Choosing life insurance is very personal. Clients only want the kind of policy which works for them.
The problem is – how to determine which type of life insurance is the best for them? What are the options? The prices? How does the coverage differ? All are good questions, but before you lay it all out on the line for potential customers, encourage them to get started on a search for whole or term life insurance. Have them explore the options of each type of policy. This allows them the chance to put together a list of questions to ask you.
Just for the record, a “term” life insurance policy is for a set number of years, which is any number of your choosing, based on what works the best for your clients. The word “term” means it expires at the end of the term chosen, not at the end of the person’s life. That being said, the term may be extended after it matures. Just remember, that if the customer chooses to renew, or extend the policy, chances are that the premiums will be higher. If the policyholder passes away during the term of the policy, those named as beneficiaries receive the benefits of the policy.
Term-life premiums are relatively low to begin with, largely because the policies only offer death benefits, which means premiums are dependent on how long a policy runs. Thus, for a short term, there are lower premiums.
On the other side is a whole-life policy, one that extends to the end of an individual’s life. As expected, there are higher premiums for this kind of coverage, because there is cash value on the premiums paid. If the customers want to ensure that premiums stay the same for the run of the policy, they should consider buying a fixed term-life policy.
A bit confusing to say the least, but if you take the time to explain the various options you have available for your clients for both types of policies, they get a feeling of what would suit their lifestyle and point-of-view. Term coverage can be a good choice for the younger crowd, due to lower premiums and the ability to get involved in investments, which would grow their portfolio. Also the death benefit is tax-free.
Whole life does not offer the benefit of being able to save on premiums and invest the savings, and there are taxes to be paid on the cash value, as that money is considered to be income. However, what your customers choose is solely dependent on what they want to accomplish, the type of coverage they are comfortable with and what each policy provides when they pass on.