This document provides guidance on conducting a life insurance needs analysis for clients to determine the appropriate level of coverage. It outlines steps for gathering existing policy and beneficiary information, assessing immediate cash needs like debts and expenses, college funding needs over 18 years, and income needs for a surviving spouse. The needs analysis calculates totals that are then compared to existing coverage to determine the net new life insurance needed. It emphasizes using the needs analysis results, rather than estimates, to demonstrate coverage needs to clients and increase the likelihood of a sale.

1. Life Insurance Needs
Analysis
Converting Tough Small Sales Into
BIG Easy Sales
Thomas R. Kestler, CFP, CLU, ChFC

2. Setting the Stage
 Tell me about your current life insurance coverage.
 X, Y, Z (Get access to the policies)
 X – Coverage
 Y – Cost
 Z – Cash Value
 Who are your beneficiaries? Are you sure?
 How did you come up with the coverage amount?
 Has anyone ever done a comprehensive insurance needs
analysis for you?

3. Introduction to Needs Analysis
 Immediate Cash Needs
 College Needs
 Income for Surviving Spouse

4. Immediate Cash Needs
 Pay Off Debts
 Credit Cards
 Auto Loans
 Personal Loans
 Mortgage
 Emergency Fund for Surviving Spouse
 6 Months Combined Income
 Estate Settlement & Final Expenses
 $10,000

5. College Needs
 College Cost in Today’s Dollars $10,000/yr
 Time Till Freshman Year 8 yrs
 Tuition Inflation Rate 7%
 Year 1 $17,478
 Year 2 $18,741
 Year 3 $20,097
 Year 4 $21,549

6. College Needs
 Assuming Investment Return of 8.00%
 Lump Sum Needed Today to Provide for Future
Inflated Income Stream
$36,398

7. Income for Surviving Spouse
Current Combined Income
Survivor Need
$
SS Survivor
Income From Surviving Spouse
SS Retirement
@ 65
Time

8. Summary
 Immediate Cash Needs $
 College Needs + $$
 Income Needs for Surviving Spouse + $$$
 Total Need = $$$$$
 Less Existing Life Insurance - $$
 Net New Life Insurance Need = $$$$
Perform
CPR

9. “Tell You What”
How about if I take these policies and
gather the information to do a
complete needs analysis for you and
(spouse)? I’ll just need to gather a
little more information and we can set
up a time next week to go over the
results.
“Does that make sense?”

10. Confidential Fact Finder

11. Income Needs for Jennifer at
Blake’s Death

12. Blake Summary

13. Jennifer Summary

19. Comparison
30 Year Term Option UL Option
 2,500,000 Blake  2,500,000 Blake
 1,000,000 Jennifer  1,000,000 Jennifer
 5,000 Children $3,970  5,000 Children
 Existing Insurance $3,500  $360,000 Retirement Income
 Total $7,470  Death Benefit for Life
 Total $9,000
$127.50/Month Difference

20. First Year Commissions
 Target $12,002.00 X 90% = $10,801.80
 Excess $8,998.00 X 3% = $269.94
 Total $11,071.74
 New Money From House $5,500.00
 Effective Commission Percent 201%

21. Things to Remember
 Use the Needs Analysis to calculate their insurance
needs – NOT your “guesstimate” – They will be
more apt to buy if they understand where the
numbers come from
 Always get health information and medications at
the first appointment
 Use cash values and premium from existing policies
 Don’t try to keep coverage level for life – Use the
flexibility of Universal Life

22. Things to Remember
 Never show premium payments beyond age 65
 Always illustrate a retirement withdrawal schedule
 Never illustrate the exact insurance need calculated
 “Let me make a suggestion…”

23. Thank You!
800-699-0299