Life Insurance

SELL MORE INDEX UNIVERSAL LIFE BY ASKING FOR LESS…

Presented by Brian Leising   When presenting Index Universal Life (IUL), we usually position the product as an either/or decision.  You either place your retirement dollars in an IUL or continue placing them in your 401(k).  When it works, this all or nothing approach is great.  What happens when this approach fails? Do you think some people are afraid to place all their eggs in one basket?  Consider this: don’t ask for all their eggs, just a few.  Here is the second way you can position IUL as a retirement plan supplement: Consider positioning IUL as a resource to tap during down markets.  During retirement, people need a steady income whether the stock market is up or down.  If a client withdraws money from a qualified plan invested in stocks when the market is down, they are selling at a loss.  This has a detrimental effect on their total funds over time.  What if they did not have to sell at a loss? What if they had an alternative fund to draw from in those down years?  Here is an example: The years 1973 through 1993 included five years with stock market losses.  Using this strategy, a client would only need their IUL to cover five years of loans or withdrawals, not all 20.  Since clients pay taxes on withdrawals from qualified plans, not on life insurance loans, the net amount needed from loans is actually lower than their qualified plan withdrawals.  You don’t need to ask for nearly as much money to fund five years of a reduced income need.  It should be much easier to redirect a portion of a client’s retirement contributions than all their contributions. How can these two ideas presenting IUL as a retirement supplement lead to more IUL sales?  1) Prospective clients tend to be more receptive to redirecting or moving some of their money rather than all of it.  This will help you close more sales.  2) Once they see the benefits of having an IUL, clients will ask to place even more money into the contract.  They will even think it was their idea.
Life Insurance

Three ways for a Property and Casualty Agency to…

Presented by Brian Leising   Are you concerned about losing clients to your competition?  Looking for new ways to boost your retention rates and grow revenue?  The average client retention rate is 10% higher when agencies cross-sell products.  Many agencies fail to effectively cross-sell life insurance because they do just a few basic things the wrong way.  You need a plan.  Here is the second of three items that all successful agencies use to sell life insurance to their auto and homeowners clients:  
  1. Understand life insurance must be sold pro-actively. Selling auto and homeowners insurance involves sales skills, but selling life insurance requires a different skill set, a different approach.  People are not required to purchase life insurance.  The lowest price is not going to make the sale.  You have to make them realize they need the coverage.  You cannot throw out numbers of different coverage amounts and expect them to pick one.  You need a system in place to determine the amount and type of coverage needed for your client’s situation.  It really doesn’t matter if you use a computer program or a quick analysis on a napkin, have a system to use and use it, every time.  In the end, the computerized systems and the shorthand napkin systems arrive at nearly the same coverage amounts.  People only buy life insurance for two reasons, they love someone or they owe someone.  All systems take these reasons into account.  We tend to look at them as debts to pay off (owe someone) and income to provide (love someone).  Looking for a system to use?
    1. Financial Brokerage quoting engine needs analysis
    2. Calculate Your Needs from lifehappens.org
    3. My two-column shorthand system (article coming soon!)
    4. The four zeroes (0000) approach (article coming soon!)
Start using one of these systems this week, then check back next week for part three.
Life Insurance

Three ways for a Property and Casualty Agency to…

Presented by Brian Leising   Are you concerned about losing clients to your competition?  Looking for new ways to boost your retention rates and grow revenue?  The average client retention rate is 10% higher when agencies cross-sell products.  Many agencies fail to effectively cross-sell life insurance because they do just a few basic things the wrong way.  You need a plan.  Here are three items that all successful agencies use to sell life insurance to their auto and homeowners’ clients: Have a system in place to ask for life insurance business.  It doesn’t matter what system you use, have one and use it.  One agent I know has a dollar bill and sign on his desk that says “This dollar is yours if I don’t ask you about life insurance.”  Do you send out annual review letters or e-mails?  Be sure you include life insurance.  You could also play a video in your office waiting area.  The LIFE organization has several “Real Life Stories” available at www.lifehappens.org. Work on this first, then check back next week for part two.
Life Insurance

What’s behind door number 3? A life insurance conversion…

Presented by Brian Leising   Are you unhappy with the conversion options available to your clients? Not able to sell term and permanent coverage to every client every time?  Here’s another option to consider: Return of Premium (ROP) term.  How can ROP help?  At the end of the term the client receives cash, walks away and that’s the end of it, right?  Most carriers offering ROP actually give the clients three options.  The obvious option is to take the cash and run.  The client could also apply the cash to convert to whatever permanent plan the carrier makes available at the time, thereby reducing the required premiums to maintain the same face amount.  What people tend to forget is the third option.  The client can choose to use the ROP funds to purchase a reduced paid-up policy.  The policy is paid-up…guaranteed. Here’s an example from one company using a preferred non-smoking male age 35 for $500,000: The annual premium is $110.  After 30 years the person could choose a $64,322 paid-up policy.  He could alternatively purchase a traditional term for $530/year and 30-pay a $64,322 no-lapse UL for only $544/year.  Two separate policies actually represent a savings of $26 in this scenario.  But is your client going to do that?  If they will, that’s great, you just used the ROP concept to sell a permanent plan in addition to the term you were going to sell anyway.  Your client is closer to having the proper coverage for their needs and you made more money.  Cha-ching!  But how many of your clients are actually going to do that?  They may not see the need for permanent coverage.  When money gets tight, which policy is going to go?  What if they miss a premium payment on the no-cash no-lapse guarantee UL?  There are potential leaks in the two-policy plan.  People don’t always do what’s best for them, but what is perceived to be easiest.  The ROP option gives the client only one policy to deal with and an absolute guarantee their permanent plan will indeed be permanent.  They know from day one how much permanent coverage they will have and what the premium will be – zero.  Show your clients what’s behind door #3.  You can’t lose.
Life Insurance

What’s behind door number 3? A life insurance conversion…

Presented by Brian Leising Are you unhappy with the conversion options available to your clients? We typically sell term life insurance to fill a temporary need, but over time needs change. The reasons for coverage change from debt payoff (mortgage) and employment income replacement to social security income replacement, health care expenses and wealth transfer. These are needs your clients will have between retirement and death. Compared to their younger selves (your original term clients), 20-30 years gave your clients not only age, but extra pounds and health problems that didn’t exist decades earlier. What do you do when a new fully underwritten permanent plan of life insurance is not an option? You look at conversion options. Most insurance companies allow policyholders to convert their term policy anytime during their initial level term period, up to around age 70, to any permanent plan they make available at the time of claim. Good news! Your client can get permanent coverage. Bad news! They are at the insurance company’s mercy as to what kind of plan is available. Many carriers limit the products available for conversion, usually omitting their most competitive plans, some offering pricy whole life or current assumption (no guarantees) Universal Life. Some carriers by current practice make all their current permanent plans available. Good for them. What will their current practice be in 20 years? Who will own the company then? Clients have no guarantee an insurance company will continue that practice and may be stuck with no guarantees or with high priced options. If you can sell your client a permanent and term plan from the start, you can solve this problem. We know that doesn’t work in every situation. Clients may not see the need for permanent coverage or the price may be too high. What else can you do? Check back next week for the answer in part two.