When you’re speaking to your high net worth clients, they tend to take your opinion to heart. You’re the financial expert, and they trust that you know what you’re talking about and are keeping their best interests in mind. But that doesn’t always mean you won’t get a little push-back here and there, especially when it comes to life insurance. High net worth individuals, especially, more often than not have money set aside for their loved ones should something happen to them unexpectedly and that has the potential of making life insurance a tough sell. However, life insurance is still an essential part of estate planning for good reason. Here are some arguments your high net worth individuals may come up with and how you can effectively counter them:
I know I need life insurance, so maybe I’ll look into it next year.
Of course, your clients are busy. They’re running start-up business or law firms and probably don’t have a lot of time to go over all their life insurance options right now. Plus, they’re only 30 or 40 and in good enough shape – they may not be running a marathon any time soon, but they work out and watch what they eat. What are the chances of being diagnosed with cancer or getting into a car wreck unexpectedly? Even if the odds of an unexpected premature death are on the low end at any given time, remind your client that the odds of dying of cancer or heart disease at some point in their life are one in seven, according to the National Safety Council. The risk of dying in a car accident are a bit lower – one in 112.
Still, make sure your client understands that the month or year they are planning on waiting to invest in a life insurance plan could be the difference between their family carrying on with relative comfort if they should die suddenly or no longer having the funds to pay the mortgage or send their kids to college. The time and expense of investing in a quality life insurance plan is nothing compared to the comfort of knowing that their family is provided for should the unthinkable occur.
I probably don’t need life insurance – I have plenty of money in my various assets to provide for my family.
This is an especially tricky one for agents with high net worth individuals who may think that their personal savings or assets are more than enough to take care of their loved ones should anything happen to them. If your client presents a similar argument, find out exactly how much of their assets are liquid. It’s not enough to have great investments in start-up companies or stocks and bonds if their family doesn’t have access to it quickly and easily.
Say your client is the owner of a business that is doing well and bringing in plenty of money to support the family. If they die suddenly, how much longer is that money going to be coming in? Do their family members have the ability to step into the role and continue to keep the company profitable and provide an income for the family or will they be forced to sell and live on a fixed income? It is by no means unheard of for a family to go from wealth to bankruptcy in a span of a few years due to poor financial planning on the part of the breadwinner.
I’m letting something silly getting in the way of buying life insurance.
As a financial advisor, you’ve probably heard every excuse in the book as to why your clients don’t want to buy a life insurance policy for themselves. Some say they don’t want to tempt fate, as if buying a life insurance policy somehow increases the odds of them ending up in a car crash or being diagnosed with cancer. Others just say they’re too busy to go through the process. Some clients are sincerely afraid of needles and want to avoid the blood work that goes along with getting a new life insurance policy.
Whatever the reason, make sure your client understands that a life insurance policy isn’t for them, but for their loved ones. While nothing should get in the way of your clients protecting their families in case of a premature death, irrational excuses should be the least acceptable.
When talking to your clients about life insurance, be sympathetic – it’s not a fun topic. Considering one’s own death is unsettling at best, which is why it’s important to frame it as a way for your clients to protect their family financially no matter what.