How do you help a client decide between term and whole life insurance?
Answered by 7 licensed agents
By asking the right questions.
Determining if they're looking for something short-term (out of work, bought a house, had a baby, etc) or permanent (wanting to build cash value, static premium for life as long as premiums are paid). Finding this out alone can guide the conversation.
In some cases, maybe the client has less resources but expects to have some within a period of time. Since term life is less expensive for a larger death benefit, sometimes this makes sense until they can get into a whole life policy.
Ultimately, learning their overall goals and needs is critical for guiding them in this decision. Oftentimes clients will have a blend of both.
I recommend both. Term is less expensive but it doesn’t last as long as WL. WL has benefits of being there once the term ends. It is most affordable while we are young and healthy- and you don’t have a whole lot of it at ages 70-100, so get enough for your legacy goals by balancing both types. IUL is like a Hybrid of them both and has some strong features and benefits to consider as an alternative strategy also combined with WL. If you can’t afford what you want, remember some thousands are better than no thousands and nobody knows from the payout if it was Term or Perm. But if you don’t pay, they won’t pay- so get what you can actually and realistically pay. Also WL can be paid in lump sums or in a time frame, still lasting the whole life, I think people miss on this option, but it makes sense to just have, what if you live to be as old as Moses, 120, WL will always be there!
I think presenting both options with accurate quotes will ultimately help the client decide whether to move forward with whole life, term, or a little bit of both. You can not accurately assess the situation until you have been provided with actual numbers to analyze.
I conduct a financial and needs analysis to determine the appropriate amount and type of life insurance. I then review the client's goals, budget, and coverage needs, explain the differences between term and whole life insurance, and help them select the solution that best meets their objectives.
I refer to Term Life Insurance as renting insurance for a period of time, such as 10, 20 or 30 years, to cover a financial obligation. This could be covering a young family until they no longer rely on you financially. Whole Life, typically cost more, but can cover you for your life time. Some Whole life Plans can build up cash value.
I base life coverage first on age. I will chose a term policy for anyone age 18 - 55. After a few years on a term policy I offer a conversion to an Indexed Universal Life Policy.
Whole life is offered to adults 55 - 80 years old.
The answer to this question is really simple. I spend a good deal of time getting acquainted with a person to understand their goals, financial skills, and protection needs. A big part of the conversation involves explaining the pros and cons of each insurance form and asking the client which sounds better to them. I also point out that it does not need to be an all or nothing situation as people can buy some whole life and some term and get the benefits provided by each product.
