Life Insurance in Action

insurance continuing educationAs a life insurance agent, you know that people have different characteristics, different situations, and different needs. Consequently, the type and amount of life insurance necessary to meet these different needs will vary, depending on the situation of the individual or family. The products and services the life insurance industry offers meet a need and that is constant and continuous. In the final analysis, people buy life insurance because it minimizes the economic hardships of death and enables them to accomplish through mutuality and cooperation what they could not accomplish alone as individuals.

Let’s look at one example.

Karen Michaels, who is 23 years old, owns a flower shop in a small shop in the Midwest. Her annual net income is $40,000. Karen owns her own condo and has no debts except a $5,000 balance on her car loan. She plans to marry within the next 12 months, but she now has no dependents. Her fiancé is 24 years old and has returned to school to begin a master’s degree in teaching.

What life insurance needs does Karen Michaels have?

The fact that Karen has no dependents would seem to indicate that the only income need she has is for final expenses.

In cases where final expenses would be difficult to estimate, many life insurance agents recommend one-half of annual net income be used. In Karen’s case this is $20,000, which would be needed to cover the cost of medical or hospital expenses and for the expenses of a funeral. However, Karen owes $5,000 on her car loan so her total cash needs are $25,000 ($20,000 plus $5,000 of debt). If she were to die today, how would these debts be paid?

Also, remember that Karen is marrying within the next 12 months. She may be motivated to start a life insurance program that would provide for her future spouse and any children. It’s easier for you to address the need for a life insurance program now than next year after the wedding. The wedding expenses and maybe purchasing a larger home with her new spouse may leave the couple with very little money for insurance.

There is a current need for life insurance that would provide a monthly income to Karen’s spouse for at least ten years should Karen die. Karen could give no better wedding present to her spouse than a guarantee through life insurance that he will be assured of an income for at least ten years, even if Karen’s early death should break up the home. Such independence would help assure her spouse of an adequate income for some time.

As a life insurance agent, keep in mind that there is no substitute for life insurance in guaranteeing a dependable future income. Doing so will help you be enthusiastic about your work thus maintaining your effectiveness in presenting life insurance to your prospects.

Want to know more about life insurance? Check out our life insurance continuing education classes.

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