December 6, 2013 | BY DAVIS LIFE & ANNUITY
Some people look forward to retirement. They cannot wait for golf, fishing, bridge, friends, and Florida—the good life. Meanwhile others dread retirement. They do not want to go day-in and day-out without a job to go to. What will they do with all their free time?
These two types of folks are different in many respects; however, they can agree in one important way: they both want to maximize their retirement funding. That is where you, the agent, come in.
There are three important options you should be presenting to your clients to help them improve their retirement funding:
Option #1: Individual Life Insurance
That’s right, life insurance. Life insurance can both protect and provide increased flexibility for your clients.
Many clients will not put life insurance and retirement security in the same arena. For example, the 2012 ING study, U.S. Insurance Revealed found people were most familiar with life insurance’s protection benefits (the death benefit), placing the greatest value on such uses as replacing lost income (26 percent) and paying off debt (23 percent). Yet, not many respondents highlighted the value of life insurance in protecting retirement savings (4 percent) or building wealth (1 percent).
Many clients are at their max retirement plan and IRAs, but do not realize that through a cash value life insurance policy, such as indexed universal life insurance, they can build cash value that may provide financial flexibility later in life. With longer lifespans, a fifty-year-old client could accumulate a nice nest egg with a full-funded Indexed Life policy. Furthermore, many of these policies offer long-term care and critical illness options allowing for the use of the death benefit for these potentially catastrophic expenses.
Option #2: Voluntary Benefits
Serious illnesses or accidents can generate significant expenses for an individual, even if there is a decent medical insurance plan in place. Too often, families do not have ready cash flow to deal with extensive out-of-pocket medical expenses or to weather the elimination period before disability payments kick in. Point in fact: the 2011 National Bureau of Economic Research report, Financially Fragile Households found that nearly half of Americans are not able to access $2,000 easily for an unexpected expense.
Many clients will solve this problem with a 401(k) loan. This is not a good idea. Instead, your clients may be able to buy accident, critical illness, hospital. indemnity or disability coverage through payroll deductions at an affordable price to guard against this risk.
Option #3: Annuities
Many clients worry about the staying power of their retirement funds. How about offering your client fixed annuities specifically designed to provide a certain amount of annual guaranteed income, usually with upside potential, based on interest rates or some other mechanism. This insurance contract, in effect, protects the client’s lifestyle and eases concerns that market fluctuations or life events will prematurely deplete retirement account values and the income those values might have generated.
We at Davis Life & Annuity work with agents every day to help them solve their clients’ retirement needs. Please give us a call. We are here to help your clients turbo-charge their retirement funding.
NOTE: If you would like to share your thoughts on this article or subject, I welcome all comments and will respond promptly to any questions posted.