Why — and how — advisers should talk to clients about juvenile life insurance
October 26, 2016 by Pam Jenkins
You probably have no trouble talking to your clients about including life insurance in their employee benefits package. After major medical coverage, it’s one of the most important building blocks in an employee’s financial protection platform. And offering voluntary life insurance through the workplace lets your clients offer a simple, convenient and affordable way for their employees to select the amount and type of coverage that meets their individual needs.
So why is it so hard to talk about juvenile life insurance?
You may assume there’s no significant market for this type of coverage: your clients would be reluctant to offer it, and their employees wouldn’t be interested in it.
Our experience shows just the opposite. In fact, nearly a third of Colonial Life’s permanent life sales are for juvenile coverage. LIMRA’s 2015 Insurance Barometer Study backs this up, showing nearly half of those surveyed agree most juveniles need permanent life insurance. And the number is even higher for some demographic groups, including lower wage earners, those under 25 years and over 65 years old, and African-Americans.
Obviously, if you’re not talking about juvenile life, someone else is. Here are some important points to keep in mind to make the conversation worthwhile for you, your clients and their employees.
- Life coverage will never be more affordable than it is in childhood. The younger children are when their coverage starts, the lower the rate. In fact, nearly half of those who purchase juvenile life insurance do so to lock in a low rate, according to LIMRA’s study. “Juvenile life is a discussion around the practicality of purchasing it for a child or grandchild,” says Will Tinson, a Colonial Life sales representative based in New Jersey. “Employees who buy juvenile life like the idea that it’s a cost-effective way to provide a benefit for their family.”
- It protects children’s insurability. Buying whole life for a child protects him or her against the chance an unexpected accident or illness could make life insurance more expensive — or even unavailable — later on. This is another top reason named by buyers of juvenile life in LIMRA’s survey, cited by 45%.
- It can help provide a financial safety net now and later. Permanent life insurance such as whole life accumulates cash value at a guaranteed rate as long as the policy is in effect. The policyholder can take out a loan against the cash value if needed for unexpected expenses or even to pay the premiums. Life insurance isn’t designed as a savings plan, but it can help play a role in providing a financial safety net, now and in the future. “The employee usually can pass ownership of the plan to the child or grandchild at adulthood,” says Allen Searson, a Colonial Life sales rep in Georgia. “The child will then have a good life plan at a very inexpensive rate.”
- It could keep a family out of serious debt. The average funeral costs more than $7,000. At the same time, nearly half of American families say they don’t have even $400 on hand for an emergency. That may be one reason crowd-funding for funeral expenses has become one of the most common online fundraising causes, according to the website NerdWallet.
“Worksite products are for working Americans who may not have much in the way of savings,” says Craig Russey, a sales rep for Colonial Life in Florida. “Juvenile life is a very inexpensive way to cover these costs.”
Life insurance is protection nearly everyone is going to need at some point in his or her life. Buying it as a gift for a child or grandchild can be an affordable way to meet many needs — now and in the future.
It’s up to you to start the conversation.
Pam Jenkins
Jenkins is the assistant vice president for product development at Colonial Life & Accident Insurance Company.
