One of the best gifts parents can give their children is a strong foundation through a good education. The parents’ income can play a vital role in making this possible. A family’s plans and dreams often are built on the parents’ income.
While people agree about the importance of taking care of their children and education, the role of insurance to make sure this happens is often overlooked. Many people believe they have enough assets, such as property, to guarantee their family’s future. Unfortunately, what they may fail to realize is that lifelong health and a thriving economy aren’t guaranteed, so their assets may be unavailable when their family needs them most.
When clients think they don’t need insurance
I had a prospect who didn’t believe in insurance at all, while his wife felt it was part of her security. The husband felt if something happened to him, his two properties worth RM 2.5 million (about $602,000) could be sold.
To please his wife, however, he purchased a critical illness policy two years ago with a minimum coverage of RM 500,000 (about $120,000). Unfortunately, earlier this year, he was diagnosed with a critical illness and received his critical illness payout of RM 500,000.
He also decided that since he’s now unable to work, he also would sell his properties to take care of his family’s expenses. Due to the pandemic and economic crisis, however, he had a problem selling his property, even at a below-market price.
After this, he started to believe in insurance. He now believes that insurance is really powerful when you don’t have your health and need money the most. As a result, he bought extra coverage for his wife and two children.
Questions to help clients understand insurance better
To help clients think about the importance of their income to their children and the role insurance and income-protection products can play in this, ask your clients these five questions:
1. Can you guarantee your health will not change in the next three to five years? If it does, will this affect your ability to earn?
2. Can any parent guarantee they will always have the ability to earn and save for their children’s education in the next 10 to 15 years?
3. Can any parent guarantee they will live until their kids finish their schooling?
4. As parents, are you willing to leave your children’s future uncertain?
5. What would you feel to see your children suffer because their dreams and goals fell apart due to your insufficient planning?
These are the uncertainties every parent faces. Yet these can be alleviated through planning, which allows people the ability to generate an income as long as it’s needed. Let your clients know that insurance is one of the most efficient and effective financial products to replace an income lost due to premature death, illness and disability. Should these happen and they’re properly insured, their children’s education and future will be taken care of.
Lam Pui Ka, of Kuala Lumpur, Malaysia, has been an MDRT member since 2018 and is a Court of the Table qualifier.
MDRT member exclusive information about the importance of clients’ children during financial planning:
- Read “Why you shouldn’t ignore your clients’ kids”
- Read “Shaking the family tree”
- Watch “What high-net-worth clients are missing about education planning” (MDRT members only, Canada)