Riders Help Answer The Question ‘Whats In It For Me?’

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“Whats in it for me?” You may never actually hear this statement directly from prospective customers when selling life insurance. But you can bet that most, if not all, prospects have the thought.

Its human nature. People inevitably and invariably are going to take actions that are in their own best interests, and avoid those they believe are not.

Think about it. Say youve negotiated the best price for a new car and are ready to sign on the dotted line. Then you discover that, because of trying to maintain market share, the car manufacturer will lose $5,000 on the car if you go ahead with the deal. Does that potential loss for the dealer prevent you from buying? Do you feel sympathy and offer to pay more? Of course not.

Now, think about selling life insurance. This means selling a product most people dont believe they want, and many dont even believe they need. (When is the last time an insurable person called you out of the blue, asking if youd sell them a life policy?) The buyer is thinking, whats in it for me?

That, as noted above, is human nature. Its also human nature to procrastinate. Combining those things with trying to get customers to face their own mortality can almost make a sale seem like an insurmountable hurdle.

What can you do to help make the sale a little easier and, perhaps more importantly, provide some additional, tangible, and even predictable real value to your customer?

The answer lies in combining death benefit protection with a combination of living benefit-type riders that can provide a valuable benefit to the insured, while still living.

Such riders enable you to satisfy the prospects very real need to get something of value–to have a substantial answer to the “Whats in it for me?” question. You do this while also providing your client with the much-needed death benefit protection–the need for which he or she may not fully acknowledge.

Some of the different types of riders available today include:

Waiver of Premiums: This waives either the scheduled premium, planned premium, or cost-of-insurance charges if the insured is deemed disabled. Their cost is generally nominal, considering the actual risk of a disabling event occurring. Many agents never think twice about adding such riders to a policy.

Unemployment Rider: This provides for a three-month waiver of the policy premium when the insured has been involuntarily unemployed. Some companies dont even charge an additional premium for this very practical and potential significant rider.

Disability Protection Rider: This protects the insureds income if he or she is unable to work due to an illness or injury. Benefit availability is up to $2,000/month.

Terminal Illness Rider: This provides access to the death benefit on a discounted basis, often up to $1 million, if the insured is diagnosed as having less than 24 months to live because of terminal illness. This tax-free benefit can be used for whatever the insured wants–from getting his or her financial house in order to taking a last vacation. Generally, this rider is available at no cost.

Chronic Illness Rider: This provides access to the policy death benefit on a discounted basis if the insured cant satisfy the basic triggers usually found in a stand-alone long-term care policy (generally being unable to satisfy two out of six activities of daily living or having a severe cognitive impairment). Typically, this is a no-cost rider, providing early discounted death benefit payments on a tax-free basis.

Long-Term Care Riders: These provide chronic illness protection (same triggers as CI riders described above) for the full death benefit or beyond (with the addition of additional month or lifetime riders). While there is an extra charge associated with this type of rider, it may be tax-deductible under certain conditions. With LTC being one of the most talked-about protection products available today, its a natural to add this to a life insurance contract.

Living benefit riders are the perfect solution to providing additional value to the insurance customer while overcoming the unconscious desire to avoid any purchase that doesnt benefit the buyer in some way.

Remember, if you dont embrace the value of these types of riders, your competitor will.

Michael S. Pinkans, CFA, CFP, CLU, ChFC, is a registered representative and investment advisor with Equity Services Inc. and vice president of sales and promotion at National Life Insurance Company, Montpelier, Vt. You can e-mail him at: Mpinkans@nationallife.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 10, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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