Choosing the right life insurance for your family isn’t always easy. With complex policies filled with difficult-to-understand language, it’s no wonder why many Americans find it hard to figure out what type of coverage — and how much — they need.
For middle-income Americans with limited budgets and limited access to companies that often cater to higher income households, the challenge is even more difficult. Primerica’s latest quarterly financial survey of middle-income families found a gap in life insurance policy coverage. While 64% reported having a policy through their job or one purchased outside work, 39% said that policy was worth $100,000 or less. A common rule of thumb is to have a policy that’s about 10 times your annual salary, meaning many have insufficient coverage.
If figuring out the right policy feels complicated, you aren’t alone. The survey also found 24% of middle-income households aren’t confident when it comes to buying life insurance without professional help. That’s where Primerica’s straightforward, yet innovative approach to term life insurance comes in.
When a Primerica representative sits down with a new client to discuss term life insurance, they aren’t looking solely at the coverage that’s needed. By discussing what the client is hoping to get out of life insurance along with their unique financial situation, Primerica representatives can see the big picture.
For most families, that means ensuring they have the right insurance coverage now, while still being able to save for the future. “We teach our families how to build a financial game plan that allows them to have protection in place during the time they need it while also making sure they have the retirement savings they’ll need later on,” said Stephen Madison, Executive Vice President of Product Marketing & CMO for Primerica Life.
Unlike whole or universal life insurance, term life insurance provides coverage for a specific period of time, or “term” of years. If the insured person dies within that time period, his or her beneficiaries receive the death benefit covered in the policy. Figuring out the right amount of coverage revolves around a method called DIME — debt, income, mortgage and education. That means if the unthinkable happens and the policyholder dies far too early in life, the death benefit can help ensure his or her family won’t be left with mountains of debt or unable to pay the mortgage, and they will be able to replace their loved one’s income and have funds set aside for their children’s education.
Primerica representatives place a heavy emphasis on educating clients. From explaining the value of term life insurance — which can be more affordable and may provide a better value over whole or universal life insurance — to teaching families the basic principles of How Money Works™, Primerica helps make a difference in the lives of middle-income families across the country. In fact, the company has pioneered a philosophy it calls “buy term and invest the difference,” which encourages clients to examine how much they’re saving by paying for a less costly term life product compared to a costlier insurance policy and then invest that difference to secure their financial futures.
“We teach our families how the policies work,” Madison said. “We even worked with a simplified language expert to write our policies in a way that anyone can read and easily understand them. Unless you’re a lawyer, you would really struggle with reading most of the insurance policies in the industry. At Primerica, we actively make sure we don’t hide anything.”
A critical part of this educational process is sitting down face-to-face with clients — an approach that Madison said can be hard to find elsewhere in the insurance industry, which tends to favor wealthy clients over the middle market. It’s why Primerica also offers its complementary Financial Needs Analysis, which examines clients’ financial situations and suggests personalized strategies to bolster financial security.
“Having these one-on-one conversations really gives middle-income families the ability to make wise decisions, as opposed to just having someone trying to push a product on them,” Madison said. “Most of our representatives come from the very same communities that they’re working in because they recognize a need and want to bring value to their family, friends and neighbors who are just like them.”
Disclosures:
- Primerica representatives market term life insurance underwritten by National Benefit Life Insurance Company, Home Office: Long Island City, NY in New York State; Primerica Life Insurance Company, Executive Offices: Duluth, GA in all other U.S. jurisdictions; and Primerica Life Insurance Company of Canada, Home Office: Suite 400, 6985 Financial Drive, Mississauga, ON, L5N 0G3, Phone: 905-812-2900 in Canada.
- Cash value life insurance can be universal life, whole life, etc., and may contain features in addition to death protection, such as dividends, interest, or cash value available for a loan or upon surrender of the policy. Cash value insurance usually has level premiums for the life of the policy. Term insurance provides a death benefit and its premiums increase after initial premium periods at certain ages.
Need help. Insurance is one of a number of that I can not afford on my retirement
income.