How to Perform a Life Insurance Needs Analysis for Your Clients

As a life insurance agent, you are not just a simple salesperson. Sure, you sell products such as life insurance to your clients, but you do so much more for them. One of the most important things you can do for your clients is to help them decide exactly how much life insurance they need and which type of product would work best for them. By performing a life insurance needs analysis, you can help your clients make an informed decision they can be confident in. Here are the four main steps to figuring out the monetary needs for your clients.

As a leading Insurance Marketing Organization (IMO), Good Life Insurance Associates (GLIA) provides a full range of insurance products, services and tools to support your individual clients’ wants and needs. Let us help you establish and grow your insurance business! Learn More

Step 1: Detail Income Needs

The first step in the life insurance needs analysis process is to detail the family’s income needs. In this step, you’ll determine the capital that will be required for the family’s income should the insured pass away.

Start by laying establishing the insured’s current income, the family income goal, the survivor’s income and any other income. Then, calculate the annual income shortage this results in and the total capital necessary for income based off an earnings rate adjusted for inflation.


  • Current Income: $100,000
  • Family income goal: $80,000 (80% of insured’s income)
  • Survivor’s income: $40,000
  • Social Security income: $25,000
  • Income shortage: $15,000

For this analysis, a standard acceptable earnings rate to use is 5%. To determine the capital the family would require for income, divide their income shortage by 5% (0.05). In this example, doing so would result in $300,000 in capital ($15,000 / 0.05) required for the family’s income.

Step 2: Detail Cash Needs

The second step is to factor all expenses the family would want to cover through a life insurance policy should the insured pass away. The most common expenses are end-of-life costs, funds for sending kids to college, paying off the mortgage and other debts, and having emergency funds on hand.

Simply add all of these totals up, then add them to the capital income required from Step 1, and you’ll have the total capital the family will require.


  • End-of-life costs: $15,000
  • Mortgage: $150,000
  • Debts: $20,000
  • College funds: $45,000
  • Emergency funds: $20,000
  • Total needs for cash: $250,000
  • Total required capital: $550,000

Step 3: Detail Assets & Other Capital

The next step in a life insurance needs analysis is to factor in any current assets and capital that will provide income for the family. This should include any liquid assets the family has in bank accounts, stocks, etc., and any other life insurance, for example.


  • Current bank balances: $40,000
  • Stock assets: $10,000
  • Other life insurance: $100,000
  • Total Current Capital: $150,000

Step 4: The Final Determination

The final step is quite simple. Subtract the family’s total current capital from their total required capital to find out how much money they would need to be covered through life insurance. In the example we laid out, the family would need $400,000 in life insurance to cover all their income and expense needs ($550,000 total required capital – $150,000 total current capital).

Discussing the Right Insurance Product

The total coverage level is only one aspect of a life insurance needs analysis. Once you have this number in mind, you need to figure out the right product for your client. As you know, there are two main types of life insurance: term life insurance and permanent life insurance:

Term Life Insurance

Term life insurance will cover clients for a set period of time. The most common terms are 10, 15, 20, 25 and 30 years. If the insured passes away during the term of the policy, the benefit will be paid to their beneficiary. Once the term expires, the policy is no longer in effect, and no benefit will be paid out.

Permanent Life Insurance

Permanent life insurance, by contrast, remains in place for the entire life of the insured. No matter when the insured passes away, the life insurance policy pays a benefit to the beneficiaries. Some of these policies have options that allow the amount of coverage to grow over the life of the policy.

Which One is Better?

This is where a discussion with your clients is necessary to determine which type of policy is right for them. While term policies do end, they also have a less expensive premium.

The life insurance needs analysis here should discuss the family’s financial needs after the term life policy they are considering compared to a permanent policy. For this example, let’s compare a 30-year term plan to a permanent policy.

If your client is 25 years old with two young children and are renting a home, a 30-year term policy may not last long enough. When the policy expires when the client is 55 years old, the family may still have significant expenses left if the insured passes away not long after the policy expires.

In this scenario, a permanent policy may be more beneficial to ensure the mortgage of a future home the family may purchase can be paid off, as well as the children’s college expenses can be paid for.

If the insured were 55 years old with two adult children out of college and a mortgage with 10 years remaining, though, a permanent policy may not be necessary. In fact, a shorter-term policy might be a better fit.

