The History of Life Insurance, and Sales Strategies Product Suitability Term Customers with limited income compared to need (affordability). Customers with a short-term exposure that needs to be covered (debt). Whole Life Hate to say it, but I m not a fan. If you fund a Traditional Universal Life with the same premium as a Whole Life, the UL will outperform it, and give your clients more options. However, minimum face amounts on Whole Life are lower than UL, so if you have a prospect with a limited need, this may be the way to go. Traditional Universal Life Customers who are fine with a conservative but reasonable, and stable, consistent rate of return. Variable Universal Life Customers who like big returns (who doesn t), but can handle (both from a time perspective, and mental and emotional perspective) the periodic downturn in the market. Because of those periodic downturns, it s important that these policies aren t written at minimum premium. Preference would be somewhere between Target and Guideline Maximum premiums. Indexed Universal Life Customers who like big returns, but are fine with caps on growth, to guarantee against a negative rate of return. Because of higher fees associated with this type of policy, Target to Guideline Maximum premium should be encouraged.
Sales Strategies Will I need much Life Insurance after I retire? Customers will find themselves in one of three spots, all requiring life. Poor Middle Income Wealthy Still working Retired Retired -Active Income -Passive Income -Wealth Distribution -Needs Income Replacement -Pension -Probate fees - Survivor will receive a -Estate taxes lower, or no benefit -Social Security - If both are receiving Social Security, the lower benefit will go away. Why should I buy Life Insurance for my kids? Why should I buy that much Life Insurance for my kids? Guarantee their insurability. Don t focus on sickness, focus on their child getting into hobbies such as sky diving, scuba diving, getting a pilot s license, etc. Someday, they ll be buying Life Insurance on themselves, to protect their family. You can do something for them, that they can t do for themselves, so when that day comes around, they don t need to buy as much, because you ve locked in a significant amount for them, at a much lower premium. In the event of a tragedy, while they re young (focus on this, the least). With a large face amount, this allows the parents to take time off work to adjust, mentally and emotionally. This is particularly important if there re other children in the house. Mr. and Mrs. Prospect, what this will do for you is, God forbid something happen to one of the kids, you wouldn t have to worry about going back to work right away. You ll have the option to take a leave of absence so that you can make sure you re there for the other kids, to make sure they can adjust.
Why should I save money in my Life policy vs. my? It s tax deferred. Earnings pass to your beneficiary, income tax free. Cash retrieval. o Withdrawal your money under First In, First Out (F.I.F.O) rules, as opposed to Last in, First Out (L.I.F.O.) rules. o You can borrow against the Cash Value, and avoid paying taxes entirely. Forget the needs analysis, and just write the policy. Periodically, you ll get a call from a prospect that will sound like this Hi,. This is John Smith. Hi, John, how are you? Great, thank you. Hey, do you guys sell life insurance? We sure do, what did you have in mind. How much would a $250,000 Term policy cost. About $26 a month. That s pretty good. Is that something you want to get started. Sure. This is usually somebody between 35 and 55, and has either just had a close call, or scare that had them visualize their mortality, or they know someone, usually around their age, that just passed away. These are people who know they ve had a need that they procrastinated on, and now they re hot to trot. Sometimes if you jump into making sure they do a needs analysis, or want to talk about differing product choices, they cool off, and not buy. They just want to get a policy, and get it over with. With this prospect, you firm up the appointment, and just write what they want. And don t feel you re not doing your job right, if you take this approach, because, a good policy today, is better than the perfect policy, someday. Between now, and that someday, if they don t act, they may die, and their family would be left with nothing.
It s also easier to persuade a client, than it is a prospect. Once the policy is written, and it s in the underwriting process, give them a call, and say, the policy should be finished going through underwriting, pretty soon. By the way, when you picked $250,000, how d you happen to pick that number? When they give you their reasons, if there s anything they didn t consider, say What you ve said, makes sense. Tell me though, did you ever consider At this point interject your other points on needs they may not have considered. If the client is agreeable, contact underwriting to increase the face amount. If I can t get the right face amount, I ll just hold off until I can. There s an old proverb that goes, Better to light a candle, than curse the darkness. My old DM used to say, if the lights went out, would you light a candle, or sit in the dark? Of course, the answer is, light a candle. To which he would reply, because a little light is better than nothing, right? Some life insurance is always better than no life insurance. And you want to make sure they understand that even if the amount they get isn t optimum, it can still do a great deal of good for their family because it buys them years of time, to financially adjust. Face Amount, Premium Budget, and Product Choice. There are three variables to look at when making recommendations, face amount, premium budget, and product type. My order of priority is budget, then face amount, then product type. I prioritize budget, because if I go over their budget to get a permanent plan, or to get a higher face amount, and they buy, they re likely to lapse the policy, which does them no good. Next, is face amount. Even if a person has a permanent need, if they can t afford to buy the face amount they need in permanent, I ll recommend a term plan that we can convert to a permanent plan, at some point down the road. The point to emphasize, when it comes to face amount over product type is, if you were to pass away five years from now, it really doesn t matter what type of policy you have. What matters is that you have the right amount of insurance to make sure your family is taken care of, correct? Let s talk when my term plan is up in a couple of years. Sometimes you run across the person who has a term policy that s going to expire in the next couple of years, and they want to hold off until then, to make any changes. Here s the conversation you want to have with them, to get them to move sooner, rather than later.
A new policy may be similar in price to your old policy. Often, when new products are introduced, because of better mortality tables or efficiencies, prices drop. There s a possibility that a policy they took out several years ago, may be similar in price, to what they would pay for a new policy, even though they re older. Every day, we get one day closer to losing a preferred or ultra-preferred rating tier. All it takes is a little weight gain, or a little jump in cholesterol or blood pressure, to push you into a different rating tier, and you ll forever, pay more. Often times, people with expiring term policies are in their 40 s and 50 s. At that age (trust me, I m in that zone), we see that weight gain, blood pressure fluctuations, etc., all happen a little easier than they did when we were younger. Getting locked in before a slight change in health, that can make a big difference in premium, is important. Every day, we get one day closer to becoming uninsurable. It doesn t have to be a catastrophic diagnosis, that makes us permanently uninsurable, sometimes it could be an accident. Or sometimes a temporary illness, creates a scenario, where we re temporarily uninsurable. If due to an accident or temporary illness, you become temporarily uninsurable, that could be a year or two, that your family s not protected.