Are you one of the bashful 56% – the 56% of Financial Advisors who, according to Saybrus Partners, are so bashful that they will not talk about life insurance even if the client brings it up? Imagine, some advisors are so uncomfortable with the product that they just cannot bring themselves to talk about it, even if they are asked to do so by the people who pay them. It boggles the mind. But, it is not all that surprising.
We have turned away from life insurance over the past 25 year for any number of reasons:
- Life insurance is viewed as an emotional product and sale – a soft skill. We have devalued soft skills in favour of technical skills since the computer uprising of the early 1980s. That devalues life insurance as a solution and agents as solvers. Oddly, we have not devalued families, just their protection.
- Many consumers and advisors do not appreciate the magic of life insurance. We don’t understand the value of letting the masses share your estate risk rather than your living with it. Investment Advisors manage the risk of inappropriate investments but usually ignore the risk of not having the time for their investment plans to work.
- Mathematics developed as a way to solve estate problems. “Investing the Difference”, and often all of a person’s discretionary financial security money, became the way to handle an otherwise delicate subject without confronting reality.
- Mortality and morbidity is routinely underplayed these days. No, we haven’t cured cancer yet and heart and stroke continue to kill people. But hey… it’s always someone else. We have fallen for the “we have all the time we need” fallacy. In fact, we are all on the clock.
- The rise of the “easy money” in the mutual funds business displaced life insurance sales as a way to make money. Today it’s about collecting big sums of cash at small commission rates to grow assets rather than taking small amounts of cash to create huge benefits at large commission rates to make money.
- Companies and advisors have evolved life insurance mostly into an investment rather than a way to provide tax-free cash at death. The death benefit is often just a side value to the crafty tax play that predominates today.
- Life insurance remains the “ugly sister/sibling” in financial planning. It’s not a sexy product everyone wants to talk about either. In fact, no one wants to talk about it and, as I have talked about recently, there are lots of these reasons the product still has to be sold. These contribute to its marginal status in the marketplace.
The Life Insurance discussion is a very personal discussion. Consumers know it. We know it. It keeps us away from it. That’s why it’s so hard to get into it. We have been told our whole lives not to pry into personal matters and this is as personal as it gets.
Personal discussion? Think about the essential questions the life discussion drags out of a prospect – the ones that people have to answer to themselves, at least, if they are willing to consider the product. Why else would you pay hard-earned cash when you don’t have to help preserve someone else’s lifestyle that you will never see. This is why we are so uncomfortable with the discussion – it is the discussion we are forced to have with ourselves that scares us most.
What are those difficult, essential personal questions? I’m talking about the questions we almost never ask aloud but are the basis of buying or not buying…
- How much do I love my family?
- How much does their safety and security really matter to me?
- Am I prepared to trade pleasure and satisfaction for them and me today for their support later when I am not here?
- Am I prepared to exchange my money today for their support tomorrow?
- Are my finances and budget sufficient to permit me to take care of the future and today comfortably?
- Am I healthy enough to qualify for the insurance?
- Will my past “sins” come back to haunt me so I get rated or turned down altogether?
See, it’s very difficult stuff. It’s like “love Insurance”. That’s why it’s entirely reasonable to be uncomfortable starting a life insurance conversation with prospects? But it is entirely unhelpful too.
Getting into the discussion takes a little finesse. You have to know what to say to get into the discussion effectively, professionally and stylishly.
At one time, when all we did was start the life insurance discussion in business, it was a lot easier. We were practiced. And, since more people were asked, they were more used to it too. Today, everyone is out of practice and it’s tough for us all.
Talking about life insurance is not an easy discussion. Because it is a character product, when you have it, you buy it – it touches emotional nerves for both the buyer and the seller. So, it’s tough even to get into the discussion. Both the buyer and the seller can have issues opening the topic. There are no successful hypocritical life agents – either you believe in the product so you buy or you won’t sell either.
