The Best Life insurance for Real Estate Agents

Life insurance at age 50

By Holly Mitchell

I am a retired real estate agent, who is now in the insurance industry, and now know how important Life insurance for real estate agents can be.  A recent internet search of “Life insurance for real estate agents” turned up basically nothing!  I honestly was shocked that this market has not been a focus of the insurance industry.  You see, I worked in my father’s life insurance business as a teen and into my 20s.  Once I graduated from Auburn University, I sought out another career which turned out to be residential real estate sales.  Because I had worked in the insurance industry prior to selling real estate, I knew the importance of life insurance and already had a policy in force.  I did not give the matter of real estate agents having (or not having) life insurance much thought until I got back into the life insurance industry several years ago.

Life insurance for real estate agents?

Life insurance for real estate agents

Thinking back, even as a top producer, I was never approached by an agent to purchase life insurance.  The real estate industry in our area is predominantly made up of female agents.  According to Realtor.org, 58% of all REALTORS are female. http://www.realtor.org/field-guides/field-guide-to-quick-real-estate-statistics. Maybe agents thought that the female agent’s husbands had the couple’s insurance and retirement taken care of?

How is anyone to know what life insurance for realtors is best?

Real Estate sales in our town was and is still a BIG business.  Agents are making a substantial income that undoubtedly would be missed by those family members that depend on it.  I worked on a 100% commission basis, as I suspect most real estate agents do!  While some agents make good money, they are on their own when it comes to benefits.  When I say benefits, I mean health insurance, retirement, self-employment taxes, and all business expenses to name a few.  No one paid these expenses for me, I was on my own.   Real estate sales are cyclical and there is no guarantee of income each week or month.

I can recall a conversation our office was having about personal insurance and its necessity.  Some comments were made about it not being needed, the cost, or my husband has insurance. This was a group of females.  I asked the group, “If you were to die or become disabled, would your family suffer?  Would your family’s lifestyle change?”  After a marked moment of silence, the resounding answer was “yes”.  These agents produce a substantial income that they and others depend upon.

When it came to retirement savings, SEPs and IRAs were about the only options available for real estate agents.   Since real estate agents do not have an employer, there is not employee benefit consultant there to help guide them through a 401k or other retirement options.  There are several agents I previously worked with, that are still selling real estate and they are now in their late 70s and early 80s.  Some of them may choose to continue working, but others may actually have to keep working due to the lack of planning for retirement.

I would like to move forward and explain how having a life insurance policy can help out in each of the situations I have laid out above.

Death Benefit

As mentioned earlier, many real estate agents make a substantial amount of money that their families could not get by without.  In the untimely death of one of these real estate agents, a life insurance policy’s death benefit could take the financial burden off of their family.  The family will need these funds to cover final expenses for the deceased, supplement daily living expenses, pay off debt, and possibly plan for a child’s future education.  These are only a few examples of where the death benefit funds could be used.  It may be that there are young children in the family that the deceased was the primary caregiver.  The proceeds from a life insurance policy’s death benefit may allow the remaining parent to take some time off from their job or hire a caregiver to take over some of the parental duties the deceased performed.  Life insurance for real estate agents is very important and should not be overlooked.  See how inexpensive it is by getting a quote to the left of this page.

In order to determine the amount of coverage needed, it is important to speak with a life insurance agent.  You can speak with someone at Ogletree Financial by calling 1-800-712-8519.  Our agent will help you determine the amount and type of life insurance you need by using a financial needs analysis.  This process will look at your income, current and future expenses, debts and assets.  This analysis focuses on what income your family would need if you died today.  The questions asked will help to determine a face amount that will essentially be used to replace your income.  If your wish is to go beyond just income replacement, the analysis can be extended to look at expenses, such as funeral and medical, mortgage, and college tuition.  Your current assets are also factored into this analysis to determine the amount of life insurance needed.  Believe me, it is a lot simpler than it sounds.  We can usually find out the amount of life insurance needed in about 5 minutes.

