Life can be scary. Just look at all the survival handbooks out there: You just never know.
“Your health can change tomorrow,” says Steve Spector, managing director of risk management services for Kolb+Co., an independently owned accounting firm, in Brookfield, Wis. “Tomorrow’s not promised to anybody.”
So what’s your best bet? Life insurance. Obviously.
Despite the solution it offers, a problem remains: It’s still insurance. As with any other, there’s a stigma. Consumers don’t really understand it. They don’t know how to buy it, and they aren’t always sure why they should. That’s where brokers come in.
So we’ve prepared a survival guide of our own that covers everything from how to thrive in the industry to how to score your best-selling potentials. Good luck.
Illustration by Colin Hayes
HOW TO DEFINE IT
Life insurance (noun): Insurance that pays out a sum of money either on the death of the insured person or after a set period.
And the more specific kind:
Whole life: Life insurance that pays a benefit on the death of the insured and also accumulates a cash value.
Term life: Life insurance that pays a benefit in the event of the death of the insured during a specified term.
Universal life: Payments of the insured are placed in an investment fund, earnings from which pay the premium on term life insurance while any remainder continues to increase the policy's value.
Permanent life: Life insurance that remains active until the policy matures, unless the owner fails to pay the premium when due.
Group: Covers a group of people, usually employees of a company, members of a union or association, or members of a pension or superannuation fund.
photo credit: David Castillo Dominici
HOW TO (SUCCESSFULLY) SELL LIFE INSURANCE
Offer it. Ask practically anyone, and they’ll tell you life insurance is pretty darn important. So why in the world are people not buying it? It might be because no one’s offering it to them.
A Deloitte survey out this year found 33 percent of people said they didn’t have coverage because no one had offered to sell them a policy. This is despite the fact most workers (45 percent of non-buyers and 70 percent of buyers) included life insurance among their top five financial priorities.
“Life insurance is very much on the minds of many consumers,” says Rebecca Amoroso, vice chairman for Deloitte. “A significant percentage of respondents have simply not been offered coverage recently; many also noted that they never shop for coverage on their own initiative. Not soliciting their business exacerbates this gap between insurers’ interests and consumers’ needs.”
…And keep offering it. A significant number of the insured and uninsured intend to buy new or additional insurance in the next two years.
Take the role of educator. Let’s be honest: Insurance of any kind can really confuse people. Explain that life insurance can be a source of cash in retirement, a way to save money for financial emergencies, or to help finance a child's college education.
Keep it simple. Consumers like simplicity. If you just point out the obvious—that they should protect their family—and you give them easy solutions to do so, they’ll probably do it.
photo credit: sixninepixels
HOW TO TAKE ADVANTAGE OF SELLING OPPORTUNITES
Work with financial advisors—and do the talking for them. A survey by Saybrus Partners suggests that more than half of financial advisors admit they steer clear of discussions about the benefits of life insurance when speaking to clients on general financial planning issues, largely because they feel uncomfortable talking about the policies.
“This means that many of their clients may be lacking essential protection for themselves and their families or missing opportunities to more effectively transfer their wealth to the next generation. Life insurance is not a set-it-and-forget-it product. It should be monitored and adjusted,” says Kevin Kimbrough, national sales manager for Saybrus.
The survey did find that 42 percent of the advisors surveyed said they’d feel more comfortable discussing and recommending the products to their own clients if they could work with a life insurance specialist or attend life insurance seminars geared for financial advisors.
Work with employers. People aren’t always as proactive as they can be when it comes to financial products and insurance. When life insurance is offered in the workplace, people are more likely to buy it.
photo credit: renjith krishnan
HOW TO ASK IMPORTANT QUESTIONS
Successful brokers know how to ask questions.
“Sometimes they aren’t fun, sometimes they can be disturbing. But you may have to make them uncomfortable thinking about death and disability. That’s how you find a solution,” Spector says.
Think about the prospect. If you’re talking to a married couple with a couple of kids, ask “feeling finding questions,” Spector suggests. How would you feel if you didn’t come home tomorrow night? How would your family survive? How much money would your family need based on your existing income, your lifestyle, the reduction of your debt, any mortgages, student loans, and so forth?
Spector says he talked with a father and son (both adults). The son was buying in to his father’s company. Spector says a good question for him was, “If your father was to die, how much was the mentoring that you weren’t able to get worth?”
