Life insurance is crucial to financial planning, providing necessary protection and peace of mind for individuals and their families. It ensures their loved ones can move forward in mourning without worrying about funeral costs, outstanding debts, and future living expenses.
As a life insurance agent, you get to walk through this vital journey hand-in-hand with your client, which can be one of the most rewarding aspects of the career. If you want to add life insurance to your product Rolodex, then keep reading to learn the fundamentals.
Understand Life Insurance Basics
To dive into the life insurance market, you need to know the three main types of life insurance.
Term Life Insurance. Term life insurance provides coverage for a specific period, usually 10, 20, or 30 years. It pays out a death benefit if the policyholder passes away during that term, and it is generally more affordable than permanent life insurance, which makes it an attractive option for those with smaller budgets.
Whole Life Insurance. Whole life insurance offers lifelong coverage with a death benefit guaranteed as long as you pay the premiums. It also includes a cash value component that grows over time. This function allows policyholders to accumulate tax-deferred savings.
Universal Life Insurance. Universal life insurance is also a permanent policy. It provides flexible premiums and adjustable death benefits so policyholders may adapt their coverage as their needs change. Along with insurance protections, a cash value element earns interest based on current market rates.
Key Terms and Concepts
A large part of being a life insurance agent is acting as a sort of dictionary for your clients. With all the insurance terminology out there, it makes sense that they would have questions. So, it’s your job to understand these fundamental terms fully.
Premiums. A life insurance premium is a monthly, semi-annual, or annual payment made to the insurance company to keep the policy active. The premium amount depends on various factors such as age, health, length of policy, type of policy, etc.
Beneficiaries. A beneficiary, or beneficiaries, is the person, or persons, that is legally designated to receive the benefits from a life insurance policy. If not a specific individual, policyholders may designate businesses or charities as beneficiaries.
Death Benefit. A death benefit is the sum of money paid out to the designated beneficiaries laid out in the life insurance policy. This payment functions as a safety net for those left with immediate funeral expenses, bills, debts, and future financial endeavors.
See a list of the different types of death benefits from the American Life Fund.
Cash Value. Cash value is an additional feature that is part of some permanent life insurance policies. With cash value, a portion of your premium is paid to the insurance protection and the rest builds tax-deferred interest. It makes a policy more valuable because the policyholder may be able to withdraw money while they are still alive.
Just the Beginning
These are just the basics you’ll need to know as you begin dipping your toe into selling life insurance, but there’s plenty more to learn!
At Empower Brokerage, we are dedicated to providing agents with comprehensive training and resources to master selling life insurance. Reach out to us and start gaining the knowledge and skills you’ll need to guide your clients down the path to financial protection.
Agents
We hope that this information on life insurance basics is useful to you.
Empower Brokerage is dedicated to helping you make informed decisions about your health and finances. Whether it’s through webinar training, one-on-one calls, seminars, or marketing plans, we want you to be successful!
Give us a call at 888-539-1633 or leave a comment below if you have any questions.
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Kayla is a graduate of Texas A&M University and joined the marketing team at Empower Brokerage in early 2021. She creates content for the company websites and assists with various marketing campaigns. LinkedIn Profile
