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The Affluent Client

Affluent clients may not "need" more insurance, but they should certainly "want" it.

By Donald Ray Haas, CLU, ChFC, CFP, MSFS

In last month’s column, we discussed three approaches to managing clients’ love-hate relationship with insurance--self-insurance, the total insurance agent, and presentation procedures. This column focuses on more affluent clients and how their world changes from “needs” to “wants” often before they realize it.

Let me explain. It’s a natural transition, as so well explained by Abraham Maslow’s Hierarchy of Needs. Maslow was a humanistic psychologist. In insurance, this manifests itself in the client’s statement: “I don’t need any more life insurance.” His thinking is based on his situation at the time he lived in a “needs” world; now he probably does not “need” more life insurance. You can try to convince him until you are blue in the face, but you will simply be wasting your time and his time. What is worse, you will move from the position of a trusted advisor to that of a hard salesperson.

A much better approach is to say to the client: “Of course, you don’t 'need' more life insurance. We’re not talking about “need;” we’re talking about 'want' You left the needs world quite some time ago. Congratulations! Now, it’s time to acknowledge this change and prepare for your family at the level you really ‘want’ them to be able to live.”

As a seasoned insurance agent, I have concluded that all types of insurance are necessary. However, when we look at individuals on the lowest rung of the economic ladder, they do not see liability insurance as a priority. In fact, it is far from being a necessity.

The extremely high cost of medical care makes medical insurance highly important to most people; however, it’s expensive and may not be affordable. Maybe Medicaid is available.

Sure, all insurance is important, but not necessarily for everyone. A hierarchy of needs starts to evolve just as in all aspects of life. Maslow created five categories of needs, starting with the most basic of survival needs (oxygen, water, protein, salt, sugar, calcium, and other minerals and vitamins). When these physiological needs have been met, they’re followed by the need for safety and security, love and belonging, and esteem. Maslow referred to these levels of needs as Deficit Needs. This means that if you don’t have enough of something, you have a deficit and feel a need.

When you cannot meet your lower-level needs, you can’t fully devote yourself to achieving your potential. Maslow suggested that we can ask people about their philosophy of the future, i.e., what their ideal life or world would be like. We would receive significant information about the types of needs they do or do not have covered.

The fifth level, self-actualization, takes us from the “needs” world to the “wants” world. On this level, it’s no longer a matter of need; it’s a matter of relating differently to one’s current status. Before realizing it, the more affluent clients reach a level at which they have extensive choices not based on absolute need, but on their desires and wants. People at all levels have desires and dreams, but often, only those at the highest level can actually do what they want.

An example
A 40-year-old attorney client of mine has an annual income of over $1.5 million. As he showed me through his beautiful home, I mentioned what a wonderful standard of living he is providing for his two teenage children.

A week later at our next meeting, he said: “Don, before we begin, I’ve decided that I want more life insurance on myself.” I asked: “How did you come to that conclusion?” He replied: “I got to thinking about your comment that I was providing a wonderful standard of living for my kids. I’ve been lucky to have a great income, which they probably will not be able to develop. Hence, I’m going to help provide extras for them for their entire lives. If I die, it would be a tragedy for them to lose those extras. Don, calculate the extra amount of life insurance I should have to satisfy this desire.”(want).

Next month we will examine the tremendous amount of information your client’s 1040 form reveals.

Donald Ray Haas, CLU, ChFC, CFP, MSFS, of Southfield, Mich., has been an insurance agent and financial consultant for more than 47 years. He can be reached at 248-213-0101 or at


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