deal with extensive out-of-pocket medical expenses or to weather the elimination period before disability payments
kick in. Point in fact: a 2011 report from
the National Bureau of Economic Research, Financially Fragile Households,
found that nearly half of Americans are
not able to access $2,000 easily for an unexpected expense.
In cases like these, the client may
be under intense pressure to take out a
401(k) loan, which will diminish the account’s compounding potential and may,
if not paid back, permanently dial back
To guard against this risk, your clients
may be able to buy accident, critical illness, hospital indemnity or disability
coverage through payroll deductions at
an affordable price. When reminding
your clients about these insurance coverage options, be sure they realize policy
payouts typically are unrestricted and can
be used for anything — car payments,
mortgage, food, etc. — and not merely
for medical expenses.
Tactic #3: Building retirement funds
through individual life insurance.
The first two approaches — group life
and voluntary benefits — give clients
fast, usually tax-free money that can protect the flanks of their vital retirement
savings, what ING U.S. refers to as their
“orange money.” With that employer-enabled insurance coverage in place, advisors can begin the conversation about
individual life policies and how they both
protect and offer increased flexibility to
the client’s retirement.
Don’t be surprised if your client doesn’t
place life insurance and retirement security in the same mental bucket. The 2012
ING U.S. Insurance Revealed study
found people were most familiar with
life insurance’s protection benefits (the
death benefit), placing the greatest value
on such uses as replacing lost income ( 26
percent) and paying off debt ( 23 percent).
Yet, not many respondents highlighted
the value of life insurance in protecting
retirement savings ( 4 percent) or building
wealth ( 1 percent).
While employer-sponsored retirement
plans and IRAs are the primary mechanisms for retirement savings, clients may
be maxed out in their plans or desire
the added protection of a death benefit.
Through a cash value life insurance policy,
such as indexed universal life insurance, a
client can build cash value that may provide financial flexibility later in life.
Few careers these days end after a 30-
year tenure and with a gold watch. If a client is surprised by a job loss a few years
before retirement age or simply wants to
leave full-time work before Social Security age, the policy’s cash value can help
protect his or her options. Make sure your
clients understand this extra measure of
security — and its direct impact on their
Tactic #4: Creating a steady lifetime
retirement income with annuities.
By the time a client reaches retirement
age, it might seem that the need for insurance — or any type of protection — has
come to an end. But, clearly, this is not
the case. Clients often make withdrawals
from retirement accounts to create their
income stream in retirement, yet they
may be concerned about the endurance of
those savings. Will their savings last an
entire lifetime? After all, a lifespan that
is five or 10 years longer than expected
or higher-than-anticipated medical costs
in later years can greatly accelerate the
depletion of retirement accounts.
To offset this risk, many advisors are
turning to fixed annuities specifically
designed to provide a certain amount of
annual guaranteed income, usually with
upside potential based on interest rates or
some other mechanism. This insurance
contract, in effect, protects the client’s life-
style and eases concerns that market forces
or life events will prematurely deplete re-
tirement account values and the income
those values might have generated.
Advisors can do their clients a service
by explaining the potential role of annuity income as a guard against such unpleasant financial surprises in retirement.
Covered at every angle
These four insurance approaches —
group life, voluntary benefits, individual
life and annuities — are well-known protection strategies within the financial services industry. Yet, many advisors could
do more to educate their clients on the
power of these strategies as a means to
protect retirement momentum.
By explaining the role of these four tactics to your clients, you will be delivering
a more holistic brand of retirement advice
— one that acknowledges and addresses
the risks that hover on the periphery of
any retirement vision. Your clients will
appreciate the education and your efforts
to keep their retirements on track and fortified against life’s uncertainties.
Kurt Fasen is senior vice president
and head of ING U.S. insurance
sales support for the retail life,
employee benefits and annuity
businesses. He has more than 20
years of industry experience, including as a
distributor. Fasen, a graduate of the University
of St. Thomas, earned the LIMRA Leadership
Institute Fellow as well as the Life Underwriter
Training Council Fellow designations through
the Wharton School of Business and the
American College, respectively. ING U.S.
(NYSE: VOYA), which plans to rebrand in the
future as Voya Financial, is focused on its
mission to guide Americans on their journey to
greater retirement readiness and to make a
secure financial future possible — one person,