Final Thoughts

All life insurance needs analyses are unique to each client. That’s why it’s important as a life insurance agent that you take the time necessary to sit down with your clients and understand their needs before making a suggestion on which life insurance policy would be right for them.

As a leading Insurance Marketing Organization (IMO), Good Life Insurance Associates (GLIA) provides a full range of insurance products, services and tools to support your individual clients’ wants and needs. Let us help you establish and grow your insurance business! Learn More

How to Create an Insurance Agency Business Plan

All companies need a solid business plan. A business plan gets you off on the right foot, creates a blueprint for your success, and can help you secure outside funding from investors and financial institutions if you need it.

For insurance agencies, many insurance carriers will require you to submit a business plan before they partner with you. Unfamiliar with the process? Here are the basic steps to create an insurance agency business plan.

As a leading Insurance Marketing Organization (IMO), Good Life Insurance Associates (GLIA) provides a full range of insurance products, services and tools to support your individual clients’ wants and needs. Learn More

1. Write an Executive Summary

All business plans start with a strong Executive Summary. This is a relatively small section that serves as the introduction to your insurance agency.

The Executive Summary should serve as the guiding force of your insurance agency. It can include things such as your mission statement and why you’re opening your agency—if you’re a startup. If your company has had past successes, you can detail these in your Executive Summary as well.

This section should also include your areas of specialty, the opportunity in the market, your plan for capitalizing on the opportunity, and how you plan to separate yourself from the competition.

2. Describe Your Company

In this section, you’ll dive deeper into the key aspects of the business. You’ll highlight what makes your insurance agency special. You’ll also want to outline the general structure of your business, such as whether you’re a limited partnership, a general partnership or a sole proprietorship.

Next, outline your company’s history—or your personal history if your company is new. Then, describe how your insurance agency will fill a demand in the market.

End the section with a short analysis of how your company will earn a profit. This part can include a full analysis of your market so you can show how you’ll delineate yourself from other insurance agencies.

Within this company description section, you can also discuss the structure of your organization. This should include the owners of the company and their background as well as the critical decision makers and their pertinent skills.

3. Outline Your Products

This section will describe the products and/or services that your insurance agency will offer. You should break down in detail not just the areas you’ll cover but the costs and revenue that you anticipate for each.

For example, you’ll want to include a detailed breakdown of renters insurance, auto insurance, homeowners insurance, life insurance and any other products you plan to offer. Show a projection for each insurance category and the value that you’ll deliver for that category.

It’s important that you fully describe all the basics of each insurance category in this section. Assume that the person who will be reading your business plan will not be fully familiar with what you do.

You shouldn’t get too technical with these categories, so you don’t confuse the reader of the document. Avoid buzzwords that the industry uses, and go with the most basic descriptions you can provide. It’s important that your insurance agency business plan is easy to read and understand.

4. Communicate Your Strategy for Sales and Marketing

Any good business plan will describe in detail what the plan is to market and sell the products being offered. This section of your business plan should describe your strategy for reaching customers and then selling them insurance. You should detail your plan for generating and nurturing leads from first contact through final sale.

This plan should include the channels you use to reach this audience. For instance, do you plan on using traditional print media, social media, email, content marketing or some combination of all of the above?

Once you’ve detailed your marketing plan, it’s important to outline how you’ll close deals. This should include not only your internal strategy in terms of personnel and how you’ll sell, but offers, pricing and value propositions that should be attractive to customers.

5. Detail Your Financials

The final section of an insurance agency business plan will describe one of the most important aspects of any business: your financials. Starting and running any business requires money. This part of the business plan will describe how you’ll obtain that money to get your business off the ground.

Many investors and/or financial institutions will focus heavily on this section of your business plan when they’re making a decision about whether to loan you money or invest in your business.

This section should include a cashflow statement, profit-and-loss statement, sales forecast and balance sheet. If your insurance agency is a startup, you should include projections for all of these, with data and facts to back up your projections.

You could boost your case by providing an analysis of your agency’s break-even mark, which will include how much you need to earn in revenue to make a profit. This section should also include what money you’re bringing to the table to fund your insurance agency, including any personal money or other outside funding you’re using.

The financials section can be highly technical, so you may want to seek the assistance of a certified public accountant when preparing some of these documents.

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Big Changes to Section 7702 Impact Life Insurance

While much of the focus of the federal government’s spending bills over the past year has been on economic relief, the life insurance industry got a big boost, too. With the changing of IRS Section 7702 built into the Consolidated Appropriations Act of 2021, life insurance has become more attractive to consumers. Here are what the changes did and how it affects selling life insurance.

