Is Selling Insurance Hard? Pt 2

In the previous post I went over a few facets of what makes selling insurance, life insurance in particular, a difficult job. There is a hesitancy from people to purchase something they know they need, but generally speaking, do not want to purchase. In essence, asking someone to add to their monthly bills to protect their family from financial ruin is a hard job.

One of the many objections agents get when selling life insurance goes something like this. "I want to talk to the wife (or my husband, partner, significant other) before making a decision. I may need a few weeks." Where do I begin?

First, I have rarely met a spouse who did not want to be named a beneficiary on a life insurance policy. And by "rarely", I mean never. As a smart agent once proclaimed, "Wives hate life insurance but widows love it." 

A few years ago I met a woman who was in dire financial straits. Her husband had left his well paying job to start his own business. In doing so, he borrowed some money to get his business off the ground. The wife was fully aware of the situation and insisted he purchase a life insurance policy to cover the debts he had incurred if he were to die unexpectedly. He told he would "get around to it." 

After a few months went by, he told his wife that he had bought a policy. She never saw the paperwork or a policy but assumed that he was telling the truth. Not long after, the husband was clearing out some trees near their home when a log fell on him, crushing him to death. 

You can figure the rest out. There was no policy. She couldn't afford to repay the debt and lost her home. She was forced to take a small apartment and, even though she had been out of the job market for a long time, had to take a job as a teacher's aide in a high school. When I spoke with her she broke down in tears several times from the stress that could have been avoided if her husband had just purchased that policy.

When someone says they'll get around to it later, I share that story with them. And I make sure that their spouse or significant other is present to hear it as well. 

The other objection I deal with is "I need a few weeks to think it over". The logic is that if I have a few weeks to think rationally I will decide if I need a policy. This is one of the most ridiculous things I have ever heard. Did they need a few weeks to decide on the purchase of a TV, cell phone or clothing? Or how much time did it take to decide to drop $7 on coffee, which they do often? 

Imagine someone dropping $50 each month on coffee but not wanting to spend $35 to protect their family. As stated previously, the priorities are all out of whack.

So when the prospect claims they need a few weeks, I let them know that the insurance company will also need a few weeks to decide if they will approve them and what the rate will be. I will encourage them to start an application which can be submitted with no money. "That way the underwriting process can begin and a paramed exam can be completed in the meantime. And by the way, we pay for the exam as well, so you won't have to pay anything until the insurance company has done their due diligence. And that process could take a few weeks," I say. "So while you're thinking it over, so is the company."

People think of insurance agents as being high pressure sometimes. Personally, I feel that the vast majority of agents are trying to do the best thing for their clients and sometimes that requires "good pressure". And in the end, the beneficiaries of that policy are thankful for the agent's work. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

How To Make Life Insurance Work

Life insurance has come a long way since the days when it was known as burial insurance and used mainly to pay for funeral expenses. Today, life insurance is a crucial part of many estate plans. You can use it to leave much-needed income to your survivors, provide for your children’s education, pay off your mortgage, and simplify the transfer of assets. Life insurance can also be used to replace wealth lost due to the expenses and taxes that may follow your death, and to make gifts to charity at relatively little cost to you.

To illustrate how life insurance can help you plan your estate wisely, let’s compare what happened upon the death of two friends: Neil, who bought life insurance, and Bob, who did not. (Please note that these illustrations are hypothetical.)

Life insurance can protect your survivors financially by replacing your lost income

Neil bought life insurance to help ensure that his survivors wouldn’t suffer financially when he died. When Neil died and his paycheck stopped coming in, his family had enough money to maintain their lifestyle and live comfortably for years to come.

And since Neil’s life insurance proceeds were available very quickly, his family had cash to meet their short-term financial needs. Life insurance proceeds left to a named beneficiary don’t pass through the process of probate, so Neil’s family didn’t have to wait until his estate was settled to get the money they needed to pay bills.

