Selling Life to Boomers

When working with Baby Boomers, first determine the amount of coverage they need, then decide which product fits the bill.

By Lucretia DiSanto Jones

In a way, insurance and financial advisors working with Baby Boomer clients must wear two hats to deal with two different scenarios. On one end of the Boomer spectrum are those clients who, in their mid-40s, are still young. On the other end of the spectrum are those Boomer clients who are very quickly closing in on their 60th birthday.

No matter where your Boomer clients fall on the spectrum, life insurance must be part of their overall financial plans, according to John Putnam, CFP, CLU, a member of Charlotte AIFA (N.C.) and a financial representative with Northwestern Mutual Financial Network.

Amount first, product second
The variance in Boomer client needs is the reason Putnam, like many advisors, works hard to get Boomer clients “out of the box.” Using a factfinder or a personal, confidential questionnaire, Putnam uncovers what makes his Boomer clients tick and what they want life insurance to do for them.

Some say they want to pay off debt, cover final expenses or fund higher education. Some more mature Boomers will mention charitable giving. Ultimately, the purpose of these talks, says Putnam, is to first determine the amount of life insurance they need and then identify the product they need. “You want the right amount to go to the right people at the right time,” he says. “When the smoke clears, the main goal that most have is that they want their families to stay at their current standard of living.”

Boomers may be especially averse to talking about these weighty issues, however, mainly because many of them don’t want to make changes in their standard of living to pay for life insurance coverage. When talking to Boomers about life insurance needs, Putnam is straightforward. “If you need it, buy it. If you don’t need it, don’t buy it. Either you have enough assets to provide for your family if you die,” he says, “or you don’t. So you need to create assets for when your family will need them the most.” 

The need for owning life insurance exists over the course of a Boomer’s planning years, but the reason for having it changes. While younger Boomers are more likely to need it to create assets, older Boomers may need it more to protect their assets.

Product options
Once Putnam and his Boomer clients have nailed down the amount of insurance they need, they look for the right solution together.

“If you’ve got a Boomer client with a big life insurance need, but he’s not doing other things, like saving for retirement, term might be the way to go. With increases in life expectancy, rates for term insurance have really come down in the past five years. So it’s too affordable not to solve the problem. But if a Boomer needs a death benefit in place for more than 10 years,” says Putnam, “he should consider a more permanent insurance solution.”

Paying for it
Objections pop up when the advisor talks about the cost of the coverage. Putnam finds that once he explains the potentially devastating effects of not having insurance, clients and prospects are more likely to accept its cost. Besides, Putnam helps clients make it work. “If someone says, ‘I don’t have the money,’” explains Putnam, “I will say, ‘Let’s look at what you spend.’” People need to understand that they may not be using their money in the most efficient manner.

Here’s an example he used during a news story with a local television station. He asked viewers if they would pay $4,000 a year to buy a cup of coffee every morning; go out for a salad, a sandwich and a drink for lunch every day; then order a pizza instead of cooking dinner at night. When you add this up, Putnam explains, the annual cost is over $4,000. He then asked viewers, “If you had to write that check, would you still do these things?”

Putnam says it’s an incredibly powerful example for Boomers. Luckily, “most Boomer clients don’t object to life insurance once they understand how it works, how they can afford it and why they should afford it,” he says.

And remember, amount first, product second.