As a leading Insurance Marketing Organization (IMO), Good Life Insurance Associates (GLIA) provides a full range of insurance products, services, and tools to support your individual clients’ wants and needs. Let us help you establish and grow your insurance business! Learn More

What the Change Is

As part of the bill signed in December 2020, life insurance companies are allowed to drop their minimum interest rate assumption on policies to 2% and 4%, depending on the policy. This calculation is used to define what a life insurance policy is.

Policies that are defined as life insurance are exempt from taxes when a death payout is made. If the policy is not defined as life insurance, then the beneficiary must pay taxes on the payout.

The History of Section 7702

Section 7702 was passed into law in 1984. Before that time, death benefits were considered tax free no matter what the policy accumulated. This meant that gains the policy earned weren’t taxed.

The problem from the IRS’ standpoint was that consumers were using life insurance policies to shelter their money from taxes, rather than using the policy for its intended purpose—as a way to provide a death benefit.

Since 1984, Section 7702 stated that gains from a life insurance policy would be taxed as normal income when the death benefit is withdrawn. The law also clearly defined life insurance policies to separate actual policies from those just feigning as one.

The Section 7702 Tests

To be considered a life insurance policy, it must pass one of two set tests. These tests are:

  • The Guideline Premium Test: It requires that any premiums paid can’t exceed a limit determined by the statute.
  • The Cash Value Accumulation Test: It requires the cash value of the policy to not exceed thresholds that are determined based on the face value of the policy.

These tests did not change at all with the Consolidated Appropriations Act of 2021. However, the interest rate assumption that’s used to calculate the limits for both premiums and cash value of life insurance policies did.

The New Rates

The interest rate assumptions hadn’t changed since Section 7702 was first enacted into law almost 40 years ago. Under the new law, those interest rates have changed. Now, for the CVAT as well as guideline level premium calculations, the new interest rate assumption is 2%. For guideline single premium calculations, the new interest rate assumption is 4%.

These rates only apply to new life insurance policies that are issued after January 1, 2021. Those policies that were issued before that date aren’t impacted at all. However, a new contract can be exchanged for the old one, with the new interest rate assumptions applied to it.

Why the Changes Were Made

The world in 1984 was significantly different than it is today. Interest rates then were very high.

It was generally assumed that life insurance policies could be credited with a 6% or at least a 4% interest over the life of that policy. Because of this, it was assumed consumers could continue to fund their life insurance policies adequately.

As interest rates went down, though, it became more challenging for these consumers to keep up their life insurance policies over the long term. With interest rates at historic lows today, it was even looking possible that particular life insurance products would go away altogether, because they just wouldn’t be attractive anymore.

For instance, the combination of interest rates that are low and the limitation on premiums could have resulted in the policy’s value being depleted well before the insured died. As a result, costs to retain the policy would increase substantially as the person aged.

What are the Practice Effects of the Changes?

The question, of course, is what are the practical effects these changes to Section 7702 will have on life insurance policies and, as a result, the life insurance industry?

Quite simply, the changes in interest rates could result in increasing the maximum amount of a policy’s premium that’s allowed to be paid into the contracts of life insurance policies. This makes life insurance policies more attractive for consumers, especially if they expect to pay higher tax rates in the future.

Life insurance policies can now, once again, become more attractive tools for people to put their money so they can enjoy growth on a tax-deferred basis. Since the policies now have the capacity to pay out more of the premium money, consumers have a better chance of avoiding having their death benefits taxed as ordinary income.

Work with an Insurance Marketing Organization

As a leading Insurance Marketing Organization (IMO), Good Life Insurance Associates (GLIA) provides a full range of insurance products, back office services, and tools to support your individual clients’ wants and needs. We provide financial advisors and insurance agents in our network across the country with access to a full range of premium carriers, expert support services, and an industry-leading compensation plan.

Contact us today to learn how we can help you establish and grow your insurance business!

How to Become an Insurance Agent

Being an insurance agent is a rewarding career. Not only is there a significant amount of potential for growth and financial success, but you can also help people every day with the products that you sell.

If you’re just entering the job market, or if you’re thinking about a change in careers, it’s important to know the steps to take to become an insurance agent. Here are seven things you need to do if you want to sell insurance for a living.

