There is a common misconception about life insurance, that it is only something used in death. Too many episodes of Unsolved Mysteries painted life insurance as something you take out on someone before killing them to get the money. It has made life insurance into a career that many people find both morbid and a little slimy and in turn scared a lot of people off from what could be a fulfilling and lucrative career.
The truth of the matter is that life insurance is much more nuanced than popular culture has led us to believe and those who work in the industry care deeply about their clients. In fact, most insurance policies sold are far more entwined with the living than the dead.
Living Benefits of Life Insurance
Most people are unaware of the living benefits of life insurance. When you sell a policy, you are not just making a way for burial to be paid for. Many life insurance policies come with living benefits that can be used while the owner of the policy is still alive and can vastly improve their quality of life.
Term Life Insurance Benefits
Term life insurance, also known as term assurance, is a type of life insurance that gives policy holders coverage for a set period (the term) at a fixed rate. In general, term life insurance is less expensive than permanent insurance because clients are only paying for the death benefit - that is, the lump sum paid to their beneficiaries should they, the policy holder, die during the term of the policy. In some instances, though, term life insurance policies offer living benefits. However, these benefits must be obtained through riders. The term life insurance rider adds a benefit to the policy, usually for an additional charge.
Some types of living benefit riders for term life insurance include the following:
Return of Premium Rider
Think of this benefit like a savings account for the insured. Not offered in all term policies, this benefit allows for returns of the premiums paid into a policy at the end of the term (assuming the insured does not pass away, in which case the death benefit is paid out instead). This type of term life policy can be a lot more expensive than the typical term policy, but it can be beneficial to those who need it.
Terminal Illness Rider
This rider, also known as accelerated death benefits, provides funds in the event of a terminal diagnosis that shortens the holder's life expectancy to two years or less. In addition to providing coverage for end-of-life care and related expenses, this rider can also be used for other purposes. If the policy holder is in good health, it may be used to take a vacation to a destination they have always dreamed of visiting. Insurers often include this rider automatically, however there may be a waiting period before it becomes effective: the policy must be in force for a specified time period before it becomes effective. Any amount that is advanced will be deducted from the benefit amount paid to the policy holder's beneficiaries.
Chronic and Critical Illness Riders
Similar to the terminal illness rider, these riders offer protection for those who have received a life changing diagnosis. For some qualifying illnesses with high medical expenditures and a short life expectancy, such as a stroke, heart attack, or renal failure, but which aren't always terminal, this can provide money to help cover medical expenses.
This also holds true for catastrophic illnesses that render policyholder’s incapable of performing two out of the six designated "activities of daily living" (ADLs). Eating, bathing, using the restroom, dressing, transferring, and continence are some of the ADLs covered.
Whole Life Insurance Benefits
Whole life insurance, usually referred to as conventional life insurance, offers continuous death benefit protection for the duration of the insured's life. Whole life insurance has a savings component in which cash value may buildup in addition to paying a death benefit. A fixed rate of tax-deferred interest is accrued.
Cash Value and Loans
Life insurance enables the policy owner to acquire monetary value during from their policy. This is referred to as a living benefit of life insurance because, unlike a death benefit, which is paid out upon death, the policyholder can spend the funds while they are still alive. As with term life riders, this might be used for medical requirements, but it could also be utilized for other things like new automobiles, education expenses, or sudden financial difficulties.
Remember that this is still a loan, and the death benefit will be reduced by the loan balance plus any accrued interest if it is not repaid before the client passes away. Additionally, the policy may expire if loan interest is not paid.
Final Thoughts
If you find fulfillment in a career that makes the lives of your clients better, then life insurance may be the field for you. You’ll help ensure financial security while your clients are living and make sure their families are protected when they are gone. A good life insurance agent always makes sure that the policy they are selling is going to offer the most benefits for their client. They make sure that vulnerable people are not swindled by television and internet ads offering life insurance with no living benefits or that will not cover the cost of their burial. You can help protect hundreds of families every year, just by being there for them.
We started Real Financial iKons because we saw firsthand what a lack of financial security can do to a family. Many veterans, blue-collar workers, retirees, and single parents have nothing in place should they become ill, injured or die. Their homes have no protection and there is no money in place to ensure a college education for themselves or their children. We wanted to build an agency for those people, the ones who may not be blessed with the financial education or resources to make these decisions.
Being a life insurance agent is for sure a lucrative career, but for Real Financial iKons, we are about so much more. We want to help people.
If you are considering becoming an agent or if you are thinking about changing companies, Real Financial would love to have you on our team.
Click here to get started on your new career path and become an iKon