Three Core Beliefs About Permanent Life Insurance

Over the past 30 years, I've had a diverse background in the financial services industry. I spent the first 12 years of my career as an advisor and lifetime Million Dollar Round Table (MDRT) qualifier. Then, I became a managing partner of the Effner Financial Group, managing 117 full-time advisors, insuring over 65,000 policyholders and a face of amount of nearly $27 billion. Now, each year I work with hundreds of reps across the country helping them transform their potential into performance.

One of the key elements that’s made me successful in each of these stages is my belief in permanent life insurance. Clients tend to make purchasing decisions through emotion not logic. So it is critical to your success as a financial advisor to find out what you believe. Those beliefs will shine through in your presentations to clients. If your beliefs aren't in line with your language and actions, they'll sense it. However, when everything's in alignment it makes you a far more compelling and effective financial professional.

With this in mind, here are three of my strongest beliefs on permanent life insurance.

Forced Savings

First, permanent life insurance is a great forced savings plan. The reason is that people pay their life insurance premiums automatically in order to keep the policy. They may miss contributing to their kids’ education plan or their IRA due to competing priorities, but they’ll never miss a premium payment. I know that I haven’t.

As proof, pull up a typical clients’ financial history. Their biggest asset, other than their home, is usually a 401(k), which is also a type of forced savings. Like permanent life, it doesn’t require clients to have a tremendous amount of self-discipline to achieve a positive result.

If you ask a client, “Mr. Prospect, you’re 35 years old with $100,000 in your company’s 401(k). How much would you have if you could have spent the money?” Most will answer “none.” The importance of forced savings cannot be overemphasized.

Unfortunately, the dilemma for most clients is that their 401(k) is not enough. They need to replicate the forced savings element in their personal planning, and permanent life provides the ideal vehicle.

Advisors often adopt a self-defeating attitude about permanent life insurance. Before a meeting, they might have thoughts like, “A thousand bucks a month is a lot of money” or “twenty to thirty years is such a long commitment.”

If these thoughts get in your head, imagine how your clients will feel! A commitment to a long-term savings program is exactly what your clients need. In fact, if they had it 5 or 10 years ago, they would be so much better off today.

Tax Deferral

The tax treatment of permanent life is a big deal for your clients. They can have an asset that builds up for decades with zero tax liability. Tax deferral is one of the greatest gifts the government has to offer. Deferring taxes means that as long as your clients leave the money in the account, they do not have to pay tax on the accumulated dividends, interest, and/or capital gains. How many other assets offer this great benefit?

You can tell how good the tax advantages of permanent life are when the government tries to impose some limitations. There are modified endowment contract (MEC) rules that limit the amount you can contribute and still qualify for the favorable tax status.

Think of it like the Roth IRA, where the government also puts limits on the amount that can be deposited. Help your clients understand how the tax status of permanent life will make it easier for them to achieve their financial goals.

Guaranteed Death Benefit

The belief that I’m the most passionate about is that everyone needs life insurance when they die. Permanent life insurance has a guaranteed death benefit whether someone dies at 30, 50, or 104.

Suppose you meet a 35-year-old couple with young children. They know they need life insurance to protect their family. However, in the back of their minds, they are thinking that they only need life insurance for 20 years or so. At 55 years old, their kids (hopefully) will be on their own, their house will be paid off, they’ll have plenty of money, and life will be grand. They think they won’t need life insurance anymore, and, therefore, term insurance is a good solution.

Logically, this scenario might make sense. Yet if you think about your clients who are 55 years old, who feels like that? The short answer: nobody. They are still concerned about not having enough for retirement, still have debt, and their kids’ college tuition is a drag on their budget. They will have a need for life insurance beyond age 55. At 35 they can’t see it, but your job is to help them see it.

Building a Legacy

Next, consider a recently retired married couple with $1 million in assets under management. They have children and grandchildren. This couple has both a fear and a desire. Their fear is that they will outlive their money and be a burden due to health or long-term care needs. Their desire is to create a financial legacy for each of their kids and grandkids.

Based on their fears and desires, they will attempt to preserve the $1 million, not spend any of it, and live off their Social Security income. However, imagine if they had purchased a permanent life insurance policy while they were in their thirties, and funded it for twenty or thirty years so it was paid up when they reached retirement. Their lives today would be so different!

Their permanent life insurance policy would free up their other assets, ensuring that they could leave a legacy. They could enjoy spending the $1 million in assets on their own lifestyle needs. Yet, without life insurance, they’re stuck worrying about how much they can spend and still accomplish their legacy goals. It's important that people are aware of these possible outcomes when they are in their thirties and forties.

These three beliefs are part of my core beliefs of why permanent life insurance is so important. Internalize these beliefs and I promise you that it will help you become a more effective financial professional and strengthen your sales process.

However, these beliefs are just the tip of the iceberg. For a discussion of all seven of my beliefs on permanent life insurance, check out the “My Beliefs” course in my P2P Academy. The My Beliefs course has 44 training videos that cover my beliefs, not just on life insurance, but on disability insurance, saving for retirement, long term care, overcoming fear, and more.

It's one thing to read these posts, but you'll get more out of this by being able to watch these videos, hear and see me, and then watch them over again until you've mastered your mindset. Best of all, you'll just be getting started since we have over 150 training videos on P2P Academy that cover everything I've learned throughout my 30 years in financial services, including proven sales processes and language in all stages of the sales process, from prospecting to annual reviews. Best of luck to you!


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