In the last few months, the world has turned topsy-turvy. Situations on which we depended have changed overnight, and for some, sources of income have been reduced to levels which are deeply concerning. The ability to support dependents financially—and even socially—have become very real problems for many people. Here are some of the issues in this post-lockdown scenario:
*Ability to meet monthly debts
*Volatile stock markets
*Unforeseen health issues
*Just putting food on the table for the family
The list is long and different for everyone. Keeping personal or family finances on an even keel take up most of the list. There appear to be no guarantees. People are appreciating, more than ever, how critical it is to ensure financial security for their dependents, either during their lifetime or as a cushion for the family when the major breadwinner dies.
That’s where that life insurance policy comes in…the one they invested in when they were just beginning their careers, bought their first home or had their first child. Post COVID-19, when life regains some semblance of normalcy, people need to have kept that wisely purchased ‘protection against risk’ so that financial security for the family is secured in the future. Insurance was created for just such a reason—in case of major threats to one’s family’s security. This is exactly the situation COVID-19 has created.
It runs contrary to all that careful planning when policyholders surrender or lapse their policies in the throes of a crisis.
And yet, that is exactly the phenomenon facing the life insurance industry. When confronted with the biggest threat to financial stability in our lifetime, people are foregoing insurance payments as a quick fix to finding ready cash.
WHY IS LIFE INSURANCE IMPORTANT?
The effects of COVID-19 are going to be felt well into the future. In the same way that Trinbagonians have embraced using masks, hand-sanitising and self-quarantining, all of which have minimised the threat of the virus to our citizens, the same principle applies to invest in life insurance. COVID-19 best practices, like wearing a mask, are the obvious, visible ways of protection. Insurance works quietly in the invisible background to protect a different but critical kind.
Here’s a quick look at some very good reasons for maintaining that life insurance investment:
*Replace Lost Income
Life insurance is a financial security net for the family when the major breadwinner dies. We all have experiences of people shifting off their mortal coil with no warning whatsoever, leaving the family to ‘ketch’.
*Cover Burial Expenses
Even a basic funeral service can run upwards of several thousand dollars. Insurance removes that immediate burden from the bereaved.
*Pay Off Debt
Debts don’t disappear when someone dies. Where a couple have co-signed for a mortgage or other loans, one will be left holding the bag if the other dies. The other outcome could result in creditors trying to collect from the deceased’s estate. While that gets rid of debts, it also leaves heirs with a depleted balance. Life insurance covers those lingering financial responsibilities.
Where the policy has built up a sizeable cash value, the policyholder can choose to take out a loan against the policy at interest rates lower than a traditional bank loan.
*Business Planning for Business Owners
Business owners must maintain their life insurance. It ensures that the hard work of the business owner is not lost because of obligations that accrue if the owner dies. In the case of a partnership, both parties should ensure that each other is covered. That way, if one dies, the other isn’t left with a financial burden.
*Peace of Mind
No one can truly predict the future. But having life insurance means people can be better prepared for any eventuality. That kind of peace of mind is invaluable and ensures a restful sleep at night.
Science has not yet provided a reverse process for ageing. People get older, not younger, and comfortable retirement is what most people aspire to, at whatever age they choose to take it. Life insurance offers the freedom to call it quits and keep those ‘golden years’ burnished because of the insurance payout.
OPTIONS FOR MAINTAINING LIFE INSURANCE POLICIES WHEN FUNDS ARE TIGHT
Many policyholders prefer not to surrender their life insurance once they’re given viable options.
One insurance company, Tatil Life, has been pulling out the stops to support policyholders while they come to grips with the deprivations the virus has wrought on the lives of some. The company has been working with clients on an individual basis to support special situations during this period.
There are several alternatives to surrendering a policy which the insured should discuss with his or her agent, as these can offer a measure of relief very quickly. Agents can hold virtual meetings easily, adhering to COVID-19 safety practices.
TALKING FROM EXPERIENCE
Ronald Milford, managing director, Tatil Life:
“I often think about the power of what we do. We have all been to retirement parties, where the retiree can enjoy this new stage of life, in comfort, because ‘what we do’. We have seen people moved to tears because they don’t have to go scratching around for funds to pay for an operation or critical illness treatment for themselves, or someone they love, because of ‘what we do’. That’s very fulfilling.