As a leading Insurance Marketing Organization (IMO), Good Life Insurance Associates (GLIA) provides a full range of insurance products, services and tools to support your individual clients’ wants and needs. Let us help you establish and grow your insurance business! Learn More

1. Pick Your Education Path

To sell insurance, you do not need to have a formal college degree from an accredited college or university. At the same time, having an associate’s or a bachelor’s degree in finance or business could help open up more possibilities within the insurance industry.

So, the first step to becoming an insurance agent is deciding how you will approach the education phase. Know that even if you do have a college degree, you will still need to go through the pre-requisites to become licensed to sell insurance in your state (more on that below).

2. Choose What Kind of Agent You Want to Be

There are two general categories of insurance agents:

Independent Insurance Agents

Independent insurance agents serve as brokers and work with multiple insurance companies to provide policies for their customers. They have the ability to shop policies from various companies to then bring to their customers as options.

Captive Insurance Agents

Captive insurance agents, meanwhile, work for one particular company. They get their training from the insurance agency and get support from the office in return. Captive agents only sell policies from that agency.

What’s Right for You?

While independent agents typically have more freedom and higher earning potential, there are some benefits to being a captive agent, too. There’s also nothing wrong with starting as a captive agent to gain experience in the field before branching out on your own to become an independent agent.

3. Choose Your Specialty

There are many different insurance policies you can sell. The most common are auto, home and life insurance.

In most states, you are required to get a separate license to sell each type of insurance. Step three, therefore, is to pick which types of insurance you’d like to sell, and then proceed with the necessary steps to obtain a license to sell it.

Don’t feel like you have to gain a license to sell every type of insurance policy under the sun. There are plenty of agents who specialize in only one or two types of insurance and do quite well for themselves. In fact, establishing yourself as a leader in a given niche can be a lucrative strategy for your business.

4. Complete All the License Requirements

Each state has a different set of licensing requirements for insurance agents. Most states require a set number of classroom hours to ensure agents are educated on the products they will sell. Some states also require a set number of hours to be educated on insurance and ethics codes for that state.

An increasing number of states are offering these courses online, and they often don’t have to be taken on a “full-time basis.” In other words, you can complete the required education hours over a number of months to best suit your schedule.

Once you have completed all the pre-license requirements, you can move on and take the official license test. Every state has specific testing requirements as well as fees associated with the test and various licensing processes.

If you want to see a state-by-state list of these requirements, visit the National Insurance Producer Registry.

5. Complete Other Requirements

Depending on your state, you may have to fulfill other requirements once you pass your insurance license exam. This could include undergoing a background check and/or being fingerprinted.

Some states will allow you to complete these steps before you take the exam, so you can hit the ground running once you receive your license to sell insurance.

6. Find a Job, Or Go Independent

Once you’ve reached this step, you are officially allowed to sell insurance in your state. Congratulations!

Now, you just need to find a job. As in any field, local insurance agencies will post job openings for various insurance agents. If you don’t see any online, you can always inquire directly with a local broker.

If you are interested in becoming an independent agent right from the get-go, you’ll need to build up your business from the ground-up. It will take a little more legwork, but you’ll need to set up your business name, branding and logistics before you start trying to acquire clients.

7. Stay Up to Date on Requirements

The education never stops for officially-licensed insurance agents. Almost all states require that insurance agents complete requirements for continuing education.

This allows agents to stay up-to-date on any new changes to laws and/or regulations that directly affect the industry. It also allows you to stay relevant and knowledgeable for all your customers.

Consider Working with an IMO

As a leading Insurance Marketing Organization (IMO), Good Life Insurance Associates (GLIA) provides a full range of insurance products, services and tools to support your individual clients’ wants and needs. We can help you establish and grow your business no matter where you are in the process.

We provide financial advisors and insurance agents in our network across the country with access to a full range of premium carriers, expert support services, and an industry-leading compensation plan. Contact us today to learn more.


How to Sell Life Insurance Successfully

Selling life insurance can be challenging. Unlike some other forms of insurance, such as auto and home, life insurance isn’t a necessity of driving a car or mortgaging a home. In other words, it’s optional insurance that people choose on their own to purchase. As an agent, this makes selling life insurance more challenging than other types of insurance. But there are some things you can do to help make the value proposition clearer to prospects and improve conversions. Here are some tips on how you can sell life insurance successfully.

