Before you sell another term policy to a client who is under the age of 60, consider the potential cumulative premium costs they would see during their lifetime with a long-term strategy for their insurance needs. If the client’s primary objective for purchasing life insurance is to leave a death benefit to a beneficiary, recommending a series of term policies will cost them an additional $98K – 233K in premium expenses over their lifetime.
Before going into the potential costs, first consider the client’s life cycle. The average client likely will have more income and discretionary funds available during their working years than they would during their retirement.
With that in mind, locking in a level premium at the point in time when they are youngest and most healthy will provide for considerable cost savings throughout their lifetime. If they cannot afford permanent insurance during their working years, how will they ever be able to afford the much higher premiums following the end of a 20 or 30 year term period when they are older and likely less healthy?
The table below provides an overview of the cost of $500,000 of life insurance coverage using two different strategies for 40, 50 and 60 year old prospects.
- Strategy #1: Shows the cost of first owning term insurance then purchasing a guaranteed product following the end of the level period.
- Strategy #2: Shows the cost of owning permanent insurance from day one.
The total cost for the client from issue age through age 90 is reflected. All figures below represent a Male, in CA, at Standard Non-Smoker Rates.
The ‘additional cost’ column in the term strategy, and the ‘premium savings’ column in the second strategy result from comparison of the ‘Total Premium Outlay’ columns.
Permanent Insurance at a guaranteed level premium through age 90, versus a combination of Term Insurance followed by Permanent Insurance – the numbers don’t lie, GUL is the right long term play. Contact your Life Sales Rep to learn more or discuss specific details.