Financial advisors miss chance to add life insurance into estate planning

Oct 10, 2011

Financial planners should consult clients on the importance of adding life insurance to their estate planning.

A recent survey conducted by Saybrus Partners found many financial advisors do not properly educate clients on the importance of life insurance as a financial planning tool, and both advisors and clients miss the opportunity to incorporate life insurance into the estate planning process. The survey found about half of adults who are working with a financial advisor have discussed adding life insurance to their financial plans.

National sales manager for Saybrus, Kevin Kimbrough, said that insurance offers clients with tax efficiency a potential for continued income and a way to transfer wealth. According to Kimbrough, not discussing life insurance with clients not only hurts the client's financial planning, but it ignores an opportunity for financial advisors to set themselves apart from the competition.

"Additionally, there are benefits to including assets such as life insurance that are not tied to the financial markets and therefore not subject to the same volatility we are currently seeing," Kimbrough said.

The survey reported 15 percent of respondents who have discussed life insurance with their advisors said the conversation took place more than 10 years ago, while 40 percent have discussed the topic in the past 12 months. Over the last two years, 34 percent of respondents with a financial advisor were recommended to add some form of insurance to their plan, but only 24 percent were advised to include life insurance specifically.

The U.S. Census Bureau reported in a summary of life insurance activity that between 1990 and 2008, annual life insurance policies in force decreased from 389 million policies to 335 million policies, and yearly life insurance purchases dropped slightly from 28.7 million to 28.6 million. 

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