Some customers have a negative view of financial advisors who sell life insurance. Additionally, the work of a financial advisor is to be the invincible fiduciary, representing only the client. Having a financial advisor that can sell life insurance may seem incapable to some individuals. However, many financial advisors wear various hats and every significant financial plan offers a life insurance policy.
There are various reasons why financial advisors would want to sell life insurance to their clients. These involve the commissions and the chance to offer additional wealth planning services, which enable them to fulfill the client’s requirements. However, the disadvantages include the difficulty most advisors experience when discussing life insurance with clients and the criteria to understand a new area of expertise. In the article, we will explore some of the major reasons why financial advisors sell life insurance as a crucial component of a good financial plan.
What is a Financial Advisor
A financial advisor is an expert that is responsible for giving financial advice. Most people view financial advisors as a group of people, such as investment advisors, stockbrokers, and financial planners. Financial advisors have multiple certifications or professional selections if they have experience in a certain field.
For instance, you might partner with a chartered financial consultant (ChFC) or a certified financial planner (CFP). Moreover, a license to sell insurance may also be acquired by Registered Investment Advisors (RIAs) to offer advisory services. Many customers may need a financial advisor’s help with planning a budget, college preparation, estate planning, saving and investing, retirement planning, and taxes.
Why Financial Advisors Sell Life Insurance
You may have noticed that a financial advisor you work with usually wants to sell life insurance as part of a financial plan. In addition, there are various reasons financial advisors would sell life insurance to clients and it would be outlined below.
Offering financial coverage to your family
The main purpose of life insurance is to cover your family financially when you die. It serves as a safety net to guarantee that your loved ones can continue to live comfortably even if you stop earning money. Funeral costs, unpaid debts, mortgage payments, and even replacement income for a spouse or children can all be covered by life insurance. Financial advisors put your family’s health and financial stability first by selling life insurance, even during unanticipated events.
Transferring wealth and estate planning
Life insurance can be a very effective tool for wealth transfer and estate planning. To make sure your beneficiaries get the full value of your estate, you can use the proceeds from your life insurance policy to pay estate taxes. It can assist in preventing the need to liquidate assets fast or leave your loved ones with a sizable tax bill. Furthermore, life insurance can be used to distribute assets fairly among beneficiaries by distributing inheritances equally among them. Your legacy is protected and enhanced by financial advisors through the addition of life insurance to your plan.
Supplementing retirement income
Life insurance is a useful tool for augmenting retirement income. Over time, life insurance policy types, like permanent life insurance, may accrue cash value. During retirement, this cash value can be accessed as a tax-efficient source of additional income. Financial advisors understand that life insurance can offer an extra degree of security in retirement. This may occur for individuals who are worried about running out of money or having to pay for unforeseen bills.
For key personnel and business continuity
To ensure business continuity, life insurance can be extremely important for business owners. Life insurance provides funds for bills, debt settlement, and smooth business transition in case of a major employee or business owner’s death. Key person insurance is the term used to describe this kind of coverage. A few financial advisors stress the value of key person insurance in securing the company’s future. Advisors show their dedication to preserving the viability and success of small and large businesses by endorsing life insurance products.
Major Benefits of Why Financial Advisors Sell Life Insurance
Financial advisors are aware of the many advantages life insurance provides to people, families, and companies. Financial advisors can sell life insurance to enhance business continuity, wealth transfer, retirement income, and financial security. Working with a professional financial advisor can help you understand the right type and quantity of life insurance coverage for your specific needs and objectives.