Creating a Wow Experience With Life Insurance Selling
We live in a fast-paced world filled with high-paid athletes, entertainers, corporate executives and professionals.
The “average” major league baseball player made over $2.3 million last year. Hollywood movie stars and musicians make millions of dollars for each appearance. In the corporate arena, executives regularly negotiate for themselves multimillion-dollar compensation packages.
Many other professionals, such as doctors and attorneys, earn 7seven- figure incomes.
Today, far too many life insurance agents earn only a small fraction of the income of people in these other professions.
Why does a disparity exist between the incomes of life insurance agents and those of other professions? The “average” life insurance agent should earn in excess of $1,000,000 million per year. Without the correct approach to life insurance selling, agents will continue to struggle with incomes that are far short of their potential.
Certain obstacles in the life insurance industry cannot be overcome by working harder, taking motivational courses, or tapping a new sales idea, insurance product or tax law quirk. What forces keep agents from achieving outheir peak income performance?
The evidence is overwhelming that all of the existing information, education and marketing ideas in the life insurance industry are ineffective and need overhauling. Proof of this fact is everywhere.
A 2003 “report card” published by Limra LIMRA International indicates that life insurance agents must call an average of 15 prospects and make 6 presentations to close one sale.
First, one sale out of 15 prospects equates to a 93 percent failure rate, a figure that discourage agents from calling on prospects.
Secondly, for the one case that LIMRA statistics show will be closed, the size of the insurance policy sold will be substantially lower than what it should be.
Thirdly, LIMRAs 15-6-1 ratio speaks volumes about the publics negative attitude toward life insurance and, in particular, the benefits of owning permanent life insurance.
A recent MetLife survey of 1,000 families whose breadwinner had died within the past 12 months indicates that on average the life insurance amount only provided 2 years of income replacement for the family.
Hartford Financial Services reports that 64% of households with total incomes of more than $100,000 have less than $500,000 of life insurance coverage, with 10% owning less than $100,000. LIMRA statistics also reveal the average new policy sold in the United States is only $120,000.
The only ratio that agents should accept is one that requires calling 15 people, making 15 presentations and closing 15 sales.
Consider what would happen to your income if you had a 15-15-15 sales ratio and began selling life insurance to every prospect you met? Many agents are, in fact, achieving this success rate using the concepts and methods I outline below.
But before we look at the solution, let us further identify the problem. .
According to the American Council fofr Life Insurersance, the number of life insurance agents has shrunk by nearly 100,000 in recent years. For every 1,000 agents recruited, only 14% survive the first four4 years. Surviving agents only produce an average of $45,000 of earnings in their four4th contract year.
These poor statistics have caused many home offices to reduce recruiting efforts or eliminate support for career agent distribution. Other home offices have attempted to slow agent migration out of the industry by re-branding themselves as full service financial superstores. Many have removed the words “life insurance” from their corporate name and logo.
Other companies have created brokerage-dealer capabilities, licensing their agents to do securities transactions to compensate for low commissions in life insurance sales. Stock market and interest rate transactions have replaced the financial security and guarantees that our industry once proudly provided.
Another trend has been the proliferation of term life insurance, which now accounts for 49% of all new life insurance sales and 69% of all new life insurance policies in force. Advertising and promotions sweeping through the Internet are persuading consumers that term life insurance is less expensive and offers better coverage than permanent life insurance. Agents find it increasingly difficult to sell permanent life insurance to a public that remains term life-oriented.
To remain viable, agents resort to sales from ever-changing sections of the tax code or the latest hot new product. Changing economics, tax laws and markets ultimately render these alternatives inadequate. Clients lose confidence in the agent and the industry, resulting in diminished consumer satisfaction.
How poor must these statistics get before serious rethinking occurs and the life insurance industrys marketing and sales ideas are considered to be ineffective? What is the main reason for the dismal performancde of life insurance sales?
Was there a decline in the population? Did inflation disappear? Did life insurance premiums get more expensive? Was there an income tax law that eliminated the tax advantages of life insurance?