Insurance is the delivery of a promise in the future. Gaining the policyholders’ trust and confidence is the first step. Reinforcing the promise with adequate and effective protection of their interests is the second. The result is meaningful client engagement, where every partner in the transaction benefits.”
Trudy Pedro, Top Performing Tatil Life Agent, Brian Pedro Agency:
“I began this career simply to make a difference in the lives of others. I remember clearly the day I handed over the signed insurance contract to a dear friend with the words, “God forbid if something unforeseen should happen, but now your children will be taken care of.”
Like many others I have encountered on this journey, my friend had a lot of monthly commitments and was also in the process of constructing a new family home. Her budget was limited, and while I made several attempts during annual reviews to encourage her to purchase more life insurance to keep up with the growing needs of her family, she was unable to.
“My friend never knew the place, the time or the hour when she would leave this world, and on that fateful day when she said goodbye to her children and departed for work, they had no idea that it would be the last time they would see their mom alive. In an instant, their world changed, and while no amount of money could ever compensate for the pain they feel every, single day, I take comfort in knowing that their future is still promising.
“If my friend had taken the easy way out and cancelled her policy or stopped her payments during difficult times, where would her family be today? How very different their future would now look. My advice to everyone who is going through tough financial situations now, imagine life for your family without you, the main income earner of your household. Imagine your loved ones with no financial stability and no one capable of providing for them as you do.
“Protecting your family is the most loving, responsible act of a parent.”
Walter Stewart, Tatil Life agent with the Keith Charles Agency:
“In my 23 years in the insurance industry, it’s still gratifying to see the expressions on family members’ faces when they receive the claim cheque of the proceeds relating to the death of their loved one. While this cheque—no matter its dollar value—in no way replaces their loss, it guarantees that life, livelihood and longevity continue. Such assurances bolster my belief in the need and importance of life insurance and the reality that living is more comfortable with a life policy to protect you.”
Christopher Wright, Tatil Life agent with the Cyril Murray Agency:
“Early one Sunday morning—very early, it was still dark—my phone rang. It was a lady, hysterical. I learned that her husband had died in a car accident on the way home from work. He had invested in a personal accident plan because he had a high-risk job. His wife was the one that pushed him to take it out. In shock from the terrible news, and at a loss for what to do, she called me. Her husband had only been a customer for two months, yet the couple’s interaction with me meant that the wife could turn to me in her moment of greatest loss and need.
“In the end, she received $400,000 plus additional benefits, with only $300 paid on the premium. But that is not the point of this story. Today, that lady still calls me every time she wants insurance-related or other kinds of advice. She sent me photos of her daughter after her SEA exam. The other day she called me to find out if I could recommend a good tile man to redo her bathroom floor.”
HOW A CONSERVATION MANAGER WORKS WITH CLIENTS
Claudine Allert’s day centres around decompressing clients who feel that relinquishing their policy right now is vital. Here are some of her stories in the area of conservation. The dictionary definition of conservation is “prevention of wasteful use of a resource,” which aptly describes Claudine’s role.
A story of a client’s Universal Life Policy:
“She was told that this policy would give her "premium holidays." She had never heard the term but was soon to experience the reality. Her parents passed away and she could not pay the premium. It was a blow from which she could not recover in a short time. She wanted money to assist with the burials and could not see her way to pay this or any policy for at least a year. She visited the office to terminate the policy for cash. The agent gave her excellent advice about the "premium holiday." She took an interest-free loan which could be paid off at any time in the future and took some time to reinstate her position of regular premium payments, when she was comfortable doing so, for a year. She never thought that a holiday could be enjoyed in this way!”
A story of a client’s annuity–creating a comfortable future:
“She was the single parent of three children. Her salary was not enough to cover all her expenses and she took loans to make ends meet. Just $100 a month, which she could put aside without thinking of it, would grow little by little over the years. You must decide what is important to you now, I told her, and what is important for your retirement package. After two years she reviewed her annuity. She asked for a projection and imagined her life in the future.
“She could have a large sum of money at age 60. She increased the payment to $200 and continued to look at the accumulation. She was able to claim back the taxes, which was a small saving to her policy, and she gradually increased the payment over time. By retirement, she was all smiles. Her income—although not at the level of her salary—comfortably met and surpassed her needs.”