11 situations when people wish they'd bought insurance earlier - BenefitsPro

(Photo: Shutterstock)

Why do friends, neighbors and prospects often find themselves in financial trouble? They find themselves reacting instead of being proactive. Some of those problems could have been solved by buying insurance products earlier. You are in that business, so it’s up to you to make a compelling case.

11 problems that might come down the road

Let’s look at 11 situations where early action involving buying insurance could have headed off the problem.

1. Your friend spent everything they earned for the past 30 years. As they approach retirement, they realize they are unprepared.

Early action: Annuities have an accumulation phase and a distribution phase. They could have started putting money aside early, a little at a time each month. They could have increased their savings as they got bonuses and salary increases. They would have a nice nest egg.

2. Your client owns a business with aging partners. Everyone will pass away someday. When that happens, their spouse and heirs will want their portion of the wealth tied up in the business.

Early action: The goal is for the business to continue on a long-term basis. If the company had bought key person insurance early on, they would be prepared to buy out the deceased partner’s share from the life insurance proceeds.

3. Your friend has been buying term insurance for years to “save money.” They felt they got the same coverage without the higher price tag associated with whole life. Now they’ve discovered “term” describes a period that ends. They are facing much higher premiums.

Early action: Had they bought whole life insurance, their premiums would be set for their lifetime, and they would be building cash value.

4. Your client’s business lost out on getting a good hire. It’s a competitive job market. Salary isn’t the only thing a potential new hire considers.

Early action: If the company had a good employee benefits plan, it would signal the company really cares for their employees.

5. Your friend has realized their aging parents can’t care for themselves. For decades, their parents told them: “Don’t worry about us. We can look after ourselves.” The sentiment was well-meaning, but they were wrong. They need help.

Early action: Had your friend looked into long-term care insurance for their parents years ago, the premiums wouldn’t have been so high, and they would have coverage available when their parents needed to move into assisted living.

6. Your client is having trouble hiring employees to fill vacancies. They think of employees as independent contractors, expecting to hire on an as-needed basis. The pandemic changed all that.

Early action: If your client brought people on as full- or part-time employees and provided them with a good benefits plan, they would probably have improved employee retention and been able to attract new employees because of the benefits offered.

7. Your friend discovered their job for life…isn’t. They are facing downsizing. It may take a while for them to find their next position.

Early action: If they bought whole life insurance early (and contributed to their retirement plans) they might have access to emergency cash available as loans.

8. Your client discovered all health insurance is not the same. Why do they let those people put those ads on television! All those seniors look so happy having made the call!

Early action: This doesn’t need to be that early! If they called their insurance agent “before calling the number on the screen” they might have gotten a better picture of the pros and cons of different health insurance coverage options.

9. Your friend realized Social Security and their 401(k) won’t cover their expenses. Didn’t someone tell them before that Social Security is only a part of your retirement income? It’s not meant to be your entire retirement income!

Early action: If your friend sat down with you to discuss financial planning, they would have had an idea how much they would need to save for retirement and how to start.

10. Your client discovered while on vacation, their health insurance stops at the border. Unfortunately, they were on a ship in the Mediterranean at the time. Apparently “I’m on Medicare” aren’t the magic words they thought.

Early action: If your client told you their vacation plans in advance, you could have helped them find medical insurance that would cover them for the time they were away.

11. Your friend died, leaving the family with a mortgage on the house. It’s a dual income household, but they were spending every dollar just trying to make ends meet.

Early action: If they bought life insurance when they married, they would have a lump sum payment that might have been able to pay off the mortgage. That would reduce stress on the surviving family members.

You’ve heard sayings about the wisdom of buying insurance early. Perhaps friends and clients need to be reminded why they might need it.

Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor” can be found on Amazon.