But Bob didn’t buy life insurance, so his family wasn’t so lucky. Even though Bob left his assets to his family in his will, those assets couldn’t be distributed until after the probate of his estate was complete. Since probate typically takes six months or longer, Bob’s survivors had none of the financial flexibility that a life insurance policy would have provided in the difficult time following his death.

Life insurance can replace wealth that is lost due to expenses and taxes

Neil planned ahead and bought enough life insurance to cover the potential costs of settling his estate, including taxes, fees, and other debts that his estate would have to pay. By comparison, these expenses took a big bite out of Bob’s estate, which had to sell valuable assets to pay the taxes and expenses that arose as a result of his death.

Life insurance lets you give to charity, while your estate enjoys an estate tax deduction

Using life insurance, Neil was able to leave a substantial gift to his favorite charity. Since gifts to charity are estate tax deductible, this gift was not subject to estate taxes when he died. Bob always dreamed of leaving money to his alma mater, but his family couldn’t afford to give any money away when he died.

Life insurance won’t increase estate taxes — if you plan ahead

Before buying life insurance, Neil talked to his attorney about the potential tax consequences. Neil’s attorney told him that if his estate was large enough, it could be subject to federal and state estate taxes, depending on the applicable law at the time of his death. Neil and his attorney put a plan in place that would allow Neil’s survivors to use his life insurance policy to help pay for some of the potential estate taxes that might be owed at his death.

Be like Neil, not like Bob

Throughout his life, Bob worked hard to support his family. Neil did, too, but went one step further — he bought life insurance to protect his family after his death. Here’s how you can be like Neil:

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• 1. Use life insurance to ensure that your family has access to cash to help them meet both their short-term and long-term financial needs.
• 2. Plan ahead — buy enough life insurance to cover the potential costs of settling your estate and to ensure that the assets you leave to your survivors aren’t less than you intended.
• 3. Consider using life insurance to give to charity.

As you can see, these are just a few ways to make sure your life insurance policy is used efficiently. If you have any questions or comments, let us know. In the meantime, please stay healthy. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Do I Need Term Or Permanent Life Insurance?

Life insurance gives you a way to protect your loved ones avoid financial stress surrounding your funeral and help ease the transition to life without you.

When you’re shopping for life insurance, you have options. You can choose between multiple insurance providers. You can pick the amount you want your policy to pay out when you pass away. You’ll also need to make a decision about how long your policy will last, and that usually means choosing either term or permanent life insurance.

When it comes to term vs. permanent life insurance, what’s the difference? Which policy type is best for your situation? Hopefully this will help you understand the basics to both permanent and term life insurance policies.

What Is Term Life Insurance?

Term life insurance gives you life insurance for a set term. That means you choose a policy and a death benefit (the amount your beneficiaries will get when you pass). But you also choose a term associated with your policy.

At the end of that term (e.g., 10, 20, 30+ years), your policy is set to expire. At that time, you have options. You can let the policy expire, renew it for a new term or — assuming your insurer allows — convert it to a permanent life insurance policy. Many carriers will give you an option to convert your policy to a permanent policy during the term.

Why would you choose life insurance that will expire after a certain time? Simple: term life insurance policies are significantly cheaper than permanent life insurance policies. And, in some cases, you may feel you only need life insurance for a certain time.

For example, some people buy term insurance with a term that lasts the length of their mortgage or until their kids will be done with college. That way, your family can get through major financial milestones with or without you. Once the house is paid off and the kids are educated, you may not be as worried about leaving your partner without your income.

The amount you’ll pay for your term policy depends on a few things: your current age, the term of your policy and the size of your death benefit.

CNN Money has a helpful example to give you a ballpark idea. They say that a healthy 35-year-old male buying a 20-year term policy with a death benefit of $500,000 will pay about $430 a year. At 50, that same male will pay $1,300 annually for the same policy.