However, to riff on Mark Twain, “The hardest part of getting started is what to do or say first.” Jumping right in is the right idea all right, but when moving from a general financial or investment conversation how do you make bridge to life insurance? How do you segue or transition neatly from something else into life insurance?
Side note: These questions are also great prospecting questions. They can get anyone into the life insurance discussion.
Compelling questions have developed as a smart way to get people to think about life insurance as a sensible idea for them and their situation. The idea is that the right question gets people thinking properly and past their own insecurities about buying.
If they ask a question or make a comment about it, you’re into the discussion. Your job is to carry the discussion from their answer. It starts with the question. Getting in that way makes people more receptive to further conversation and then “life insurance programming” to use the traditional term.
Programming sounds like 21st century talk yet it comes from the middle of the last one. Still it’s about code and the questions we ask are the code you need to get into the discussion.
So, if you want to get ahead on the life insurance discussion, it pays to know some of these questions that get prospects and clients thinking about life insurance in a good light. Here are just a few of the many ways you can transition effectively into the life insurance discussion and a brief explanation of then idea.
Here are a few easy and even elegant ways to start the life insurance discussion. These questions apply both for a change of course in a financial planning discussion and also for prospecting, when you ask for interest. They can work for both.
Of course, they are not all for everyone and not for every advisor either. But all you need is one of them to re-energize your faith in the product and you’ll be off to greater success. Which one appeals to you most?
- “Do you like life insurance? No one does… but do you have any idea of what good it can do for you?” Starting with a question where you are quite sure of the answer is a good way. You make people more comfortable because you are both on the same side of the discussion. Then, changing perspective makes it easier to think about going forward for you both. Make a list for yourself of what life insurance does, not what it is. This list will help you explain the value of the product so it matters to prospects.
- “There are five ways to fund your will. Which one have you chosen?” Life insurance is the easiest way to fund a will but most people do not think about it that way. That’s why will funding is a good approach to getting into the discussion – it’s a way of thinking about what it does, not what it is. Use the “Un-Will” to help in this discussion.
- “Does the nobility in your family have to start with you?” Here is another question where prospects won’t necessarily know where you are going. That’s why it’s so good. Who wouldn’t want their family to be one of the nobility? Life insurance is one sure way to make sure your family will one day. It allows anyone at least to die a millionaire. You can be a great ancestor with a small investment in life insurance.
- “Have you ever wondered how long could you afford to live on your savings?” Sadly, that’s the deal you’re leaving your family if you have no or little life insurance. Sometimes asking this question reminds people of the hard realities of life. That may be all it takes to answer those difficult personal questions in their family’s favour.
- “How important is it that your family continue to live in the world you created for them even if you weren’t here?” Sometimes you just have to ask the honest question. Sometimes you have to put it in terms they may not have considered. Again, see how we are keying on benefits of the product and not the product? We want to know what matters to most to the prospect.
- “Would you rather your family had too much life insurance or too little – if they needed it?” This question gets at the common, if lame objection about having too much life insurance. We are working with that issue in a positive way. By the way, whatever amount of insurance you buy, it will be the wrong amount. Buy what you need today and die when you need more later, and the family will have too little money. Buy what you’ll need later and then die tomorrow and they will have “too much money”. You’re wrong either way. Would you rather be wrong so they benefit or so they come up short? You decide.
- “Do you know the determining factor whether you can buy life insurance?” Some people think that if you have enough cash you can buy all the life insurance you want. They also think it’s like car insurance and they can buy it later. Of course, that’s not true. Your health buys is. Money only pays for it.
- “What do you want your life insurance to do for you? Is yours doing it?” A recent study said that 70% of consumers didn’t believe that their life insurance would do what they wanted it to do (BMO Life). Therefore, you can use this question with confidence knowing you have a 70% chance of getting into the discussion on their terms.
- “Have you outlived your temporary life insurance solutions yet?” Another great question built on reality. Yes, we bought term insurance (me too) falling for one of the great lies we tell ourselves in our 40s… “By the time I’m in my 60s I’ll have so much money I won’t need any life insurance.” Divorces, second families, rampant consumerism, housing costs and living longer changed all that. Today, we have “newlywed needs until we are nearly dead”. Do you know if your life insurance will last as long as you will?
