This month, we've been talking about retirement planning sales strategies. In our previous post, we talked about maximizing your client's pension using life insurance. Once you have a client willing to talk about life insurance as part of their retirement portfolio, it's time to talk about riders.
The Problem
Your clients and prospects have to prepare for so many "what if"s during retirement: disability, long-term care, longevity, inflation, and plain old accidents. It's a lot of work to buy separate policies to cover every possible scenario. It's also time-consuming, expensive, and full of paperwork that make it easy for a client to walk away. How do you talk to your client about all of these scenarios without overwhelming them?
The Solution
Cover as many bases as you can with life insurance policy riders. Some are free of charge, which should make for an easy discussion, while others will add to the monthly premium. If you're not going over all available riders with your clients, you could be doing them a disservice as well as missing out on a great sales opportunity. Common riders include waiver of premium, accidental death benefit, future purchase options, accelerated benefits, and child riders. Let's take a look at these in more detail:
- A waiver of premium rider is a good one to recommend, since it keeps a policy in force with no further payments required should your client become totally disabled before a certain age (usually 60 or 65). While there will be a waiting period involved if your client is disabled, the good news is that premiums are also usually waived during that waiting period.
- An accidental death rider adds more money to the death benefit if your client dies in an accident, rather than from natural causes. How much more? That depends on the policy, but it's often double or triple the original amount. It's an inexpensive rider to add since the chances of an accident are pretty small; however, you need to review the carrier's specific definition of an accident to be sure your client understands what is and isn't covered (hazardous hobbies aren't usually covered, for example). This rider is a really good idea for clients who have dangerous or hazardous jobs.
- A future purchase option rider lets your client buy more insurance at specified intervals (usually every 2-3 years) without having to re-apply or re-take a medical exam. Those intervals will be specified in your client's contract. Even if your client gets sick or has a drastic health event, that won't affect their ability to add more coverage. The cost of the additional coverage depends on the client's age at the time they elect to buy more - but it won't depend on their health.
- An accelerated death benefit rider allows your client to access the death benefit during his or her lifetime to pay for medical expenses resulting from a terminal illness. The carrier will specify a dollar amount (or percentage of the death benefit) your client can access, along with the circumstances under which the money can be accessed. This rider is usually free, since it doesn't represent any additional risk for the carrier.
- A long-term care benefit rider allows your client to access the death benefit during his or her life time to pay for long-term care. Unlike the accelerated death benefit rider, this one will probably have a price tag attached. However, when you look at the cost of long-term care, this is a bargain. Although LTC costs vary widely by state, it's never cheap. For example, the 2014 average annual cost for an in-home health aide in California is $52,624. In Virginia, the same care costs about $43,472. The costs only increase as you start looking at semi-private and private rooms in a nursing home. If your client is at all worried about long-term care, a rider on a life insurance policy is much less expensive than a stand-alone policy.
- A child rider can provide coverage for your client's children. This is usually term coverage offered for a specific dollar amount (often $10,000 or $20,000 per child). It's meant to cover children until they're grown and leave the house, usually expiring between the age of 18 and 25. The good news is that it's often a flat fee to cover all the kids, even future new arrivals, for just a few extra dollars a month.
Next Steps
If you don't already, make time to go over these and other available riders with every client buying a new policy. If you do online sales, build a sales call into your workflow just to make sure your clients aren't missing out on coverage they need. Even if they turn down every single one, chances are they'll be glad you asked. For help with carriers, riders, and policy types, contact our Brokerage Sales Support team at 800-823-4852 or email us at [email protected].
