Making the Pitch
Try these strategies when selling life insurance to your senior clients.
Although the uncertain economic environment benefits overall life insurance sales, you still need a sales strategy to motivate potential buyers. We asked two industry veterans, one in personal production and one overseeing a national sales force for a carrier, for their insights into today’s successful sales strategies for senior market advisors.
Back to basics
As director of Individual Life Insurance Advanced Marketing for Prudential Life Insurance in Newark, N.J., Brett Berg, JD, LLM, CLU, ChFC, works with the insurer’s top advisors. Successful life insurance producers in this market are going back to the basics, he says. “They’re connecting with their clients, especially the senior clients, in the context of overall comprehensive planning,” he says. “They are tailoring their life insurance product recommendations to the client’s needs and budget in that context.”
Berg cites two factors as particularly important. The possibility of higher estate and gift tax rates starting next year is motivating wealthy clients to take action now instead of later. For high-net-worth older clients, the gifting opportunity for the remainder of this year is just over $5 million per person and $10 million per couple. That gifting opportunity continues to provide a business opportunity for advisors, says Berg: “What we see them doing is positioning permanent products with no-lapse guarantees to lock in those guarantees.”
For other older clients, Berg has observed that flexible insurance products are important. As an example, he points to term insurance products with conversion (to permanent life) features. Those products provide coverage to the clients without committing them to permanent policies. “It gets the client to move, to lock in protection and to preserve insurability, which we all know is important,” says Berg.
“They’re connecting with their clients, especially the senior clients, in the context of overall comprehensive planning.” ~ Brett Berg, Prudential Life Insurance
Selling risk transfer
Bill Black, CLU, ChFC, with W. H. Black & Co. in Winter Park, Fla., is a 22-time qualifier for the prestigious Million Dollar Round Table. His approach to life insurance with the senior market is straightforward. “My biggest success in selling life insurance is selling insurance not as an investment but as a transfer of risk,” says Black. “What we look at is using what I call guaranteed premium universal life insurance, which is life insurance that has a premium and a death benefit that is guaranteed to age 100 or even as far out as 125 with a minimal cash value.”
The common feature among Black’s clients is that they need life insurance, whether it’s for estate liquidity, family protection or another reason. When prospective buyers counter that they can earn more with their money than the insurance company can, Black shows them the policy’s internal rate of return based on realistic life expectancies. “That internal rate of return shows you how much you would have to earn on average every year after taxes to have the premium grow to an amount equal to the death benefit,” he says. “The internal rate of return that your client would have to earn every year after taxes to beat the insurance is virtually an unattainable number. When you look at it that way you almost classify life insurance as a separate asset class.”
Coverage reviews as marketing opportunities
Black doesn’t rely on advertising campaigns or high-pressure referral requests to grow his business. He believes instead that the best prospects are those with whom the advisor has established credibility. It turns out those prospects are found in the advisor’s existing book of business but many advisors overlook that opportunity. “One of the things to do is to talk to your existing clients about a complementary review,” says Black. “Clients are always looking at their certificates of deposits when they come to maturity. But people are under the misconception that once they buy their life insurance they can throw it in a drawer and forget about it.”
In response to that attitude, Black points out that most clients aren’t using the same cellphone or computer they owned 10 or 20 years ago. Likewise, he points out, the “technology” of life insurance contracts also has changed since the client bought the existing policy. “Now, when I say technology what I mean is the interest rate credits in these guaranteed universal life policies,” says Black. “The mortality tables have changed. People are living longer. The ratings of companies have changed. You know that company that you bought 10, 20 years ago, maybe it’s not as strong as it was back then.” All of these factors, says Black, provide viable reasons to offer clients a complementary review of their existing coverage.
“The internal rate of return that your client would have to earn every year after taxes to beat the insurance is virtually an unattainable number.” ~ Bill Black, W. H. Black & Co.
By Financial writer, Ed McCarthy, CFP for the September 2012 issue of Senior Market Advisor.