The life insurance sale and its place in the larger planning process
by Kenneth A. Shapiro
Mr. Shapiro is President of First American Insurance Underwriters, Inc., a Needham, MA-based national life brokerage firm specializing in coaching growth-oriented producers and providing them solutions to their complex cases. He can be contacted at kshapiro@faiu.com.If you’re looking for sure-fire ways to double revenue in 2014 or for a “proven formula” to close with your prospects, then this isn’t for you –– and here’s why. Successful producers know from experience that there are no easy ways to close a life insurance sale. That takes time and persistent effort. These are the producers who also know that the rewards are more than worth it.
Being realistic about making 2014 more rewarding than last year is the place to begin.What’s needed is an “opportunity strategy,” a way to focus our time and energy on producing the best results. Here are three such opportunity strategiesfor the year ahead:
1. Focus on life insurance protection
While life insurance premiums are trending upward, according to LIMRA, policy counts continue to rock along essentially flat, with the number of applications declining. Even with added technological efficiencies, simplified underwriting, fewer medical hurdles, and lower premiums, life insurance sales are barely holding their own, even when taking into account the unrelenting sales of indexed universal life products.
To the average industry outsider, it may seem that life insurance has fallen behind, with other branches of the financial services industry superseding it. At times, it seems that this is a view shared by some life insurance producers.
While such a picture is certainly a reality check, it’s only part of the story. For those who believe in life insurance, who see what having the right policies can do for clients, this is a remarkable business. But more than a firm belief in the product is needed if our industry is to move the needle forward. More than ever, producers can benefit from an opportunity strategy that assists them in focusing their energy in the right places.
Winning with the Generation X and Y markets. With so much energy and interest directed to now aging Baby Boomers, the Generation X (born ’65-’80) and Y (born ’80-’96) markets seem like a sidebar to the main story. As many life agents know, these consumers can be challenging anddifficult to reach.
The place to begin is by abandoning the life insurance sales approach that’s deeply ingrained in every life insurance agent; namely, that “life insurance is sold, not bought.” These two cohorts don’t want to be “sold”anything and run from all such attempts.
A formula for success in marketing to these segments might go like this: these highly technological-dependent consumers want what they want when they want it –– and that means right now. Taking time to meet with a life insurance agent, filling out a multi-page application, answering medical questions andscheduling a physical exam are not options. Forget it –– it may not happen.
More and more, they’re online buyers –– including auto, home and life insurance –– and they want it done fast (“15 minutes and you’ll save $423”). Life companies have figured this out and are getting term life online marketing right with simplified products: no medical exams, three or four medical questions, quick decisions, low prices and coverage pushing $1 million for those willing to pay extra when bypassing a medical exam.
What has this to do with “shoes on the ground” independent life agents? A lot. The market is huge, roughly 122 million consumers in the X and Y generations. The question is how to go about approaching them.
- Generation X has a strong sense of family life, a need toresearch before buying, a somewhat cynical attitude, and they look for honesty, transparency and guarantees.
Since many are in higher income brackets, they are prime prospects for advisors who are patient and help them understand term life for meeting a temporary need and whole life as a permanent solution for a permanent need and its place in a portfolio of assetsthat can be a cash resource to help meet various needs such astuition bills andadditional retirement income. By using an Internal Rate of Return analysis, clients can learn how life insurance measures up with other asset classes. - Generation Y expresses a distrust of traditional advertising and seeks out peer opinions, does things in groups, and “lives for today.” While some advisors may not view them as current prospects for life insurance, they’re tomorrow’s customers and, as such, deserve attention.
One way to begin is by tailoring website content to recognize their concerns and expectations, including an agent’s blog that offershelpful information, a term life quote engine, and testimonials from peer clients. Make it clear that information and education is your goal and that you encourage dialogue and questions. Also, take social media seriously, particularly LinkedIn, Twitter and Facebook.
2. Focus on estate planning
It’s unusual for an agent to find a prospect who knows much about life insurance, let alone estate planning. And when you think about it, talking to prospects about buying life insurance without first engaging them in a conversation about what life insurance helps create (an estate) is going about it backwards.
With too many agents, estate planning is a missed opportunity strategy. If you prefer, call it a life agent’s “sweet spot,” where they should be positioning themselves as professionals. Consumers get excited about possibilities, dreams if you like. Or, as the Toyota ads suggest, “Let’s go places.” This really is what an estate plan is all about; this is what it makes possible, and this is what clients are looking for from a life insurance agent.
We can be so concerned with the products we sell (and we certainly need to understand them) that we fail to help clients see that a life insurance policy’s immense value rests in its ability to help take them where they want to go.
3. Focus on long-term care
How many times have you heard this? “I had interested prospects, but closing sales was close to impossible, even after multiple meetings and various proposals.” Consumers want long-term care coverage, but few ever write a check. And then you wrote off the product.
The market has changed and it’s time to take Long-Term Care Insurance (LTCI) seriously. Although the offerings have narrowed considerably, individual LTCI policies are still available, along with group plans. Based on almost 30 years of long-term care experience, insurance companies now offer programs that meet the needs of aging baby boomers, which now recognize that long-term care may be on the horizon. Fortunately, these new programs are highly flexible, creative and consumer-friendly.
- Single-premium LTCI with a death benefit. Individual LTCI policies failed because the price tag kept going up. Who would buy anything if they couldn’t get a firm price? The single-premium LTCI policy helps to overcome that hurdle. Yes, the one payment approach may be a hurdle for some, but there are many prospects that have the resources to invest in this coverage.
It’s particularly attractive since any amount not used for long-term care goes to the death benefit. From a sales viewpoint, clients have a product they can count on; it’s there if and when needed and there are no worries about eitherpaying for care or for premiums. - Life insurance with LTC benefits. Essentially, a life insurance policy with an LTC rider is just the opposite of single-premium LTCI coverage. For those clients focused on having a death benefit, a life insurance policy with a LTC rider may be viewed as having additional value that takes the discussion from “We’ll think about it” or “Maybe” to “Yes.”
4. Focus on multi-life programs for businesses
While they have been around for a few years, there is currently more interest since the business environment is changing for the better. As this occurs, smaller employers are looking to provide benefits for senior and seasoned members of their team, and multi-life programs are an opportunity to meet this need.
Before going further, it’s important to remember that multi-life and group insurance are not the same. Multi-life is individual coverage.Employers can select who receives it, including spouses, and it can be tax deductible. There are premium savings compared to similar individual products. The coverage is portable so employees can take it with them when leaving the company or retiring, and there are multi-life programs for LTCI, disability income and life insurance.
When producers embrace an opportunity strategy, there will be no need to look for a crystal ball to see what the future may bring. They will be creating it.
