Permanent Life Insurance: THE Financial Foundation

The first chapter of virtually every financial planing book, brochure, or magazine article deals with life insurance as the foundation of a well-rounded financial or retirement plan.  Permanent life insurance, with its guarantees, protection and cash value accumulation, can serve as the center of a sound financial plan—making other elements of the plan stronger and maintaining an emergency fund for the insured and a better quality of life for the survivors of those that depend on the insured in the event of premature death. 

Showing your clients how permanent life insurance can fit into their long-term financial plans can help you:

• build stronger client relationships and retention
• create additional sales opportunities
• develop new referrals
• establish new professional relationships by partnering with clients’ other financial advisors

Target Market:        

• clients who are uninsured or under insured
• clients that may not have the type of policy best suited for their current needs and long-term objectives
• clients who may not realize that the complete value of life insurance encompasses death protection and living benefits that can help them achieve more during their lifetimes

Permanent life insurance offers clients many important financial benefits, including:

• A guaranteed safety net of income-tax-free cash in the event of the death of the insured.
• Potential tax-deferred cash value accumulation.
• Access to that cash value for emergencies, college funding, family events, starting a business and other lifetime goals.
• Freedom to invest more aggressively in other areas of their financial or retirement plan.
• A possible source of tax-favored retirement income that may enable them to delay taking taxable retirement account distributions or provide for that “dream cruise” they wouldn’t otherwise be able to afford.

Certainly, term insurance should be a consideration for young families and individuals to be sure that the higher death benefit needed at those ages is met.  But, be sure to only propose fully convertible term:  a policy that will permit converting some or all of the term policy’s death benefit to a permanent plan of insurance without the need to medically qualify.  This can be a tremendous source of comfort to those insured’s whose health has declined to a point where they cannot qualify for a new insurance policy at the end of their current term coverage.

An often-forgotten rider is the disability waiver of premium.  For a relatively low additional level premium, this rider provides the beneficiary with the assurance that if the insured becomes unable to work for more than 90 days, most or all of the premium due on the life insurance policy will be waived by the carrier, keeping the life insurance policy in full force for as long as the insured is totally disabled.

Are you a wealth manager?  Do you actively manage your clients financial portfolio?  Do you hold any type of fiduciary responsibility for your clients?  Are you a trustee for a family trust?  If so, you should make sure that the financial goals of your clients are protected from being shattered by the death of the primary breadwinner in the family. Don’t forget the spouse, whether stay-at-home or employed full- or part-time.  Their death could drastically impact the financial stability of the survivors.

Permanent life insurance is not simply part of a financial foundation, it is THE financial foundation.