Is there some new financial product that replaces life insurance and makes it obsolete? The answer to all of these questions is, “no.”
What, then, is the main reason for the decline in individual life insurance sales over the past 15 years and poor agent productivity?
Years of research, consumer interviews and empirical data point to needs selling as the main cause of the decline of life insurance sales, low incomes for agents and increased consumer dissatisfaction. Needs selling undermines agent productivity and taints the publics attitude toward permanent life insurance.
Needs selling has numerous problems (see chart).
As a result of needs selling, the life insurance industry is prevented from reaching its peak performance.
For the life insurance company, this means not adding hundreds of millions of dollars to theirits bottom line. To agencies, it means not having better recruiting, training and highly productive agents.
To the agent, it means not having annual incomes in excess of $1 million,000,000, high closing ratios, and permanent life insurance sales. The cost in every direction is substantial.
There is a better way, one that can help agents reach their financial potential and help consumers have better overall life insurance protection.
This proven method allows for a positive buying experience for the prospect, free of sales pressure. Prospects become happy clients once they have been educated to the truth about permanent life insurance as a powerful success tool. They learn how permanent life insurance can realize their financial goals with spectacular results.
The key to successful life insurance selling is not needs selling, but rather using the basic principles of all insurance lines: providing consumers with insurance to cover their economic value.
The following are key elements to successful life insurance selling. And theyre key to providing the greatest service to the pubic and to securing million- dollar commissions for yourself.
? Make the prospect understand that life insurance is the first and most important financial purchase.;
? Use the full economic life value for the insureds death benefit coverage and avoid any mention of the word need..
? Show prospects how to acquire life insurance without additional -out-of-pocket funds.;
? Sell term life insurance only when there are inadequate funds for permanent life insurance;.
? Demonstrate that traditional permanent life insurance has one of the highest rates- of- return for living values in anyones lifetime.;
? Show the consumer every benefit beyond death benefits and cash values that ownership of permanent life insurance creates.;
? Prove that permanent life insurance enhances all other savings and investment products the client owns.; and
? Be an expert on every aspect of a life insurance policy, memorizing and understanding each provision in the contract.
Successful use of these elements will produce sales results never before imagined. Agents will find that consumers really “want” to own large amounts of life insurance.
Sales from other product lines will occur naturally to supplement traditional permanent life insurance. An outpouring of goodwill in the form of continuous referrals can be expected from the new client.
Imagine your new monthly calendar: You call on 15 prospects, make 15 presentations and secure 15 sales. Over the course of the year, and assuming an average client age of 40 with an income of $100,000, your production and personal base commissions should be as follows:
$1,000,000 WL Premium = $15,000
Number of sales/week = x 3
Total weekly premium = $45,000
Number of weeks worked = x 44
Total annualized premium = $1,980,0000
Times base commission % x .50
Total annual commission = $990,000
If you are skeptical of these results, then the skepticism is only evidence that existing, unsuccessful training and selling concepts have eroded your confidence and performance.
Scores of agents, once burdened by needs-based selling, have enjoyed a great leap in production. Now, many of them produce more than one million dollars of commissions annually. And so can you!
is president and CEO of Leap Systems Inc., Green Brook, N.J. You may contact him via his assistant, Peggy, at [email protected] This is an abridged version of a presentation he gave at the MDRT annual meeting in Anaheim.
The Problems With Needs Selling
o It contains serious mathematical errors that lowers the amount of insurance needed.
o It violates every rule, definition and the traditional purpose of life insurance.
o Limits sale sizes below proper amounts;
o Miscalculates the need for life insurance;
o It focuses on premature death requirements.
o It is a poor motivator for consumers.
o It promotes term life insurance.
o It prompts objections from the prospect.
o It requires constant review due to changes in the variables used.
o It does not promote the living benefits of permanent life insurance.
o It does not find the money for life insurance premiums.
Reproduced from National Underwriter Edition, June 18, 2004. Copyright 2004 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.