Most term life insurance policies (97%,according to the Insurance Information Institute) are level-term policies, meaning you decide a term with your insurer and your death benefit stays the same throughout the term.

But there are other types of term life policies, including yearly renewable policies and return-of-premium policies. 

Of course there are pros and cons to term life insurance. 

Pros: Less expensive, flexibility in choosing a plan that meets your needs and it's easy to understand. 

Cons: Policy expires at the end of the term, which could leave you with nothing. Also, it lacks cash value.

What is Permanent Insurance?

You can probably guess from the name: permanent life insurance is a type of life insurance that stays in effect throughout your entire life. Once you buy your policy (assuming you pay your premiums), your death benefit is guaranteed for your beneficiaries, whether you pass away in 10 years or 80.

But there’s more to the puzzle here. Most permanent life insurance policies come with a cash value component. As you pay your premiums, that money accumulates with your insurance provider. Depending on the type of policy you choose, you might get returns on that cash value in the form of dividends.

There are three different types of permanent life insurance:

• Whole life insurance: You get permanent life insurance plus a cash value component that essentially functions as a savings account. You earn dividends on your policy’s cash value component.
• Universal life insurance: With this policy, you get permanent life insurance plus a cash value component that earns interest based on money markets. You may also be able to adjust your policy’s death benefit (assuming you pass a medical exam). There are a couple of versions of Universal Life and in recent years have proven to be very suitable for many people. 
• Variable life insurance: This gives you the most flexibility — but also the most risk. You get permanent life insurance and you can invest your cash value component how you want (stocks, bonds or money market mutual funds). The issue is that if your investments don’t perform well, the losses can eat into your death benefit.

The cost of your whole life policy depends on a bunch of different things: your age, your current health, the type of permanent life insurance you choose, the amount of your death benefit, the insurer you choose — the list goes on. We’d love to give you a figure for how much you can expect to pay, but there are too many variables here.

Generally, be prepared for permanent life insurance to cost between five and 10 times more than a term life policy. For all that extra money, you get a policy that won’t expire and a potential earnings vehicle while you’re alive.

There are also pros and cons of permanent life insurance.

Pros: Policy will last for life and accrue some cash value. And if you have some medical concerns after the policy is issued, it won't affect your policy. 

Cons: More expensive, can be more complex and difficult to understand, and the cash value may disappear if the policy isn't structure correctly.

Despite what the financial "gurus" in the media profess, there is no "one size fits all" approach to this. Everyone has different issues, like medical conditions, the budgets and other financial considerations which may determine the face amount of the policy. 

A short conversation with us can help determine how much coverage is needed in your budget. Book a phone appointment to have a quick talk to determine your needs and how we can help you secure your family's financial future. In the meantime, stay healthy!

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! 

Getting Our Priorities Straight During the Holidays

With the holidays right around the corner I thought it would be appropriate to share a story from years ago when I was working for a very large insurance carrier. The agents were required to meet once a month and discuss our sales production numbers, and part of the process was that the veteran agents would give advice to the newer sales reps. 

As was usually the case in December, sales were down across the board. People generally don't buy much life or disability insurance before the holidays, with the exception of signing up for their benefits through work, so the agents were not too happy. I was one of them.

I shared how I would sit down with a couple to discuss life insurance, for instance, and would hear interesting excuses for not buying. "The holidays are coming and I need the money to buy a television," or "The new Iphone is coming out this week." 

That made no sense to me. "You have a wife and kids and a mortgage. If you were to die unexpectedly in the next few days, that cell phone isn't going to help your family stay in their home," I exclaimed to no avail.

Herein lies the problem for us insurance agents sometimes. We deal with people who mean well, and want to do right by their families, but their priorities are out of whack. The short term goals have overtaken the long term goals. Living in the moment is their mantra because "who knows what the future holds?" If they really want to know what is in store for them they should ask their elders. 

