In an age where less than 50% of Americans have enough money put by to cover the cost of a $1,000 emergency, financial security is a huge concern. As an insurance agent, now is a good time to emphasize the importance of being financially secure to prospective clients, while also providing you with plenty of opportunities to up-sell on policies.
However, it’s important to be tactful. The reason why so many people are reluctant to talk about the path to financial security is because it isn’t a particularly exciting subject. On top of this, becoming financially secure takes discipline, investment and a little bit of calculation. Clients will often be reluctant to admit to themselves – and you – that they might not be particularly adept at when it comes to these strengths, so it’s best to start off by keeping things simple.
If you’d like to suggest to clients how to begin their journey towards financial security, here are some of the basic building blocks they’re going to have to put in place. Remember to emphasize that from little acorns large trees grow. While achieving financial security takes time, taking out even a small insurance policy while implementing the following money management procedures will help – and it’s up to you to explain how.
1) Keeping Track Of Spending
To become financially secure, people need to understand how to budget. Everybody has different ways of spending their money, so there’s no “one size fits all approach” to this. The only way to budget accordingly is to keep track of what you’re spending, why you’re spending it and when.
Encourage your clients to look through their monthly bank and credit card statements, then compare their average monthly income to this. If they are consistently breaking even (or even spending more than they earn) each month, it might be time to suggest they take the Marie Kondo approach to clutter, and apply it to their finances. If you help clients to identify expenses they don’t need, they can cut them and free up funds for a life insurance policy.
2) Creating A Fund For Emergencies
Explain to your clients that they should try to put away enough cash to cover living expenses for at least three months (or longer if possible). This means having enough money set aside to cover things like mortgage or rent payments, utility bills, insurance premiums and everyday expenses like food – for a while, at least. The purpose of an emergency fund is to ensure families remain financially secure during troubling financial times – if a family member loses their job, needs to repair a car or faces an unexpected expense, for example. Encourage clients that they can begin this process by saving as little as $20 per month.
3) Paying Off Existing Debts
Debt is a major barrier to financial security and independence. The longer it takes to pay back what you owe, the greater the interest owed, and the less secure the finances of your client will be. Try to explain that allocating as much expendable income as possible towards debt repayments every month is the way forward. The quicker your clients become debt-free, the easier they’ll find it to prepare for the future.
4) Saving Money!
By saving, prospective clients will be in a more comfortable position to afford insurance payments. Highlight the fact that the sooner they begin to start putting money aware for the future, the more secure they’ll be – even during times of market volatility. New savers don’t have to start big, either: for example, if their employer offers a 401(k), you should encourage them to contribute to it. If their employer agrees to match their contribution, they should be encouraged to put away enough to get the full company match if possible. This is essentially free money that will ensure financial security in the future.
5) Get Insured
Most people worry about the financial security of their family members, which is why so many people consider taking out a life insurance policy. By encouraging prospects to be more fiscally responsible, you’re helping them to have greater expendable income which can be used to pay for life insurance to ensure financial security for all the family in the event of unexpected death.
If you’d like more information on how to explain to potential clients how a life insurance policy can help them to be more financially secure in the future, please do not hesitate to get in touch with us today. A member of our training experts will be happy to answer any queries you may have.