How a client’s insurance needs change over time

Many people shop around for the best price on gasoline, yet they might not do the same for their insurance. They buy a homeowner’s policy at the same time they buy their house, and they keep that policy unchanged until the day they sell their house. If they do that with their homeowners’ policy and the rest of their insurance, they could unknowingly have significant coverage gaps that may be putting them at risk. You and I know insurance needs change over time. Make sure this is a conversation you periodically have with your clients. 

10 examples of how insurance needs change

Insurance needs often change alongside life-changing events. These include

1. Graduating from school. Your client’s life is ahead of them. Although retirement seems far away, it’s never too early for them to start saving for retirement. Annuities are an obvious product. A qualified advisor can also advise their client on other retirement savings vehicles, like maximizing their 401(k) contributions.

2. Buying a car. The car needs insurance. If it’s a new car, this likely includes collision. As the car ages and loses value, collision protection might not be as important. Getting better and better cars means better insurance.

3. Getting married. It’s a big step. They will likely be planning a family. Whole life insurance is important. It provides protection and builds cash value.

4. Buying a home. The house requires homeowners’ insurance. They probably have a mortgage. More life insurance is probably a good idea.

5. Having a child. It’s another cause for celebration. College is going to cost a fortune. Your client can start saving now.

6. Buying a vacation home. This requires additional insurance coverage, especially if it’s in another part of the country subject to extremes in weather, such as flooding. Do they have the coverage they need? 

7. Illness in extended families. Your clients are getting older, but their hair hasn’t changed color yet. They are getting the thought: “This could happen to us.” It makes sense to buy long-term care insurance when you are younger.

8. Approaching retirement. Clients have accumulated significant cash value in their life insurance policies. Now they need retirement income. Does it make sense to move the cash value into an annuity to provide lifetime income?

9. Charitable giving. Your client has charities close to their heart. They want to make a difference. Should they designate one or more charities as beneficiaries on life insurance policies they currently own?

10. Estate planning. The government can move the goalposts when it comes to the threshold for paying estate taxes at the federal level. Can some life insurance policies owned by the client be designated to pay estate taxes? This might require establishing a separate trust. As their agent, you know people who can help.

Insurance isn’t a “set it and forget it” product line. Insurance is dynamic. It can change along with a client’s situation. That’s why they need a good agent.

Bryce Sanders is president of Perceptive Business Solutions Inc. His book, Captivating the Wealthy Investor, can be found on Amazon.

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