A Blend For Life: A Two-Pronged Solution For Young Families

Admittedly, I’m not a fisherman. I don’t like the thought of putting a worm on a hook, taking a fish off one—or touching either one. That said, in the life insurance world, fishing is a familiar sales analogy and it can be useful. However this isn’t a story about the epic “whales,” the memorable big cases. Rather, this is about the many schools of smaller fish you’ll find in every nearby creek and pond.

Although these smaller catches make for a less-exciting fish tale, they deserve your attention—and they’re more attainable, too. They can make a very desirable prospect for those who take the long view, especially when you know what to offer them.

An Often Overlooked Prospect: Young Families
In my experience, newlyweds and young families on a budget make excellent life insurance prospects, yet they are often overlooked. For starters hey have dependents, so they seek lifetime protection and the peace of mind it brings. If something happens to them, they want to make sure that there’s income for the family, the mortgage gets paid and the kids can go to school. Long term, they want financial growth for themselves and hope to build a generational legacy.

Often they have only group coverage through work, which will terminate when they leave or retire. If they’re proactive, they may have purchased a separate term life policy online or even a guaranteed universal life policy—one that offers the longevity of permanent coverage but not the flexibility to adapt as life changes.

In short, they may never have had the opportunity to interact one-on-one with an experienced advisor who’ll listen to their goals and offer personalized solutions. And as smart and grounded as they are, they’re likely to recognize that they now need the expertise of a skilled advisor.

That’s where you come in.

A Simple, Overlooked Solution: Blended Life Coverages
There are many products you could offer these families. But one solution that works amazingly well—that provides valuable life protection but is also budget-friendly—is to offer a blend of complementary coverages, specifically:

  • A guaranteed, permanent, whole life policy, with level premium, a level death benefit and cash accumulation feature, and,
  • A budget-friendly term life rider that multiples their death benefit.

This combination provides a meaningful death benefit, but factors-in the client’s limited cash flow. It’s a budget-friendly solution that can be adjusted to meet each client’s needs, because no solution should be one-size-fits-all.

Case Study: Eric and His Family
Eric is a 28-year-old male, non-tobacco, preferred risk, with a wife and new baby girl. He wants to protect his family, but they’re on a modest budget and worried about the rising costs of living.

When an insurance advisor contacts him, Eric is ready to listen. He tells the advisor that he can spend $150 per month on life insurance. His advisor wisely suggests pairing $130k of permanent whole life with $370k of term life, provided through a 20-year rider.

For just $150 per month, Eric now has $500k of valuable life insurance!

And that’s just the beginning. Ten or 20 years down the road, as the policy’s cash value grows (and the family’s paid their mortgage down), Eric may elect to cancel the term rider.

Or, perhaps their family income has increased so they can convert that term coverage to guaranteed whole life—without providing evidence of insurability.

Either way, the accumulated cash value now offers them flexibility—whether to consider future premium options or as a fund they can access for any reason.

And depending on the policy, the family may elect some added benefits such as an Own Occupation Waiver of Premium rider in case of disability (for $7 more per month) or an Accelerated Death Benefit Rider with terminal and chronic illness benefits (at no additional premium cost).

Plus, when Eric retires at age 65, he can elect a Reduced Paid Up option on his original whole life plan. This will reduce his permanent coverage slightly—from $130k to $126,900—but means he will never need to pay additional premium, ever. He’ll continue to have access to his cash value and his Accelerated Death Benefit Rider will never expire.

In other words, this policy arrangement gives Eric and his family a ‘permission slip’ to make changes to the coverage as needed. As we’ve demonstrated, it’s so flexible the death benefit coverage can continue even if he stops paying premium!

A New Solution to Offer New Prospects
In insurance sales it’s easy to get stuck in a rut—to offer the same products to the same type of client. This budget-friendly “blended” solution offers you a chance to dip your toes in a new pool of prospects. It can be a gamechanger for young families, while helping you build life-long client relationships.

You don’t need to set your sights on a whale in order to bring home a prize.

Kathleen Johnson, CLU, FLMI, ACS, has been the regional sales vice president, Northeast region, for Mutual Trust since 2021. Johnson supports independent agents by providing life insurance sales solutions that help attract clients and serve their needs. Since joining Mutual Trust in 1998, Johnson honed her operational and sales expertise through experience in a variety of new business, policyowner service and sales development roles. Her well-rounded background is an asset to the producers she supports.