifically to fund a scholarship for a child or other loved one.
To Pay for Retirement
Life insurance can be used to fund your retirement, providing a source of income for your loved ones if you are no longer able to contribute to your retirement savings. For example, some types of life insurance, such as whole life insurance and universal life insurance, have a "cash value" component that accumulates over time. Policyholders can borrow against the cash value of their policy or withdraw it for retirement income. In addition, some life insurance policies include an annuity option, which allows policyholders to convert their death benefit into an income stream during retirement.
To Fund a Business Succession Plan
If you own a business, life insurance can be used to fund a succession plan, ensuring that the business can continue to operate and provide income for your loved ones even if you are no longer able to be involved. Here are three ways this can be handled.
A buy-sell agreement is a legally binding contract that outlines the terms under which ownership of a business will be transferred in the event of the death or disability of one of the owners. A life insurance policy can be used to fund the purchase of the deceased owner's share of the business by the remaining owners or by a third party.
Key Person Insurance
A business may purchase a life insurance policy on a key employee or owner to provide financial protection in the event of their death. The proceeds from the policy can be used to cover the costs of finding and training a replacement, as well as to compensate the business for any lost revenue.
Executive Bonus Plan
An executive bonus plan is a type of deferred compensation arrangement in which a business sets aside money to be paid to key employees in the future, often upon retirement or in the event of death or disability. A life insurance policy can be used to fund the executive bonus plan and provide financial security for the employee's family in the event of their death.
There are many compelling reasons for individuals to consider purchasing life insurance. Life insurance can provide financial support for loved ones in the event of the policyholder's untimely death, covering end-of-life expenses, providing a source of income, paying off debts, funding a child's education, and serving as a source of retirement income. For business owners, life insurance can also be used to fund a succession plan, ensuring the continuation of the business in the event of the owner's death or disability. It is important for individuals to carefully consider their unique circumstances and the needs of their loved ones when deciding whether life insurance is the right choice for them. It is your job as an agent to help your clients to understand this.
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