- “Do you buy your life insurance from associations, credit cards, television, creditors or your employer? Why not own it personally?” Some people avoid the discomfort of personal questions by paying through the nose for insurance from TV, mail and the internet. Imagine all the money they can save and the extra help they can get if you step in and save them from all that business? Do it.
- “Is life insurance on your Christmas list? Probably not, do you think it could guarantee Christmases if the worst happened?” Some people actually buy life insurance at Christmas for just that reason. It’s Christmas and it’s time to do what’s right for the family, is the thinking. Excellent thinking. I know of a family nearby where neighbours are getting together to help them have a Christmas because Dad died without life insurance – at the worst possible time too. Is there ever a good time? If you are a Dad or a Mom, you can keep Christmases happier regardless. Wouldn’t that keep you happy today also? I know it does for me.
- “Have you insured your most valuable asset for your family?” Your earning power is your most valuable asset but won’t most people point to their house or their car? Often they do. However, nothing is more valuable to you and your family than your ability to bring home the bacon … bacon… sorry, I digress. Insure that wisely and you’ve insured their lifestyle and your legacy. It’s good for you and them.
- “Do you know anyone who can’t buy life insurance? Do you know why? How do they feel about it?” There is only one day we have a shot at buying life insurance. Today. Yesterday is too late. Tomorrow is not guaranteed. Today is it. Not everyone can buy and I can tell you from personal experience that they are not happy about it either. So, if you could buy, wouldn’t it make sense to do so and make your someday un-insurable self, happier. And your family more secure? Just asking…
- “Have you ever heard of a widow being insurance poor?” No one ever turns down a check from the insurance company. It always goes to good use. Sure people can claim to be insurance poor, but the amount they pay never comes close to being any more than a small fraction of the actual benefit their beneficiaries receive. It really is an amazing deal. Like magic!
- “Is your family’s lifestyle important to you? Would insuring it make sense then?” People are pretty proud of their “stuff”. Cars, homes, boats, cottages, sports, trips… are what they work for their whole lives. You insure it for loss of the physical object, why not insure your family can keep it when it would mean the most? Life insurance does that for you.
- “How much life insurance do you want to have inforce when you die?” It’s an odd question in some ways but does cut to the heart of it. If you get a number you can work backwards to what they need to do today to be sure that happens.
- “Has anyone reviewed your life insurance portfolio lately?” We’ve talked about this ironic sales question many times already but it does belong on the list. Since no one talks about life insurance much anymore, they don’t get life insurance reviews either. Helping consumers understand the value of their existing coverage, regardless of where it is and from whom gets them thinking the right way about what they really want and should do today.
- “What do you suppose is the most cost effective way to pay for final expenses?” We can argue many things but few will argue that using insurance (permanent life insurance) for final expenses – the funeral etc… is the most cost effective way to pay for those costs. So, as I was told many years ago, everyone needs as much permanent insurance as they will need when they die. If you don’t expect to die for 30 years, just add inflation and buy that amount. It will be the cheapest way possible.
- “What do you want to happen when you’re no longer here to take care of your family?” It’s just a version of one of Van Mueller’s questions, but it is just enough to make people wonder about what would happen. It can also make them consider what they would actually want for the family, if the two are different and they usually are.
- “What plans have you made for the orderly transition of your business… if you can’t go in anymore?” This simple question can get the business succession discussion started and a life insurance need filled for reasons that matter to the prospect.
- “If you were selling your business and I were buying, how big of a check would I have to write to convince you to leave for good?” This amount is not likely what the business is worth but what it’s worth to the business owner. She probably doesn’t know that amount can be guaranteed to the family if she isn’t there to get it.
- “Do you know anyone whose family benefitted from life insurance?” Most people do. Most people can then understand the value through the eyes of others. Getting started this way gets the ball rolling in the right direction.
