It’s the Rock of Gibraltar of industry clichés: life insurance is dullsville, man.
You don’t need to be a retread beatnik to believe it – most of your clients likely think this way. This is too bad, because it’s one of the most vital forms of investment – the bedrock of any life financial plan.
Unfortunately, the cousin of disdain is disinformation. Our featured author, the savvy Scott Thoma, presents five dangerous myths that prevent clients from making good choices about life insurance.
Misconception one: I have life insurance through my job, so I don’t need any more – you’ll hear this often. Ask the right questions: first, does this coverage follow the client if they move to another job? In most cases, the answer is no. How much coverage is provided? It may be enough when you’re healthy, young and single. But what happens if you take on a spouse and children? A separate policy will then likely be needed.
When people launch their careers, they often start out at financial zero. Building an emergency fund to cover three- or six-months’ expenses or an unexpected medical emergency is a primary goal. Clients who’ve built one often think an emergency fund is a proxy for life insurance. It isn’t anything of the kind: sudden death or incapacitation can be costly for survivors. There is no substitute for a life plan, particularly when dependents are involved.
Many clients think life insurance is unaffordable – young people are particularly prone to this misconception. The complexity of the life insurance industry is the culprit here, but in fact, the basics are perfectly understandable and easily explained by an agent or advisor. Settling on term or permanent insurance is the first step and it’s easy enough to do.
For more information, please read:
5 Myths That Could Have You Walking a Financial Tightrope Without a Safety Net | Kiplinger