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Whole vs. Term—Let the Prospect Do the Talking

By Tim Harrison, CFP, CLU, ChFC

Let’s say you’ve just done a factfinder with a prospect and you’re on to the next step: deciding what type of life insurance—whole life or term—he should buy. I recommend that you guide your prospect toward a decision by letting him—not you—answer the question himself.

Here’s how I get the “term vs. whole life” conversation going. I’ll ask a client, “Up until what age do you think you can own term insurance?” (With Northwestern Mutual, which I represent, the answer is age 80). I’ll follow up with, “What age do you think your life expectancy (or joint life expectancy, in the case of couples) will be? Usually the prospect will reply, “85 or 90.” I’ll illustrate these questions conceptually; basically, I’ll draw a line out to 80 to represent the term policy, and I’ll draw a line for whole life—a flat line that stays in place until the death benefit. Then I’ll ask, “Would you like your insurance coverage to last beyond the period of time it might actually run out? I’ll wait for a yes or no, then point out that 97 percent of our death claims last year were paid in whole life insurance, 3 percent in term policies.

I’ve found this approach pretty effective—it engages the prospect in the decision-making process and makes him feel as if his needs, not your wants, top any other consideration.

Tim Harrison, CFP, CLU, ChFC, is a wealth-management advisor with Northwestern Mutual Wealth Management Co., and a member of NAIFA-Omaha.

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