I Hate This Life Insurance Question
“How Much Life Insurance Do I Need?”
Life Insurance Makes Babies Happy!
I hate this question.
I hate this question because I have no way of knowing how much life insurance you need or if you even need life insurance.
I hate this question because this is the first question 95% of Life Insurance purchasers ask.
I hate this question because it perpetuates the misunderstanding that there is some arbitrary coverage amount that will fulfill an individual’s needs.
So, How Much Life Insurance Do You Need?
I recently had a Home/Auto client of mine call me about life insurance.
Insured: “Ryan, my wife and I would like to get some life insurance. ”
Proud Insurance Agent: “Great, life insurance is important for a young family.” (We had discussed life insurance as an important part of their personal insurance program in a previous meeting).
Insured: “Run me a quote at 500k term!”
Concerned Insurance Agent: “Why 500k term?”
Insured: “That seems like a good number…”
Inquisitive Insurance Agent: “Why?”
Insured: “…………………..” (Silence)
He had asked himself, “How much life insurance do I need?”, and 500k popped into his head without thinking about his family’s needs, priorities, and goals.
Building a Life Insurance Program that Works for Your Family
The word “program” denotes Work and Complexity to many people. Much to the contrarty, for some families a simple $150k term policy for Mom and Dad might work perfect. Other families may have need for a whole or universal life product (permanent life products). Others yet might need/want to hold multiple policies combining the advantages of term and permanent life to satisfy their need. However, you will not be able to determine what program works best for you and your family unless you ask the right questions…
“How much life insurance do I need?” over simplies the process. If you are going to pay the premiums on Life Insurance why not buy something that works for you?
Questions to Discuss with your Insurance Professional
- How do I currently pay my household bills? Could my spouse pay the mortgage, heat, electric, cell-phone, cable, food, gas, and car expenses if my income was no longer available? With only one care-giver remaining how will your spouse pay for child care?
- What outside financial responsibilities do I have? Does a parent, grand-parent, or other relative depend on me financially? Would anyone be able to pick up the slack if my income was no longer available?
- Do I want to help my children with their primary or secondary education?
- Who will my personal debt fall upon and how will they pay that obligation after I expire? How much Credit Card debt do I have? What personal or business loans do I have that could fall to my spouse or dependents?
- How much will my final preparation cost?
Can you see the value in asking these questions over “How much life insurance do I need?”
Asking all these questions may not dig out all the financial and parental obligations in your life. So be honest with your insurance professional and freely discuss your concerns.
“If you’d like to talk about your Insurance Risk, contact me today. We can talk about your exposure, and begin our relationship!”
Thank you,
Ryan H.
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Amy,
So much of our job as agents is dispelling myths passed about cocktail parties and little league games. Keep fighting the good fight!
Jamie,
This is best-practice for any agent that believes in the IIABNY organization and its message, I'm sure. Which is why I encourage buyers to always visit an Independent Agent…
Thanks for the Comments!
Ryan, This is a great article. I also like when people tell me $500k because that is what their brother or neighbor has. Its important that their insurance professional really looks at each person as a person and not a flat dollar amount and not what their friend tells them to get. The questions are really important here & everyone considering life insurance (which should be everyone) should use these.
Ryan – I totally agree. The decision on how much coverage to carry for many insurance coverages is really a personal one that the consumer must make. The job of an agent is to provide the consumer with information that will help them to decide what limit is right for them. Any consumer who asks the question “How much life insurance do I need?” and gets a quick dollar amount answer from an agent should leave that appointment immediately and seek out a professional agent who will offer information and guidance in deciding the right amount of coverage.
Amy,
So much of our job as agents is dispelling myths passed about cocktail parties and little league games. Keep fighting the good fight!
Jamie,
This is best-practice for any agent that believes in the IIABNY organization and its message, I'm sure. Which is why I encourage buyers to always visit an Independent Agent…
Thanks for the Comments!
Ryan, This is a great article. I also like when people tell me $500k because that is what their brother or neighbor has. Its important that their insurance professional really looks at each person as a person and not a flat dollar amount and not what their friend tells them to get. The questions are really important here & everyone considering life insurance (which should be everyone) should use these.
Ryan – I totally agree. The decision on how much coverage to carry for many insurance coverages is really a personal one that the consumer must make. The job of an agent is to provide the consumer with information that will help them to decide what limit is right for them. Any consumer who asks the question “How much life insurance do I need?” and gets a quick dollar amount answer from an agent should leave that appointment immediately and seek out a professional agent who will offer information and guidance in deciding the right amount of coverage.