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Jun 25 2012 12:00AM


What is the function of a financial planner in relation to various types of life insurance?


A financial planner's role with respect to life insurance should be:

a) first to analyze the client's situation to determine whether or not it would be in the client's best interest to carry life insurance

b) if yes, then proceed to further evaluate the client's situation to determine how much of a death benefit would be appropriate

c) followed by carefully explaining to the client the various types of life insurance and the major differences between them.

The types of life insurance and differences could include Term Insurance (temporary); Whole Life Insurance (permanent, possibly with cash value); Variable Universal Life Insurance (permanent, offered with underlying investments and cash value). These programs are designed for different client needs and will result in different levels of costs. The planner can assist a client, based on the client's short & long-term goals, financial objectives, family situation, tolerance for risk, and cash flow and then make an educated decision which type of life insurance would be best suited for their needs as well as how to manage the affordability.

In addition, the client should be made aware that insurance companies all don't have the same pricing structure and the client may benefit by doing some comparative shopping. Also, whether to work with an insurance agent versus obtaining a contract online should be considered and part of the discussion.

Everyone’s individual needs are different and there is no one type of life insurance or one company that fits every need. Make sure to choose a planner that has some expertise in life insurance.

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