Some financial advisors are uncomfortable talking with clients about life insurance and many more are missing the opportunity to incorporate life insurance into their financial planning for their clients, according to a new survey.
More than half of advisors (56%) do not talk regularly with their clients about life insurance as part of their financial planning, according to Saybrus Partners Inc., a life insurance partnership firm that promotes making life insurance a consistent part of financial planning.
Only one third (34%) are comfortable talking with clients about life insurance and 18% admit to being uncomfortable or very uncomfortable approaching the subject.
Less than half (47%) review life insurance policies as part of an annual review process and 10% only discuss the subject if the client raises the issue. Twenty percent talk about life insurance if they are aware of a life-changing event in the client's life.
The survey included 103 financial advisors and was conducted at the 2012 Financial Advisor Retirement Symposium held in May sponsored by Financial Advisor magazine. The results are consistent with the results of an online survey conducted for Saybrus Partners in 2011.
"Advisors are constantly reviewing the performance of their clients' stocks and other investments," said Kevin Kimbrough, national sales manager for Saybrus Partners. "By contrast, they are reviewing their clients' life insurance policies far more infrequently, based on life events or client requests.
"This means that many of their clients may be lacking essential protection for themselves and their families or missing opportunities to more effectively transfer their wealth to the next generation. Life insurance is not a set-it-and-forget-it product," he adds.
Financial advisors say they would be more comfortable talking about life insurance if they were working with a specialist in the field or if they could attend a seminar on life insurance designed specifically for financial advisors.
Life insurance policies need to be monitored and adjusted along with other financial interests, Saybrus said.
"Market volatility can have a strong impact on the performance of variable life insurance products and fixed products can suffer in a low interest rate environment, potentially leading to unintentional policy lapses," said Kimbrough. "Other issues include the possibility of missing out on more affordable rates and newly available features such as long term care riders."