One avenue investment brokers and financial advisers should consider is cross-selling insurance products as part of an overall retirement portfolio. Cross-selling products such as life insurance, long-term care insurance, and disability coverage offers opportunities to increase your revenue. These policies can also protect your clients’ financial assets and the well being of their families should they pass away, experience a catastrophic illness/injury, or require long-term care.
Cross-selling and the world of RIAs
Cross-selling as been a viable business tactic for years. Just look at Amazon. One reason the retail giant came to have world dominance is through cross-selling (or in Amazon speak, the “also boughts”). If a customer bought Product A he or she might be interested in a similar Product B. Managing investment portfolios is a similar concept. You share tips and suggestions about related products (in this case insurance) that offer further financial and asset protections, while increasing your commission.
As a Registered Investment Advisor, you need to become a master of the cross-sell. It simply makes sense to open up new avenues of revenue by tapping into your existing client base by offering the full spectrum of your services. First, it opens up a consistent new revenue stream. Second, it’s less costly to cross-sell to existing clients than to bring on a new one. Finally, you’re creating loyal clients who are less likely to move their assets elsewhere.
Insurance Products that Make Sense
Most people associate retirement planning and investments with an IRA, 401(k) or stocks and bonds. However, there is one essential element that might be missing from your clients’ portfolio. Insurance products are necessary in terms of your clients’ long-range plans, including protecting their assets, covering unexpected medical expenses, and protecting their families should anything ever happen to them. There are a number of different insurance products out there, so how do you know which ones to recommend to your clients?
4 kinds of insurance coverage to consider and how to sell them to your clients
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Life Insurance
Buying a life insurance policy is a good idea, even for young adults. Accidents, injuries and sudden illness can happen at any age, so it’s important to make sure family members are protected in the event of a tragedy. If your client is married and/or has children, life insurance is especially vital as it can help protect their beneficiaries and ensure they remain financially secure. Life insurance should even be a consideration for single individuals, so that any funeral expenses or debts can be paid off, without putting a financial burden on anyone.
Selling the benefits of life insurance to your clients:
- Liquid asset – Life insurance is considered a liquid asset, so it can be distributed to beneficiaries as cash right away upon the person’s death.
- Easy distribution – Policyholders can list as many beneficiaries as they want and split assets any way they choose.
- Earn value – Some insurance policies can earn cash value on a predetermined schedule so the policyholder always knows how much it is worth.
- Guaranteed amount – Some life insurance policies have benefits that may never change and are not subject to downturns in the market or economy.
- Tax advantage – Some Life insurance policies are tax-deferred, and assets may also be distributed to beneficiaries tax-free.
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Long-term care insurance (LTCI)
LTCI is designed to cover long-term care support and personal care, whether in the person’s home, an Assisted Living Facility (ALF) or nursing home. These policies reimburse policyholders a set amount for services and can also help with daily activities such as bathing, dressing and cooking. People are not only living longer, they are living longer with chronic illness. It is not always possible for family members to provide the care an aging adult needs.
Selling the benefits of LTCI to your clients:
- An ALF can cost as much as $5,000-$6,000 a month.
- Even if your client gets home care, the cost can quickly add up.
- Without proper protection, your client could run through their savings long before they pass away.
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Final expenses insurance
Final expenses insurance is designed specifically to pay for medical bills and funeral expenses. It is sometimes called burial or funeral insurance. It is considered an asset and distributed as cash. Funerals can cost thousands of dollars and this type of coverage will ensure that family members do not have to endure a financial burden when making final arrangements. It might surprise you to learn just how expensive a funeral can be. Most people have no idea. With no insurance or pre-planning the cost will be left up to family members.
Selling the benefits of final expenses insurance to your clients:
- A funeral can cost $7,000-$10,000.
- Final expenses insurance ensures that family members do not have to endure a financial burden.
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Disability insurance.
Disability insurance can provide short-term and long-term coverage to pay a portion of a person’s income if they are sick or injured and cannot work for a period of time. Some employers offer disability insurance as part of the company benefits package, but not all do.
Selling the benefits of disability insurance to your clients:
- Most households only have enough savings to cover a few months worth of bills
- 29% of households have less than $1,000 in savings.
- Disability insurance can keep a family afloat in the event of a lost income.
Insurance policies are a smart investment to include in your client’s retirement portfolio. Additional insurance coverage can help pay for expenses related to medical care, long-term care, accidents or serious illness. Cross-selling these products can also increase your revenue as a financial broker and advisor. You will also be providing services that can improve client relationships by helping to protect their assets.
PKS Investments is a full-service broker/dealer and financial services firm. We have over 500 locations and 1200 Registered Representatives, offering state-of-the-art products and technology. Our Registered Investment Advisors (RIA) have the freedom to offer a full spectrum of investment choices, including insurance policies as part of a long-term financial strategy. If you are an RIA, contact us today to discuss your future.