Someone or something like a business would suffer severe economic loss were you to die. If it is a family need, spouse and kids, you want to make sure that there is enough money left after you pass, to keep them in the world that they have become accustomed to. Maybe pay off the mortgage, the car loans, the student loans, etc. I also refer to it as "dream completion" where the dreams of the family unit can be completed after the insured passes on.
This is also a prevalent need in the business community. You may have a key employee whose death would cost the company much in lost revenue, stock price, consumer confidence and more. So, you shore things up with a life insurance policy that can assure that the enterprise continues to move ahead. In all of these cases, we are transferring the risk to the insurance company. And, for nominal premiums we can make this happen.
Here’s another point: I was reading an article in the April 18, 2016 issue of Pensions and Investments written by Trilbe Wynne. In this article, he had a paragraph that was highlighted as "Transferring Risk". So, I read with great interest and found a great example to us in explaining what we do for our prospects and clients.
Let me summarize a little. He was writing about the drop in pension assets due to lack of growth among other reasons. He wrote about the pension liabilities that companies had (the amount they will have to pay to retirees in the future...and now). And, many were underfunded (please excuse my elementary approach...this means they didn't have enough money to meet all liabilities short of a "Macho" bull market that lasted a long time). So, what were they going to do...or did they do? They transferred the risk.
Here are a couple of real examples that he cited: "Kimberly-Clark contributed $410 million in 2015 and purchased group annuity contracts that transferred pension benefit obligations totaling $2.5 BILLION for about 21,000 US retirees to Massachusetts Mutual and Prudential."
Lets' move to another... J.C. Penney purchased group annuity contracts from Prudential after offering lump sum buyouts to about 31,000 retirees and beneficiaries in 2015.
So, what is my point? You are assisting your clients in transferring retirement income risk when they purchase an annuity that can be converted into a guaranteed stream of lifetime income. And, it is guaranteed for as long as the live. You transfer risk when your client purchases a life or an annuity policy that also offers chronic illness accelerated benefits. Yes, life insurance, long term care, critical illness policies also do the same.
So, in closing... when someone asks you what you do for a living, how about telling them "I transfer risk". Until next time... good selling!