I've got a buddy who's a wholesaler on the life insurance side of a major financial services firm. This being our annual insurance issue, I asked him about what he was seeing from the advisors he visits (pesters). He reported sales were up in 2009 (especially for term products). He was certain it was because it's an easy and cost-effective method to account for shortfalls in the retirement portfolio in case of premature death. Little surprise then, policy reviews and basic needs analysis remained the most often requested concept packages.
Our own Matt Greenwald made an excellent case for life insurance as a backstop for portfolio losses in our March 2009 issue.
"While the value of most of your clients' financial assets has decreased, I doubt the size of the legacy they'd like to leave has also been adjusted downward," he noted. "But, how many have increased their life insurance coverage to make up for significant market losses? Your clients have likely done little to replace the assets they can no longer pass on."
In an unprecedented and thoroughly vexing market, life insurance is a relatively simple solution. If anything, the need has increased in the past year. So why aren't more so-called "comprehensive" advisors addressing it? Too many still outsource this foundation of the retirement planning hierarchy of needs, or ignore it altogether.
Joe and Jamie Stone certainly aren't. They understand the many traditional and creative uses for life insurance in retirement planning, and they share some in this month's cover story. Father Joe is teaching son Jamie the business from the ground up, which begins with insurance. And as a very lucrative aside, Joe notes the lack of young advisors dealing with the insurance side of the business gives Jamie a competitive edge (and a steady income stream).
The overall conclusion is one that affects everything from product to strategy, compliance to E&O. Insufficiently addressing clients' insurance needs is irresponsible in any other market; unforgivable now.