Peace of mind costs less than lunch

Advisors are seldom in competition with other advisors and other product solution recommendations but they are in competition all the time with lifestyle.

Many people think of lifestyle as big homes, expensive vehicles, destination vacations, etc. However, David Bach author of Smart Couples Finish Rich and Smart Women Finish Rich coined the phrase the “latte factor”.

The “latte factor” can include anything from weekend brunches out to daily restaurant or street meat lunches, spontaneous and frequent family fast food dinners, and the list goes on.

In short, it is all the money that is spent monthly that’s unbudgeted and often unaccounted for.

An advisor who attended Insurance Know-How training shared the following scenario with me. He said “I quoted a colleague of mine on life insurance. Here are some facts:

• He and his wife have small children – the youngest is 1 year old

• He is the sole income earner at this point

• This year he will make $80,000 – $100,000 with his business

Based on my calculations, I determined he would need about $1,700,000 of life insurance which will covers off any debts and income replacement need. I showed him some straight term (T20) and some combination – bit of whole life that will be paid up in 20 years and the remaining portion as a T20 rider.

He said the coverage makes sense but the premiums are way out of his budget at this point.

“I looked at a couple of different companies and the quotes ranged from $177 to $230/month,” he said.

My recommendation?

Break the monthly cost into a daily amount and relate that amount to something in their everyday life – like the number of trips to Tim Horton’s or the number of coffees at Starbucks or their regular restaurant lunches.

Here’s how quickly that adds up: I worked with a lady who bought a Tim Horton’s coffee at least twice a day and also budgeted $10.00 a day for lunches because she hated making them. Then she realized she was spending $2,500 a year on lunches alone.

Michael Curtis of Vision Systems Corp told me about a case he helped sell. The prospect was a lawyer who had a “latte factor” of over $50,000 a year as he’d go out to dinner with friends and pick up the whole tab or buy all the drinks after work on Fridays.

What’s interesting is most people have no idea just how big their latte factor is!

With your help they can quantify it. Then, with some spending priority changes, they can minimize the “latte factor” and afford the life insurance converge they need. Think about it: $177.00/month is only $5.82 per day; $230.00/month is only $7.56 per day – using 30.41 as the average number of days per month.

Peace of mind and a financially secure future for a young family for only the cost of a latte!

Helena Smeenk Pritchard has over 36 years of experience in the insurance industry and is the Principal of Helena Smeenk Pritchard & Associates, a leader in “Insurance Know-How” training. Helena publishes a weekly free ‘Did You Know’ newsletter on her site.