The senior market -- the most talked about segment in our industry -- has gained that distinction because we are all living longer. Indeed, some mortality estimates predict that those who live past age 55 have a good chance of becoming centenarians.
Since I am now 77 years old and have been in our great industry for nearly 54 years, I understand and strongly identify with the feelings, dreams, needs, and fears of this market. I also can tell you firsthand that there has been a major change in the thinking of those who have been fortunate enough to live longer and are looking forward to several years of activities and challenges now that "getting older" has become the norm instead of the exception.
If you are working with clients in the senior market or thinking about doing so, however, it is important not to view this group collectively. Do not assume that they all have the same characteristics. Instead, treat them as the individuals they are and keep in mind that they have widely different needs, with only one exception: the need for life insurance and someone to help them fulfill that need.
For instance, many seniors are still working. In my case, it is because I love what I do and am privileged to be able to continue my work. I am certainly not alone in this. Many people my age are still working because they want to. For us, the income is not as important as the continued desire to be busy; to contribute to our professions and society; and to pursue business opportunities. Of course, other seniors have to work because their initial retirement plans were derailed by changes in their corporate retirement and health plans; investments that did not produce the assets and income anticipated; or failure to plan effectively for this stage of their lives.
No matter what their reasons for continuing to work, seniors are in demand in the workforce. According to recent articles, businesses and industries are seeking them out because of their experience, knowledge, and wisdom.
The "golden years" are also the opportunity for many people to pursue their dreams. They may have achieved success at a job or career, but always thought that once the time was right and they could afford to do so, they would like to do something entirely different. It might be starting a business, teaching, social work or other exciting ventures. Still others have been forced to change their lives because of a life event like the death of a spouse or a divorce. As a result, they are now experiencing second and even third marriages.
After raising their families, sending their children to college, and preparing to move into another stage of life, today's grandparents sometimes return to "parenting," to help a divorced child meet his or her parental responsibilities. Others, unfortunately, find their grandchildren living with them because the parents died prematurely.
Finally and fortunately, many seniors now dedicate themselves to making a difference in the world by furthering mankind through charitable contributions and/or volunteerism.
Breathtaking? Yes. Hopefully, though, these scenarios prove my point that today's seniors are a diverse group and carry many responsibilities for themselves and others, and are experiencing life very much like the rest of our society. In the past, when a person reached age 65 or so, he or she might not have needed sound financial counseling. But now, I can assure you that the need is not only there, it is much more complicated than before.
To further my point, let me share three situations with you.
Situation #1
A senior citizen, age 70 plus, married for more than 50 years, has several children and grandchildren. His wife has a prolonged incurable disease and has to be placed in a full-care facility, which is the best in the area and costs about $100,000 a year. After several years there, she dies. The gentleman then meets a lovely lady, also a senior citizen, who has several children and grandchildren. They fall in love and later marry. It sounds simple, but it is not.
First, a prenuptial agreement is necessary to protect the assets of both, so they can be used as intended prior to the marriage. Also, since the marital deduction is no longer available, life insurance is needed to protect the estate and to ensure that if the husband dies first, the wife will be able to maintain her present lifestyle. Long-term care insurance also is needed to prevent a lengthy illness from depleting the couple's assets. In addition, the couple's investments require active management to generate income so that both the husband and the wife can provide for themselves, as well as their heirs and charities.
Life insurance needs can be substantial for these seniors, and they need to know that the death benefit will be there when they die. You have to be certain that they buy products that will not implode before they die and create havoc later. Term does not solve this problem. Universal life plans with guaranteed no-lapse premiums are particularly appropriate for seniors. Some policies provide for premium payments up to age 121, or they can "short-pay" the premium. Either way, the couple can enjoy peace of mind knowing that no matter how long they live, the death benefit is guaranteed, as long as the premiums are paid as illustrated. (All guarantees, of course, are based upon the claims-paying ability of the issuer.)
Situation #2
A divorced senior citizen with grown children has married a woman who also has children. They expect to live happily ever after, but one has a son with drug problems who has lost his way. The couple brings the son and his two children into their home. They provide an environment that gives guidance and focuses on the children's future. This is a major undertaking and has many ramifications, among them the need for more life insurance -- not term insurance, but coverage that is guaranteed to be there when they die. This additional life insurance provides money to the other children (the siblings of the one with the drug problems) who felt that their share of the estate was being eroded because of the care provided for their brother and his children.
Legal changes are also necessary. The proper documents, such as wills, trusts, prenuptials, etc., must be properly prepared in order to avoid a train wreck down the road. You have to understand the needs, financial challenges, and emotional situations that exist as you go through planning and implementation. You have to be ready to assist these people in satisfying the emotional needs of separate families, so there can be harmony at holiday functions and, more importantly, in everyday interactions.
Situation #3
Both spouses are alive and healthy, have given up successful professions or businesses, and are now starting the business of their dreams. But it will require a major investment, and their bank will not lend them the money because the bank officers cannot understand why anyone over age 70 would take on such a venture.
So the couple takes all of their investment savings and retirement money and plunges into the venture. But before they do, they wisely seek advice. They want their children and charities to receive what they had intended. Thus, they need a substantial amount of guaranteed, no-lapse permanent life insurance for their families and their estate tax needs. In addition, they hire two top people to help build the company and now they need buy-sell planning, a retirement plan for their employees, and more.
In summary, senior citizens have needs galore, the most important being a need for solid advice. Just because they are older and have had some success in their businesses and professional lives does not mean that they have mastered or even understand the financial and insurance needs that are paramount in our lives.
Seniors want much more than a one-dimensional repertoire of products. They want to work with someone who has financial acumen, but also cares about their needs and wants -- someone who will help them work through all the challenges, coordinate implementation of the plan with other advisers, and be there to work with them on a very personal level.
There are a few additional things you should consider when working with seniors. They gained wisdom as they grew older and can spot a fraud a mile away. They also know when someone wants to sell something in order to make a quick buck. But they also admire and respect someone who is dedicated to his or her profession and honestly wants to help them. They are not looking for a get-rich-quick scheme. They have had their share of those messes and don't want any more.
Many times, younger agents ask me what they should say to a senior person. I think it is pretty simple:
Where have you been?
Where are you now?
Where are you going?
Finally, and most important, do you feel comfortable and excited about the advice you are receiving as you travel this part of your life's journey?
Maurice L. Stewart, CLU, ChFC, CLF, has enjoyed an exceptional career in both personal production and field management. He currently serves Penn Mutual Life as an executive consultant. He received 12 Penn Mutual President's Awards and is a 2004 inductee into the General Agents and Managers Association International Management Hall of Fame. His many contributions to the National Association of Insurance and Financial Advisors earned him the 2003 President's Cup Award and a place in the Philadelphia Life Underwriters' Hall of Fame. In 2004, the New York Round Table recognized him with its Life Achievement Award.
