2011 Life Insurance Market Study: The Cost Conundrum

The key to persuading prospects they need life insurance? Establishing a personal connection

Agents hear the same objection from prospects nearly every day: “Life insurance is too expensive.” This particular challenge is like music to my ears. It’s an opportunity to help them fully understand the implications and expenses associated with not having life insurance. “Life insurance is too expensive” is simply an excuse, and the successful agent knows it’s coming and addresses it before it becomes a problem. Communicating value in the form of price is a byproduct of a good agent and a great recommendation, all followed by exceptional service. On the flip side, when price is discussed without first uncovering the client’s individual needs and concerns, the agent is set up to fail.

Relating to your client

Being that I am the sole provider for my wife and two children, I am the poster-child for life insurance — and I carry enough to provide income to my family indefinitely. I have a mortgage, debt and underfunded college and retirement accounts. When I consider the mere 1 percent of my income that is spent on life insurance premiums, it’s easy to see that it’s a great alternative to my wife and children losing everything.

Being able to relate to a client is what makes a successful agent, and I can fully relate to clients who are afraid they’ll pay too much for life insurance. I once had this same fear. In fact, I still remember the days when purchasing tangible items brought me more pleasure than planning for future protection. Now I have a family, and I want to focus first and foremost on their wellbeing.

So, I constantly tell my story to clients. This helps turn the focus to starting a sales conversation instead of giving a sales pitch. A sales conversation uncovers facts about the client’s own situation and needs. In contrast, a sales pitch might focus exclusively on products, IRRs and supplementing retirement income. This will fall on deaf ears, especially for clients who are living paycheck to paycheck.

Always lead with a sales conversation instead of a sales pitch, and always focus on creating ways the client can afford life insurance, because of the great value it brings.

Breaking things down

Before any kind of presentation can occur, a thorough fact-finding process needs to happen. Keeping the discussion in a conversational format will allow you to drop subtle hints about the affordability of life insurance.

For example, you might say: “If I passed away today, my mortgage payment is due on the first of the month, my car payment is due on the fifteenth and about $1,500 worth of other commitments are due throughout the month. I would much rather pay $40 a month, and cut out something else, than risk sticking my family with those bills.”

Once you’ve shared your story, you can determine multiple needs for insurance by asking questions or making statements. These might include:

“Who would you want to own your house if you passed away?”

“Paying 1 percent of your income toward protecting your income is better than your spouse losing 100 percent of it, right?”

 “Tell me why you are sitting with me now. What has you awake at night?”

“What other assets do you have that your family could liquidate immediately should you pass away?”

“If life insurance were free, how much would you want? Why is that?”

“What is the absolute minimum amount of monthly income your spouse could survive on?”

The presentation

Now that you have determined multiple needs for coverage, as well as income and monthly expenses, you can present your solution. It is powerful to present a solution and reiterate the client’s stated needs without necessarily naming a price. You can do this because price should no longer be the No. 1 concern. Once the concept of life insurance is explained well, the cost and exact policy becomes largely irrelevant.

The goal is to take an application and get an approval in hand before you name a price. Once you have an approval in hand, it’s time to tailor a policy to fit the needs of the client, and their budget. I have found that chances are good that the client will accept the proposal as I present it, but I always come prepared with alternative solutions.

For people that are living paycheck to paycheck, the need for life insurance is much greater because they lack the safety net to maintain their lifestyle for even a short amount of time. If the client is stuck on affordability, try pitching a 1-year annual renewable term plan to bring their rates down. These are much less expensive than 30-year term plans or permanent policies.

Of course, this is just a quick fix. I only sell this type of policy under the full understanding that I will be knocking on the client’s door next year, and every year afterward, to make sure we ultimately write them into a longer guarantee policy. I refer to this policy as the “band-aid policy” because it is a temporary fix.

Following up

Implementing a yearly review call is a powerful way to re-solicit sales or conversions from your clients. If you do a good job building the emotion and need behind the concept of life insurance, it will always be at the back of your client’s mind. In fact, I find that many of my clients call me to upgrade their policy if I don’t beat them to it.

Another technique that creates easy follow-up opportunities is helping to build a larger financial plan. I like to employ a “path to security” with my clients. This is simply a plan over 12–24 months, which creates a budget and frees up money to fund the security that insurance programs offer. Through this type of planning, you can often “find” clients hundreds of dollars each month, which is a win-win.

It is powerful to be in a position to help people make financial decisions. Always remember that these decisions can be financially catastrophic, or lifesaving. One of the best parts about the work we do is that we can help tip the balance toward positive, lifesaving decision-making. «

Nic West is a senior advisor and affinity brokerage director at http://www.WholesaleInsurance.net, a division of Pinney Insurance Center.

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