I was flabbergasted recently when a prospect asked me this question about a term life insurance policy I was discussing with him – “what’s in it for me?” He is what we call in the life insurance business a perfect prospect – he is 36 years old with a wife and two children, earns about $100,000 a year, owns a home with a hefty mortgage and doesn’t have a lot of other assets.
If we had been discussing a permanent policy, such as whole life insurance or universal life insurance, I would have been able to go into detail about the benefits of cash accumulation and tax-favored loans and withdrawals and about how whole life policies from a mutual life insurance company pay dividends, potentially adding to the cash value and increasing the death benefit., he might have been able to see “what’s in it for him.”
However, we were discussing a term life insurance policy, which doesn’t build any cash value or have any of the other benefits of a whole life policy I discussed above. A term life insurance policy is pure insurance. You pay your premiums and if you should pass away during the the term period, your beneficiaries receive the policy’s death benefit.
I asked him if he had homeowner’s insurance and auto insurance and he said he did. I then asked him what those policies had “in it for him.” He said they gave him peace of mind that if anything happened to his car or home, the insurance company would pay to repair the car and repair and/or rebuild his home. This was a benefit he could clearly see.
His thought about the life insurance policy was that he wouldn’t personally benefit from the policy if it paid a claim. I then asked him if there would be any benefit to him of knowing that his wife and children would not suffer financially if he died. To his credit, he immediately realized the selfishness of his question and was truly embarrassed that he even asked it. He wound up purchasing a policy with a larger death benefit than we had originally discussed.
In reality, purchasing a term life insurance policy might be one the most selfless acts you ever do. However, what it can do for you is provide you with peace of mind that your family will be financially protected in the event of your death.
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