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Protect and grow your clients wealth

Capital (not earnings) provides us with real security and peace of mind, because earning power can easily cease or diminish with death or disability. And only a large amount of capital will have the ability to produce a sufficient flow of income to meet a future goal. That's why its important to protect what your clients are saving for. Here are two clever ways of explaining to your clients how savings and life insurance can work together.

The scales

Your client needs a total of USD 500,000 to pay for this three children to go to college. This amount will cover all of the tertiary fees and the accommodation costs for his children. To reach his savings goals your client starts a monthly savings plan so as to put aside money to create the capital required.

He has planned well and there is plenty of time before his children go to university for him to build up USD 500,000. The monthly premium he pays to achieve this goal is USD 2,000 over 20 years. He also takes out a protection plan with the sum assured of USD 500,000. His monthly premium for this protection is USD 100.

Which way do the scales tip?

After just two months, your client dies in a car crash.

His savings plan at the point of his death is worth very little due to its infancy, and so his payout from the insurance company is not a significant sum.

However, his protection policy, which he also paid just two premiums into (or USD 200) pays out the whole sum assured of USD 500,000.

This means his wish for his children to all attend university can still be met.

Use the attached sales aid with your clients to explain the ‘’scales’’ approach to why growth needs protection.

The elevator

Looking at the same client’s situation another way, his goal of saving USD 500,000 is like reaching the top of a 50th floor building, with each floor representing USD 10,000 of his savings need.

Using the stairs to reach the 50th floor is what he is doing by saving, working systemically upwards, climbing floor after floor until the savings goal at the top is achieved. There is little doubt his goal can be reached provided he saves and invests successfully.

However, if something happens to him after going up just four floors (so having invested USD 40,000), his family will receive only what has been saved to date (less charges and plus any growth achieved), not the amount that he originally planned to reach to put his three children through university

Stairs versus the elevator

By taking out insurance, your client has ensured that there is an elevator going direct to the 50th floor. He only needs to press the button and no matter what happens along the way, the elevator will still reach the 50th floor (and his savings goals), ensuring his children get to university.

Use the attached sales aid with your clients to explain the ‘’elevator’’ approach to why growth needs protection.