4 Things to Tell Clients About Life Insurance

The increase in the number of Americans that are choosing to get life insurance following the COVID-19 outbreak continues to grow. In fact, one in four people surveyed by Life Happens said that they decided to apply for life insurance because of coronavirus.

Fast forward to June 2021: LIMRA reported that life insurance sales "rose 11% in the first quarter of 2021, compared to the same period in 2020, and new premium growth also saw a double-digit boost, up 15% from a year ago."

The organic growth of policy count this year is — unsurprisingly — driven by COVID-19. People want to protect themselves and their families in this very uncertain time.

But did your clients know that life insurance provides more than just a death benefit?

You need to make sure your clients understand that a life insurance policy can also serve as a means for building personal wealth.

This is the mindset that my company and I have been campaigning for for the longest time. We do this not because we want people to come to us to take care of their policies, but because time and again, we've seen how countless individuals have missed out on so much in life because of their misconceptions about life insurance.

How do we do this? Through activities that educate people about what life insurance really is all about.

Here are four things I tell my clients.

1. In order to get the most out of your life insurance, you need to make sure you are creating a healthy policy.

The key components of policy health are: face-amount, the life insurance type, designation of beneficiaries, and an annual insurance review.

Obviously, the face-amount is the amount of the policy. Anyone trying to get a policy must identify what the appropriate amount of their insurance is, which is typically somewhere around five to seven times their annual salary.

I also make a point of telling clients that the appropriate face amount can also be determined by using the "DIME method," or a method for determining an ideal face amount based on Debt, Income Replacement, Mortgage and Education for any dependents that may rely on the insured's income.

Clients also need to know that the beneficiary of a policy can be a person, trust or nonprofit, and that there can be more than one beneficiary.

And last but not least, clients need to understand the difference between term life and permanent life.

2. Think of your life insurance as a means to be prepared for the unplanned.

The long-standing notion about life insurance is that it's something that people who've lived long and fruitful lives have.

The pandemic has shattered this idea.

People now realize something that we agents have been saying for years: Ultimately, life insurance is a safety net. It keeps clients safe in the face of unexpected events, like death.

Owning a life insurance policy gives a client a kind of extra protection that no other product out there can provide.

3. Life insurance is not complicated.

Most people will delay adding life insurance to their financial plan due to misconceptions about cost and ease of getting insured.

Clients need to know that obtaining through me life insurance is easy and hassle free.

They can apply through me, or apply online — and, either way, they can benefit from my expertise.

4. The best life insurance is the one that you personally own.

Our clients need to understand what their employers are not telling them about their group term life insurance: Life insurance through an employer is only good while the client is an employee.

Once clients are separated from their employers the group term life insurance no longer covers them and any family members they would have added for coverage.

While there can be the opportunity to continue the coverage outside of the employment relationship, the cost of insurance is typically pricey and can require additional evidence of insurability.

If clients' only life insurance is through an employer, they should look at getting additional coverage.

Ebony Ruffin is founder and managing member of Ruffin Consulting Services, a life insurance and annuity agency. She offers life insurance agents the Gurl Get Your Life guidance program.