Convey the Benefits

How successful you are at selling life insurance will be dependent on how well you convey its benefits. Again, unlike auto and home insurance, life insurance isn’t a policy that people are forced to buy. Life insurance is an expense that people choose to purchase with no tangible current benefit. When people purchase life insurance, they are buying into the long-term benefits of the policy.

As an insurance agent, you can convey these benefits by appealing to people’s emotions. People purchase life insurance for the benefit of others rather than themselves. You can sell potential customers on the benefits of life insurance by explaining how it can help take care of family members after they pass.

Ask Tough Questions

One of the biggest obstacles you must overcome to sell life insurance is dealing with difficult conversations. To be effective at selling life insurance, you’ll need to ask potential customers tough questions.

These questions could include:

  • Does your family have a plan if you passed away today?
  • Can your family live the same life they are today if they don’t have your income to rely on?
  • Does your family have a plan for how to pay off your debt, if you have any, when you pass?

No one wants to talk about death, and no one wants to talk about what will happen to their loved ones when they pass away. But it’s an essential conversation that you need to be comfortable having—and starting—with people if you’re going to be successful selling life insurance.

You can do this in a sympathetic way, too. Establish rapport with prospective customers and sympathize with their situation. Tell them about your life, your family, and how you’re working to take care of them in that way.

Give Customers Options

One of the best ways to sell life insurance is to recognize that not every customer is alike. Different customers have different needs, and different things they are looking to get out of life insurance.

Knowing the life insurance options your agency offers—and being very knowledgeable about each—is important. The three main types of life insurance are:

  • Term Life: This policy guarantees death benefit payment if the insured dies during a specific term that’s set when the policy begins. Typical terms can be 10, 20 or 30 years.
  • Whole Life: This policy covers a person for their entire life, guaranteeing a death benefit no matter when the insured passes away. The premium remains the same for the entire policy, and it builds cash value on a tax-deferred basis.
  • Universal Life: This is also a permanent policy, with the main difference being the premiums, which are flexible. Universal policies pay out the death benefit no matter when the insured passes away, if the premiums are always paid.

Start with Current Customers

One of the easiest ways to get new leads for life insurance is to reach out to your current customers. You’ve likely already established a trusting relationship with those who you’ve sold auto and home policies to—or provided other financial services to. Since selling life insurance is all about trust, this gives you a leg up with these prospective customers, compared to other leads.

When you’re selling to current customers, you should rely on the tips above. In addition, you can tout additional monthly cost savings your customers can get by bundling more products—as long as your agency offers that feature, of course.

People are always looking to cut down on monthly expenses. That’s what makes selling insurance bundles so effective. Customers can gain extra protection for their loved ones with life insurance at rates that are likely less expensive than if they purchased the plan separately from another company.

Gain New Leads with Digital Marketing Campaigns

One of the most effective ways to gain new life insurance leads today is through digital marketing channels. Cold calling still works, of course, but you can build qualified lead funnels through multiple digital channels as well.

It’s free to set up social media pages on Facebook, Instagram, LinkedIn, Pinterest, Twitter and others. Build out your profiles so people can see you’re a legitimate, well-respected insurance agent. Link the profiles together and start posting content that’s relevant and helpful to prospective customers.

Then, run digital ad campaigns on some of these channels. The ads can direct people to your social media pages or website for more information. They can also help you collect contact information so you can follow up directly with them.

Digital ad campaigns allow you to target your ads to the people you’re looking to attract. You can even set up multiple ad campaigns—one for each age cohort you’re looking to attract, for example.

The best part about digital marketing campaigns is that they provide you with a plethora of data, so you can track how well they are performing. Once you’ve refined the campaigns, it’s up to you to follow through and make the sale.

Be Patient

If you want to sell life insurance successfully, heed the above tips and ideas. Work on the action items each and every day. Then, be patient.

Unlike auto and home insurance, life insurance isn’t something that’s mandated by governments or mortgage companies. That means you will be responsible for all the legwork involved.

This will take time, and results may be slower to come by. But, if you work hard and stick to tried-and-true sales practices, you can become successful at selling life insurance.

Work with an Insurance Marketing Organization

As a leading Insurance Marketing Organization (IMO), Good Life Insurance Associates (GLIA) provides a full range of insurance products, back office services and tools to support your individual clients’ wants and needs. We provide financial advisors and insurance agents in our network across the country with access to a full range of premium carriers, expert support services, and an industry-leading compensation plan.

Contact us today to learn how we can help you establish and grow your insurance business!