Insurance and Annuity Plans Need Flexibility

What You Need to Know

Clients' jobs, income, assets and family relations change as they age.
A life and annuity industry veteran recommends using strategies that can adjust.

Clients need life insurance policies and annuities that will suit who they are in the future, not just today.

Paul Wetmore, a financial services industry consultant at Gerson Lehrman Group, gave that advice earlier this week in an email interview.

“Some products have built-in flexibility,” Wetmore said. “Others can be packaged with additional features to add flexibility.”

The best planners look for ways to build in mechanisms that can accommodate clients’ changing needs, Wetmore said.

What It Means

You help clients handle what may sometimes feel like a financial roller coaster ride.

You also help them prepare for a time when they, and the financial roller coaster, may look a lot different.

Paul Wetmore

Wetmore has a bachelor’s degree from St. Lawrence University, a master’s degree in business from Clarkson University and the Chartered Life Underwriter and Life Underwriter Training Council Fellow designations from the American College.

He began working for MetLife as a financial planner in 1988. He ended up spending 26 years at the company, holding roles ranging from assistant sales office manager up to assistant vice president for marketing and product liaison activities.

Now, in addition to working as a consultant, Wetmore is an adjunct faculty member at the American College of Financial Services and a co-author of the latest edition of The Tools & Techniques of Life Insurance Planning, a book published by ALM designed to help planners and advisors understand the tools needed to use life insurance as a part of a successful financial, business or estate plan.

The Scenarios

Clients need flexibility in retirement income planning to prepare for the possibility that their income or expenses could change.

They also need flexibility in life insurance arrangements, to accommodate changes in their own lives, the needs of potential beneficiaries, income tax and estate tax rules, and financial goals.

Hypothetical clients Alex and Syd Smith might have young children now. They might need more death benefits now, when the children are small, and less after the children have grown up and graduated from college.

Another, similar couple with a child with special needs might expect expenses to increase later in life.

“A combination of permanent insurance with a term rider or a companion term policy can work well for clients who anticipate a reduction in their future needs, while a guaranteed issue rider or guaranteed insurability rider can be included with a permanent policy, to allow for increasing future protection needs,” Wetmore said.

Why Look So Far Ahead?

Unexpected events could change everything and thwart attempts at long-range planning.

But Wetmore said he believes that making the effort is worth it.

“Tailoring suggestions to clients’ current needs and anticipated future needs can set advisors apart from others and foster a healthy, long-term advisor-client relationship,” he said.