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Cash Value Life Insurance vs. Term Life Insurance

Posted at 06 H in by The Advisor's Resource Team 0 Comments

Choosing the right life insurance for individuals, or for clients requires a clear understanding of permanent vs. term life insurance. Your clients want to know how each type of insurance benefits them, and meets their specific needs. That means that you had better know how to answer their questions, and offer a clear explanation. 

 When you provide excellence in every phase of your customer’s experience with life insurance, you provide the value that you promise clients. The steps that you take in your presentation during the earlier phases likely differentiates your clients from those that are expressing interest, and those that actually buy the product, whether the decision is term life or permanent life insurance. 

Permanent Life Insurance 

Although whole life insurance is the most common type of permanent life insurance, you have to knowpermanent life insurance if that whole life policy is the ideal product for your client’s needs. Some business clients potentially assume that universal life insurance is sometimes the right policy. 

Whole life insurance has set premiums that remain in place as long as the customer continues making timely payments. It is important to communicate to clients that the whole life policy provides coverage over the customer’s, or employee’s lifetime, and that it builds cash value. 

The fact that it builds cash value is possibly an exceptional selling point for the customer or client seeking to purchase the best policy for their needs. Another important selling point is the fact that whole life premiums often do not increase over time, compared to term life policies. 

Universal life insurance requires that you explain that while it is permanent life insurance, it offers the opportunity for investment options. Remember that premiums are potentially adjusted over time, based on factors related to how your client manages the universal life policy. 

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Term Life Insurance 

Term life insurance, typically the most common type of insurance offered by employers, and often chosen by individuals, requires that you make sure that your clients understand all the details.

Educate clients about the pros and cons of term life insurance. Educate them that while term life seems less expensive, premiums typically increase at policy renewal. 

Understanding that there is no cash value in a term policy is an important point. If your client decides on term life insurance, explain the benefits of choosing each available term. 

Comparing Permanent vs. Term Life Insurance 

permanent vs term life insuranceRemember when offering a presentation on life insurance that you should focus on the needs of the client, not your personal opinions of one life insurance product over another type of policy.  

Term life insurance likely seems appealing to many people because of the low initial cost. Perhaps this is the ideal policy for younger, healthier clients or those that are looking to purchase their first insurance products.  

Similarly, a client that is older, not in perfect health, or one that wants to build cash value, likely benefits from permanent life insurance. An article in Financial Advisor points to the fact that Roy Croc, Walt Disney, and J.C. Penny all used the cash value of their permanent life insurance policy to start their businesses.  

There are downsides to permanent life insurance, including the long-term commitment to paying the premiums, in order to receive the maximum benefits of the policy. 

Sell your clients on the policy that meets their needs, and you likely grow your client base, and list of happy, satisfied clients. 

 

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Tags: Life Insurance, term life insurance, permanent life insurance
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