Children's Life Insurance - How to Start the Conversation?

[Guest]

I'm a captive P&C guy and, like all others, we have those pesky quotas.

I've been selling lots of term. Actually, I've been selling exclusively term. We have UL and WL, but I haven't sold any of it yet.

My problem is I am extremely uncomfortable talking about life insurance on children. I have a 2 year old and I don't know how comfortable I am with the whole life insurance on children concept.

I know many of you sell children's life so I was hoping for some advice. How do you start the conversation about it? How do you counteract the standard 'I don't believe in life insurance on children' response?

 

[seeknulfind]

It sounds like you don't believe it it yourself.

Well, I can tell you, "I" didn't believe in life insurance either -- for children or anyone else for that matter because I didn't understand life insurance. Once I understood it, I became a believer.

As for one main idea concerning insurance for children, Newby, I think, expressed it as well as anyone when he talked about when the unthinkable happens. Not only is a parent faced with burying a child but must also deal with the grief. The last thing any parent wants to think about afterwards is how to pay the bills for the next few months. So in the worst case scenario this makes a lot of sense to me. But what about the rest?

Next, consider future insurability. It looks like you've got a pretty good handle on this. But for anyone who doesn't, kids don't always fit the "perfect child" model. Some kids have health problems. Even chronic asthma (once a diagnosis of the month for pediatricians) can up the price of insurance. The best defense is to secure a child's insurability at an early age. But there's an even better reason.

Cash. A good cash-value policy can not only provide financial protection but can also build a nest egg that performs better than any "child-savings account" and that money can be accessed without the tax penalties (at this point in time anyway) associated with so-called college savings plans.

Now there is some debate concerning a 10 or 20 pay vs paying for life or until 65. A lot depends on how you see things.

Yes, handing a young adult a policy with the premiums attached may not seem like the best idea but does it really hurt to provide a vehicle that offers a lifetime to build cash value? At worst the policy can be surrendered (shudder but...) or converted to a paid up policy. But at best, the cash can continue to grow or be used as a basis for a more appropriate policy down the line.

I guess my bottom line is "I wish someone had taught me years ago what I now understand about insurance. I feel responsible to provide my prospects and clients the information I was denied and I'm happy to help teach their children these valuable life principles too.

Andy

 

[WinoBlues]

Good post.

Those are all points as well. I also let them know my kids are insured because if day ever comes the last thing I want to deal with is money.

The year my son was in Iraq was the worst business year I have had in almost 30 years. And he came back fit and sound. Had he been killed, the grief would have destroyed us financially as well.

Paying for the funeral is a small part of the value.

It sounds like you don't believe it it yourself.

Well, I can tell you, "I" didn't believe in life insurance either -- for children or anyone else for that matter because I didn't understand life insurance. Once I understood it, I became a believer.

As for one main idea concerning insurance for children, Newby, I think, expressed it as well as anyone when he talked about when the unthinkable happens. Not only is a parent faced with burying a child but must also deal with the grief. The last thing any parent wants to think about afterwards is how to pay the bills for the next few months. So in the worst case scenario this makes a lot of sense to me. But what about the rest?

Next, consider future insurability. It looks like you've got a pretty good handle on this. But for anyone who doesn't, kids don't always fit the "perfect child" model. Some kids have health problems. Even chronic asthma (once a diagnosis of the month for pediatricians) can up the price of insurance. The best defense is to secure a child's insurability at an early age. But there's an even better reason.

Cash. A good cash-value policy can not only provide financial protection but can also build a nest egg that performs better than any "child-savings account" and that money can be accessed without the tax penalties (at this point in time anyway) associated with so-called college savings plans.

Now there is some debate concerning a 10 or 20 pay vs paying for life or until 65. A lot depends on how you see things.

Yes, handing a young adult a policy with the premiums attached may not seem like the best idea but does it really hurt to provide a vehicle that offers a lifetime to build cash value? At worst the policy can be surrendered (shudder but...) or converted to a paid up policy. But at best, the cash can continue to grow or be used as a basis for a more appropriate policy down the line.

I guess my bottom line is "I wish someone had taught me years ago what I now understand about insurance. I feel responsible to provide my prospects and clients the information I was denied and I'm happy to help teach their children these valuable life principles too.

Andy

 

[jfnyl]

I have 2 custom whole life policies on my daughter, age 2. I did it as a piece of college savings and cash value, but my primary goal was future insurability. Sure, a death benefit is inevitable, but I always frame the discussion in terms of giving them a head start on future insurance, since they will most likely have this conversation with their agent when they are adults.

 

[rousemark]

I'm a captive P&C guy and, like all others, we have those pesky quotas.

I've been selling lots of term. Actually, I've been selling exclusively term. We have UL and WL, but I haven't sold any of it yet.

We also offer what most people consider to be a very innovative children's life insurance product. You pay a single premium and it provides coverage up to age 26. Then the insured has the option to convert it to a permanent insurance plan worth up to 5x the face amount with no health questions. They are given that opportunity again 5 more times. So a simple $10K term purchased on a 1 year old can be converted later for up to $300K of life insurance with virtually no health questions.

My problem is I am extremely uncomfortable talking about life insurance on children. I have a 2 year old and I don't know how comfortable I am with the whole life insurance on children concept.

I know many of you sell children's life so I was hoping for some advice. How do you start the conversation about it? How do you counteract the standard 'I don't believe in life insurance on children' response?

I have never been fond of the term to age 25 policies but I have sold permanent insurance on children. First of all, we don't like to think about it but children do die. Loosing a child is traumatic enough but can you imagine having to ask to borrow money or to depend upon charity to pay for the final expenses at a time like that? I usually approach a parent or grandparent by asking, "Have you ever thought of giving "Billy" a gift that could last long after you are gone? Right now, you could provided something for him that he would never be able to buy for himself. Life insurance based on his age 2. Let me show how it would work."

I usually show them a 20 Pay life and then a Whole life for approximately the same premium. With one company a 25K 20 Pay will run approximately $24 per month.. But a 50K WL will only cost $26. With the WL they have twice as much coverage while they are paying the premium and they can take a fully paid up policy for $22,600 in 20 years..Plus, with the WL should the child decide he wanted to keep the 50K protection for his family he can do that continuing to pay the age 2 premium. You haave provided protection for the family, protected the insurability of the child and if he doesn't elect to cash it out you have enable the parent to give him a gift that will last as long as he lives. Plus you got paid for it to help you and your family.. Sounds like a win - win to me. (just make sure the breadwinner is adequately covered before you start putting coverage on the children)

 

[asher]

Rousemark,

What / Who's Whole Life Policy are you presenting to parebts or
grandparents?

Please let us know. This would be a great campaigner idea for
business development with senior clients.

Thanks,

 

[Cornelius]

Just bring it up. It may not feel good at that moment but consider the alternative. God forbid something does happen with one of your clients children and they do have financial issues. How would you feel then?

At least you give the parents the ability to make a decision if it's something to consider. You know the risk it's just a point of if they want to insure the risk..

 

[WinoBlues]

Sell the sizzle not the steak. This is not about odds, ROI or what make financial sense.

 

[rbrewer]

What companies are you using?
Thanks everyone this is a great thread.

 

[skt1234]

I don't feel it's too difficult every parents wanted to secure his/her children life that's main think you have to focus nothing else you get success every time.