How financial advisors can strive for a higher standard when recommending life insurance
November 26, 2019 by Darla Mercado
The process of recommending life insurance doesn’t have to be rife with conflicts of interest.
Insurance has its place in a client’s comprehensive financial plan. For instance, term coverage can protect a young family in the event of a breadwinner’s early demise.
Permanent life insurance — which can be complicated because of its underlying cash value — may also play a role if a client has a complex need, including estate planning or key-man coverage.
While advisors recognize situations that may merit life insurance, some — particularly fee-only registered investment advisors or RIAs — have been put off by the conflicts that arise from recommending commission-based products.
“Under no circumstances do we sell anything like that, but there are occasionally instances where life insurance is needed,” said Dale Brown, senior executive vice president at Salem Investment Counselors in Winston-Salem, North Carolina.