- “Do you know anyone whose family circumstances deteriorated after the death of a parent?” It seems there are so many stories just like this. We especially hear about them during the Holidays. These two points illustrate two things. That that worst can happen at the worst time and that there is a way to make the worst day manageable. I know about this from personal experience too. Maybe a little somber, but it’s an indirect way to get prospects to think the right way. Life insurance allows you to grieve with dignity – to grieve without financial pressure.
- “When do you think people need life insurance?” Whatever their answer is to this question, you have a way in to the discussion or not. We’ve already talked about how today is the day to buy whenever you might need insurance. If they say they need it, you are on your way. Here’s the cool thing about life insurance, “If you need life insurance, you need it today.” There is no other day to be sure.
- “What’s the best reason to buy life insurance?” Here’s another simple way to get at a prospect’s thinking. If they know why, you can know why too. Then, it’s a matter of what. You can do that.
- “Do you want your widow to have a better choice of Daddies for your children?” So… I’m not sure that everyone can use this line, but I know it gets a knowing chuckle from people. They know it’s true. I have used it many times. I like to say, “I may not like buying life insurance, but it does give my wife a better choice of Daddies for my kids. Rich widows can do what they want. Poor ones have much poorer choices.” You might try this one indirectly like I have over the years.
- “Do you have any idea what the largest recent life insurance claim was in this country? Why do you suppose he bought that amount? Does it bear consideration for you too?” I’m told that the largest death claim in Canada was $240 Million at the recent passing of a Canadian business icon. It tells an interesting story about the real value of life insurance because it demonstrates what people, who have access to the best legal, accounting, tax and estate planning advice do with their money. THEY BUY LIFE INSURANCE WITH IT. It can be a good lesson for us all.
- “Any idea how much life insurance you can actually own?” There is a limit and oddly enough, most people only buy a fraction of what underwriters would offer them. In most common circumstances, usually the limit is a multiple of gross annual income. Higher multiples at younger ages and lower multiples near retirement.
NOTE: Since the call, I checked and found Sun Life’s Financial Underwriting guidelines. For Income replacement the general limits are based on age and earned income:
18 – 30 30 x Earned Income
31 – 40 25 x
41 – 50 20 x
51 – 60 15 x
61 – 69 10 x
70+ $100,000 plus individual consideration for special circumstances
PLUS: For insureds under 65, 2 x Net Worth and 1x Net Worth for insured 65 and over. There is more to this too. Check your carrier’s manual for specifics.
Think of what this means. This is BIG! At changeover dates you can do something they can’t do the day after… get an extra multiple of income as insurance. If they are buying 500,000 at age 35, and they could actually buy 3 million… maybe they want to reconsider – while they still can? Their insurability is fading away whether they want it to or not… This perspective changes the urgency to buy or adds to it. Let your clients know.
- “What do you want your legacy to be for your family? How do you want to be remembered?” Is this is a selfish way to get at the insurance need? Maybe. Sometimes that’s what it takes. If it does, this is at least one way to do it. Ultimately, it does help you get the answer to those personal questions.
The Life Insurance Business is like no other Business
Yes, selling life insurance is a delicate business. That’s one of the reasons why it is so very different from selling any other financial product. Almost all the other financial products are selfish purchases. They benefit the buyer directly. Life insurance is nothing like that. It benefits others when you can no longer do it yourself.
Life insurance is the most unselfish purchase anyone ever makes. It’s also one of only a few products you can only buy when you don’t need it. It’s like a parachute that way. If you need a parachute, – and you don’t have a parachute – you’ll never need it again.
The trick is to understand the true nature of the product purchase and why it can be difficult to consider. The best sales people realize that and help people get into it from a place that makes sense to them. So, review this list and see which of them makes the most sense for you and your clients. Then get started, every day with someone new.
Life insurance discussions have to start with you.
-Jim Ruta, Managing Partner, Vice President of Global Sales – InforcePRO™
If you have questions, please email Nick@agent-link.net
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