Policy Loans

In real estate sales, there is no guaranteed income or salary for the agents.  They are normally on a 100% commission income as an independent contractor.  If there is not a closing during the month, that agent’s income is zero, but the bills and expenses are still there.  With the fluctuating pattern of income real estate sales can bring, it would be beneficial if the agent could have access to some funds if this situation occurred.  Permanent life insurance offers such a scenario.  As the owner of your permanent life insurance policy, you have access to the cash value that the policy accumulates.  How much you are able to borrow and the repayment terms depend on your policy and how long you have been paying into it.  If you take a loan from your permanent life insurance policy, you still have the death benefit coverage.  There is typically a low rate of  interest specified in the policy loan provision of your permanent life insurance policy but your policy continues to grow so the loan is usually a zero cost loan.  Furthermore, you don’t even have to pay the loan back.  If you do not pay the loan and interest back it will be repaid to the insurance company at death by subtracting it from the death benefit.  It is important to know the rules and stipulations of taking a loan on your policy before moving forward with it.

These policy loans do not require an application and can be used for any expenses that you need to cover.  The loan funds are generally mailed in 7 – 10 days in the form of a check to the insured.  Once deposited, the money can be used for anything – house payment, groceries, car payment, clothing, college tuition or books – the money is yours to spend on areas where you are in need.

Living benefits

Some life insurance carriers offer living benefits with their permanent life insurance products.  These benefits can be used when the insured becomes diagnosed with a chronic or critical illness.  You do not have to be terminally ill to receive them.  If a qualified physician diagnoses you with a critical illness, such as heart attack, stroke, cancer, blindness, or Alzheimer’s disease, you can receive a lump sum or monthly benefit based on what is spelled out in your policy’s living benefit rider terms.  These funds can be used however the insured wants to use them, but typically to make up for loss of income, medical bills, or everyday expenses.

A good friend of mine, who sold real estate with me, was diagnosed with cancer while in her early forties.  She was married and had two sons, one in elementary and the other in high school.  This friend was a hard, diligent worker and therefore earned a good income selling residential real estate.  Remember, her income was 100% commissions.  As her cancer progressed she received treatments and underwent surgeries.  Obviously, this took away from her ability to perform her job as she normally could.  Our office had a wonderful teamwork atmosphere and we took care of each other.  The other agents rallied and took care of this agent’s customers, clients, and business in general.  Even with this volunteered help, the agent’s income was not as it was before her illness.  I do not know if she had any life insurance, but I do know that she did not have a policy where she could utilize the living benefits that would have served her very well during this time.  The cost of medical bills and the lack of income took a toll.  Her husband worked full time, but without her income, living their normal life grew a little tough.  Not only financially, but in need.  My friend was not able to provide the care to her family by preparing meals, running errands, doing the laundry, helping with homework, and cleaning the house.  Again these are some areas that it would have helped to have the extra funds provided by a life insurance policy’s living benefits.

Retirement Income

As stated in the introduction, self-employed people, like real estate agents, need to prepare themselves for their retirement.  No one else is going to do it for them, there is no employer offering benefits.  Typically, a SEP or IRA was the primary ways to do this.  Some of the agents bought rental property and are planning for that to be their retirement income.  Another, highly unknown, way someone can plan for retirement is with a life insurance policy.  Indexed Universal Life insurance is a vehicle that can be utilized this way.  Indexed policies are permanent life insurance plans that build cash value on tax-deferred basis and can be accessed during the life of the plan so you can take care of something of larger importance..

If you are a real estate agent, we understand how your job works and can help you decide what your life insurance needs may be.  Whether it’s for income replacement, retirement, or another reason, we can help walk you through the necessary steps.

Insurance for real estate agents

To make a safe and informed decision about any insurance product, contact the professionals at Ogletree Financial Services. To get the necessary information about the type of life insurance to meet your needs, you can complete the form on the left to get immediate information or contact an insurance professional at 1-800-712-8519.

Frequently asked Questions

Why do real estate agents need life insurance?

Many real estate agents earn a large income that their families depend on. In the event of their death, the benefits from a life insurance policy may help the family maintain their current life style by covering their daily expenses.

What is the best life insurance for real estate agents?

The death benefit from a term insurance policy can help the insured’s beneficiary. Investing in an Indexed Universal Life insurance policy can help the insured prepare for retirement and provide a death benefit.

Does a real estate agent’s employer pay for their life insurance?

Most real estate agents are self-employed and do not receive benefits such as health or life insurance, a pension, or an advertising budget. It is usually up to the self-employed person to buy their own insurance and other benefits that are normally received if they were employed by someone else.