As I expressed these concerns to my colleagues at our sales meeting, a veteran agent laughed. "I know what you mean. Everyone is living in the moment, especially younger people. They think they are going to live forever and nothing will happen to them," he said. "But you have to help them understand that is wrong."

He continued to talk about the whole situation. "The holidays should be a time to emphasize the family. That should be their focus and if it isn't, then you need to make it their focus." It made sense. 

Of course we all want to have some nice gifts under the tree for the kids to open on Christmas morning. But trying to outdo ourselves (or anyone else for that matter) isn't what the holidays are all about. Wiping out our bank accounts at the end of the year over a phone or a television actually can make our festivities (and the new year) miserable. 

More importantly, all the gifts in the world can't make up for the loss of a loved one. So my message for you this year is this: It's fine to splurge a bit. This year has been tough on everyone, but remember that the holidays are about family, whether they are immediate, extended or otherwise. Make sure your priorities are in the right order. 

My job, as an insurance agent, is to make sure that your family will be able to continue to live comfortably if something should happen to you. Your priority should be making sure that your family is able to stay in their home and continue without you were to die unexpectedly. 

As I talk to my friends and clients I am learning that many have decided to cut back a bit on expenses this year. One less stocking stuffer or electronic gadget won't be missed. My wish for you and yours is to enjoy your family as much as you can. And please stay healthy! 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

4 Things You Should Take Care Of Before You Die

As they say, nothing is certain but death and taxes. And as your tax rate may be able to go up and down, there isn't much you can do about your death. But you can make it a lot easier for those you leave behind if you have your affairs in order ahead of time. Depending on your situation, you can take care of some or all of these items early on and it doesn't have to cost you a fortune. 

The basics of taking care of things before you go to your eternal reward are not too complicated. Ask yourself the following questions.  

• Do I want a funeral? If so...
• Do I want to my family to have to pay for my funeral?
• Do I have any assets that need to be transferred at my death? For example, a home, business, collections, etc. 
• Do I want anyone to be excluded from those assets?

In other words, do you want to make these decisions now or do you want your family to have to try to figure it all out after you are gone? 

Years ago my mother passed away. She had a small collection of jewelry that included a few rings and broaches. I discussed this with my father and suggested he distribute the jewelry as he wished while he was still alive to hear "thank you" from the recipients. But I had ulterior motives as well. I didn't want to be the one having to figure out which family members would get what.

My father never followed through. At his passing the jewelry just got distributed, and I'm pretty sure that some family members were overlooked while others received small items that were intended for others.

With this in mind, here's a short list of things you should take care of before you die.

1. Buy life insurance*. Sounds obvious, but making sure your family can pay for your final expenses is very important. When you die, people will have their hands out asking for money, like the funeral director and the lawyer. The only one bringing you money will be the insurance agent. Make sure your beneficiaries are up-to-date and keep in mind that you can "assign" part of the proceeds to the funeral home.
2. Pre-plan/Pre-pay for your funeral. My father went to the funeral home and picked out his casket in advance as well as other items on his "final wish list". He failed to pay for any of it, leaving my sister and I to front the money until we received the life insurance proceeds.
3. Have a will. This keeps your estate from ending up in probate, which can be costly and puts your estate at the mercy of a judge. A will can alleviate any disagreements between family members as to who will receive proceeds and how much. For instance, if you own a business and one child actively works there while another child does not, you can put directives in the will that address the issue.
4. Have a living will. Again, you can alleviate a lot of tension in the family by making decisions ahead of time when you are lucid.

Making sure that you have taken care of these kinds of issues in advance will keep your family on speaking terms (as much as possible) and avoid conflicts. 

Nowadays, people have extended families, businesses, investments and other obligations that are hard to untangle if someone were to die unexpectedly. Letting attorneys and courts make those decisions can be costly and unproductive. Make sure your intentions are known and your loved ones will remember you fondly. 

If you have questions or comments, please let us. In the meantime, stay healthy!

*Life insurance trumps a will since it is a legally binding contract. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! Thanks!