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How Do I Save Money on my Life Insurance?

How Do I Save Money on my Life Insurance?

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Good advisors put life insurance policies in place. Excellent advisors put the right policies in place and are there at the hour of need – when there’s a claim

Whenever I talk to financial advisors about the good that they do for their clients, I always reference this quotation:

“If I had my way, I would write the word ‘insure’ over every door of every cottage and upon the blotting pad of every public man, because I am convinced that, for sacrifice that are conceivably small, families can be secured against catastrophes which otherwise would smash them forever.”
— Winston Churchill.

The value that a contract for life insurance brings is so substantial, that it is a requirement when arranging a mortgage in Ireland. However, there is also substantial value that the financial advisor brings to the process of arranging the contract.

The role of a financial advisor

A financial advisor is appointed as the agent of the life insurance company, not only to sell the policy and assist with the underwriting of the contract at outset. What is sometimes overlooked is that the financial advisor will often assist in dealing with a claim and, when this relates to a contract for life insurance, this is at a time when a family member has died.

In these circumstances, the financial advisor finds themselves elevated from the role of ‘life insurance salesperson’, to a pseudo-bereavement counsellor, sensitively assisting in managing what could be a huge financial transaction, at a time when the beneficiaries are grieving the loss of a key member of the family.

Whenever a financial advisor engages with a client’s claim they give a small part of themselves to the process, since it’s impossible not to be emotionally involved when we can have such a dramatic impact on our client’s lives.

The real value of life insurance

Getting the cheapest insurance isn’t always a good idea. It may seem like a good idea when you are paying the premium and we often hear of wanting to ‘cut out the middleman’, but what happens if there is a claim? Knowing that someone will be there at the darkest hour to help to manage the finances is literally priceless and certainly worth a few euro a month.

One of the best ways to illustrate important concepts is by way of real case studies of clients I have met over the 25 years that I have been a Financial Planner. Some of these case studies are composites of more than one client, but they are all drawn from real life practical financial planning issues.

My choice to illustrate the importance of insurance is Annie’s story. This encapsulates in my view everything that is positive about what we do.

Annie’s story

This was very early in my career, when I was just 27 years of age and working in a city centre branch of a high-street bank in the UK. A young lady was referred to me by the mortgage advisor, to make sure that she had adequate life assurance in place to cover the mortgage.

I met with Annie and reviewed her existing arrangements. Her husband was a pilot in the RAF and I quickly concluded that she had more than adequate arrangements in place with one proviso, the bank that had sold her the life assurance, hadn’t written the policies under trust. So, in the event of a death claim, there would be a need to apply for a grant of probate, with inevitable delays and possible inheritance tax implications.

I suggested that she should go back to the bank and ask them to provide a suitable trust deed. No fee, no fuss. Just good advice that was appropriate for her requirements. It’s sometimes said that pro-bono advice is one of the hallmarks of a profession.

A few months later, Annie called into the office and asked to see me again. She said she had something to show me. I was intrigued.

She produced a small box which she handed to me. When I opened it, I saw a medal. She said, “I wanted you to see that. It’s what they awarded my husband, posthumously. He died in a plane crash.”

I was totally unprepared for this. Should I give her a hug? I did, I couldn’t think of anything else to say or do. I asked why she had come back to see me.

She said, “because when I came to see you, you looked after my interests without any attempt to try and sell me something. I now have something else for you as well.” She handed me a cheque for a very substantial amount. “I’d like you to invest this for us, come and meet the kids.”

I didn’t know that she had left her two young children outside drawing pictures, under the supervision of my colleague Mary. We left my office to meet the children and the scene that met us was the entire banking staff in floods of tears.

The children had drawn a picture of a plane crashing into the ground and a happy smiley face up in the sky. “That’s my daddy” the youngest said; “he’s in heaven.”

I realised in that instant that I was now responsible for the future of a widow and two young children who had just lost their father.

Good financial planning has the power to change people’s lives. That experience certainly changed mine.

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