Talk money. How much support would you need if an income was missing from your family? How much would be needed?
photo credit: Stuart Miles
HOW TO MAKE A PROFIT
Think whole. According to LIMRA, the biggest driver behind both total premium and policy count growth continues to be whole life. “[Whole life] remains very attractive to consumers looking for security of premium and cash-value guarantees along with lifetime coverage,” says Ashley Durham, senior analyst, LIMRA product research.
In the first quarter of 2011, whole life premium increased 10 percent. Whole life policy count improved 6 percent. Half of all the individual life insurance policies issued in the first quarter were whole life products, the LIMRA report says. Measuring annualized premium, whole life market share reached 32 percent in the first quarter—just 7 percentage points lower than universal life, which has held the lion’s share of premium sales since 2003. (At its peak in 2007, UL market share was 20 percentage points higher than whole life.)
But…pay attention to other trends and reports. In an Eastbridge Consulting Group survey, carriers said life insurance is the most profitable of voluntary benefits. Voluntary AD&D coverage received the highest rating, with 43 percent of the respondents selecting it as a “very profitable” product line. Universal life/whole life ranked just behind (with 41 percent), followed by term (with 26 percent).
photo credit: jannoon028
HOW TO THRIVE IN THE INDUSTRY
At least according to one expert in the field, Jody Sevy, Transamerica employee benefits territory vice president:
“Follow the distribution trends. The days of the door-to-door salesman are long gone. But people are still in need of resources to learn more about their options and a convenient way to purchase these products. The voluntary benefits industry has been experiencing a rising demand for voluntary life and supplemental health coverage as more and more companies are reducing employer-provided benefits— leading to a growing concern about the increasing gaps in coverage. People are looking to voluntary benefits as a means to protect themselves and their families from any potential risk, especially during these uncertain economic times. With this trend, there’s a real need for brokers and agents to grow and adapt to the changing environment, packaging benefits in a way that is not only cost-effective but also provides employees with a broader level of security. Most importantly, adaption means developing technology that would make the enrollment process easier.
Focus on the death benefits, but don’t forget about the cash value. It provides many valuable options including long-term affordability and additional benefits like long-term and critical care.
Don’t limit yourself. Life insurance is the product, but the career possibilities are endless as you can enter sales, marketing, administrative, finance and IT in the industry.”
photo credit: Danilo Rizzuti
HOW TO CONQUER OBJECTIONS
When someone says, “It’s too expensive.” Tell the consumer you can fund life insurance any way they want—whether it be by buying universal, term or whole life policies, or any combination of them. Identify what the buyer wants out of a policy and how they want to fund it. “That way the buyer is thinking, ‘I’m not being sold something, I’m planning with them,’” Spector explains.
“I overcome this objection by saying, ‘We still have X amount of insurance but we’ll pare it back.’ That eliminates pressure and stress. They might say, ‘I don’t want to put in $15,000 a year, but I can put in 10K, or I can put in 5K. And that’s fine.”
When someone says, “But I don’t have a family.” Single people still benefit from life insurance—and maybe in a greater way. That’s because they’ll get a greater discount on a policy when they are younger, single and free of medical woes. But the policy still will be just as effective after significant life changes.
Revisit potential buyers. Set up a review meeting a year later. Things might have changed in people’s lives, so you can make changes in people’s insurance programs, too, whether it’s additional insurance, term conversions or so forth, Spector says.
Consider what generation you’re talking to—and plan accordingly. Older prospects are harder to persuade with solicitations than younger consumers. On the flip side, the youngest respondents found the application and underwriting process to be much more onerous than was the case among older consumers.
photo credit: t0zz
HOW TO BUY IT (for the consumers)
Force yourself to think about it. No, thinking about death—and actually making an appointment to talk about it—isn’t exactly the plans you want to make. But you need to.
Figure out your needs. Ask the tough questions. Talk to your broker or advisor about what you want (and need) out of a policy. “[Consumers] need to understand what you’re trying to accomplish, and that has to be based on a long-term thought process,” Spector says.
Buy it from someone you trust. Spector says you should be able to develop a good, professional and friendly relationship with your life insurance seller.
Have more than one meeting. The first meeting you go to with a broker, only ask and respond to questions. Think about what you want, what they recommend and revisit—and buy a policy—at a later meeting.
Make life adjustments as needed. Think about your life, where it’s heading and your goals. Financial triggers and familiar life events are significant in the life insurance purchase decision. Your needs for insurance will change when you get married, have a baby or divorce.
photo credit: Salvatore Vuono