Finding the Best Term Life Insurance for Your Client
A term life insurance policy can be beneficial to your clients. It is the most common, cost-effective, and simplistic form of life insurance. Younger clients or those who have recently experienced a life event, such as getting married or starting a business, are the best candidates for a term life insurance policy.
Reaching out to your existing client network will help you find those who may most benefit from term life insurance. You can connect with new clients by educating them online on the details, benefits, and risks of a term life insurance policy. At EMG Insurance Brokerage, our sales directors can also assist you. We help with finding the best ways to market yourself to new and existing clients.
What types of term life insurance exist?
A term life insurance policy offers affordable death benefit coverage for a fixed premium and a fixed period. Carriers offer term coverage for 10, 15, 20, 25, and 30 years. Basic term life insurance coverage is remarkably similar from carrier to carrier. Look closely at the provisions and riders offered by each carrier. They can vary greatly. For example, some carriers offer living benefits such as critical illness endorsements. Living benefits allow for a portion of the death benefit to be accelerated while the insured is still alive should the requirements outlined in the contract be satisfied.
Carrier policies may also differ in the conversion provisions, which allow a policyholder to convert either all or just a portion of the death benefit into a permanent product. This provision can be valuable to the policyholder in the right circumstance and has no underwriting requirement.
Because term life insurance is a temporary, fixed-term policy type, it is not ideal for clients who have long-term or permanent needs. These needs may include estate planning issues, established businesses, and financial commitments that exceed a 10 to 20-year window. The clients may need a more permanent solution such as whole life insurance.
What are the differences between comparable products?
Term life insurance is comparable to Variable Life, Indexed Universal Life, and Universal Life products. These policies are for clients who need longer terms (over ten years) and estate planning. These products have higher premiums. A portion of those premiums goes into an account with compounding interest.
It can be helpful to compare these products by risk:
Term Life vs. Variable Life products
Term life insurance is not subject to an index; it is just a price point. Variable life insurance is more like a mutual fund wrapped inside an insurance product. There is more risk but more reward.
Term Life vs. Indexed Universal Life (IUL) products
While term life insurance is not subject to an index, an IUL is credited based on an index, like the S&P 500. The result is less risk than the variable market, with a safety net. It never falls below zero.
Term Life vs. Universal Life (UL) products
Universal life is an investment savings-type product. A UL policy has cash value grow according to the performance of the portfolio
Is it possible to combine different types of term life insurance policies?
Yes, you can combine different term life policies. A common scenario that our team sees is that a client has a permanent plan for their long-term obligations, and then obtains a term life policy for their short-term obligations.
How do I select the best term life insurance for my client?
To find the right policy for your clients, make sure you consider their specific situations and needs. Since there is only a minor price difference between term life policy carriers, you should avoid shopping solely on price. You should look at the policy details and ask questions such as:
- What are the living benefits?
- What are the conversion options?
Keep in mind that your client’s needs will change over time. They may keep buying term life insurance policies as their needs evolve. For example, a young couple may initially only need a $500k policy. However, while reviewing their finances seven years later, they realize they need a $1.2 million policy. A broker can help you work through the details with your client’s present and potential future needs.
Should I get term life insurance through a broker?
Given the many moving parts involved with finding the right policy for your client, working with a term life insurance brokerage can give you a competitive advantage. Not only can the brokerage provide sound advice, but they can also help to find the right policy at the right price point for your client.
For example, you have a client who just started a business with a 10-year business plan. They have a 20-year mortgage and want to protect the family and business for the duration of those ten years. A brokerage like EMG can help. Our agents can find a policy that matches their needs at the lowest cost, saving you the time of having to do extensive policy research yourself.
How do I find the best term life insurance broker?
There are a few ways to find high-quality term life insurance brokers. One approach is to ask around your network for referrals. You can also connect with NAILBA, a leading insurance industry organization promoting consumer choice.
You can also do your research by prospecting several insurance brokerages in your area. We recommend looking for these qualities in a broker:
- Responsiveness and attentiveness: are they knowledgeable of the products and solutions available to serve you and your clients’ needs?
- Back-office support: what happens after a term life application is submitted?
- A good team instead of just a good salesperson: make sure that the service is as good as the pitch. Service can make or break a relationship.
- Do the owners invest back into the agency or focus on paying themselves?
You can also learn a lot about the brokerage by calling them up and asking pertinent questions, such as:
- How long have you sold term life insurance?
- Have you had any complaints with the state?
- Who are your primary carriers?
- What are the carrier ratings?
- What types of products are the affiliate carriers selling?
Do your homework and determine if the brokerage gravitates towards products with the most commission. Most importantly, visit the agency. Do an onsite visit and speak with the brokers in person.
EMG can help.
As a term life insurance brokerage, EMG Insurance Brokerage handles everything from submission to commission. This highly personalized approach gives us the ability to tailor solutions to each client. Connect with us by phone, online, or in-person, or schedule a consultation with your sales director today on how to grow your business.