How to Use Life Insurance to Care for Others

Life insurance serves many purposes, and one of the most important is ensuring the well-being of loved ones in the event of a tragedy. When helping clients establish a life insurance plan, agents often overlook key aspects that could make a significant difference in providing care for others. In this article, we'll explore some of the crucial areas that are frequently neglected when offering life insurance coverage.

1. Life Insurance for Stay-at-Home Parents

One common oversight is the assumption that stay-at-home parents don't need life insurance or require less coverage than a working spouse. However, the reality is that stay-at-home parents contribute immense value to the household. According to Salary.com, the estimated worth of a stay-at-home parent’s work is approximately $112,000 per year. This includes childcare, managing household responsibilities, and more.

If a stay-at-home parent were to pass away, the costs associated with their responsibilities would still need to be covered—expenses like child support, daycare, extracurricular activities, and more. These costs justify the need for adequate life insurance coverage.

For instance, my wife and I discussed our life insurance needs and decided that if either of us were to pass away, we would want the other to have enough coverage to step out of the workforce and raise our children without relying on external childcare. To achieve this, we opted for equal life insurance coverage for both of us, ensuring our children's needs would be met regardless of who passed away.

2. Life Insurance for Divorced Parents

Another critical aspect to consider is life insurance for divorced parents, particularly those who have custody of children. In many states, the parent providing child support is required to carry life insurance to ensure continued financial support if they pass away.

When advising clients in this situation, it's important to explore various life insurance options and match them to the individual’s needs. For example, a return of premium term policy is an excellent choice if available. It provides necessary coverage during the term and returns the premium after the policy expires, offering peace of mind while ensuring continued support for the child.

3. Exploring Payout Options on Term Policies

Many agents mistakenly believe that term life insurance only offers a lump sum payout. However, clients have several options when it comes to how their term policy’s death benefit is paid out. For instance, clients can choose income for periods certain, where the death benefit is divided and paid out over a specified number of years with interest on the principal.

Other options include certain income payouts, which provide a consistent income stream until the death benefit is fully paid, or annuity payments. Understanding and discussing these payout options with your clients can significantly enhance the value of the life insurance policy.

As an agent, it's essential to fully comprehend the range of policies you offer and match them to your clients' specific plans. This ensures that you’re providing the best possible solutions for their unique needs.

Conclusion

Life insurance is a powerful tool for caring for others, but only if it’s used wisely. By considering the unique needs of stay-at-home parents, divorced parents, and the various payout options available, you can help your clients create a comprehensive plan that truly protects their loved ones.

If you’re looking for more tips and strategies to sell more life insurance and provide better coverage for your clients, type "LIFE" in the comments or reach out to us for a coaching call. At InsuraRisk University, we’re dedicated to helping you excel in your practice and ensure your clients have the protection they need.