By: Sam Kaufman, President, Agent Support Group
Inflation is all over the news as the Federal Reserve increases key interest rates in an effort to retard its rapid acceleration. While retailers appear to be the first to notice changes in buyer’s habits as indicated by Walmart in their most recent quarterly financial report. Other industries, such as housing, are also experiencing declining sales as buyers wait for mortgage rates to return to their historic lows.
What does this mean for the life insurance industry and financial advisors. First is that breadwinners need to rethink how much life insurance they need to supplement their other assets in order that their families have adequate funds for maintaining their lifestyles without a financial hardship. At age 40 a 20 Year Term policy with a death benefit of 1,000,000 may be purchased for as low as 577 annually. Why would anyone not protect their family by providing a reserve line of credit in the event of their death for .057% annually? The same holds true for business owners relative to keyperson protection if their business became financially impaired due to the loss of a keyperson.
Even wealthy people need to rethink their financial plan as the old 4% rule of thumb may no longer be applicable. Are those approaching retirement have sufficient funds and is there need for a cushion in the event of one partner’s death?
The Federal Reserve may tame inflation in the near term, but the cost of living will always continue on an increasing trajectory. No one has ever died and left too much money for the protection of their family or business. Now is an opportune time to speak with your clients about creating a reserve line of credit.