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April 23, 2006 at 04:00 PM
Life insurance is widely available to American workers, either through employer-paid plans or voluntary coverage offered as part of an employee benefit package. Yet millions of Americans have no life insurance coverage–and even those people who do have coverage usually don’t have enough.
Why aren’t workers buying life insurance at work?
According to a recent study by LIMRA International, Windsor, Conn., some of the reasons are financial: consumer debt load is up, health care costs are rising and contribution limits to retirement plans have changed. That means workers are devoting more of their financial resources toward paying off credit cards and mortgages, shouldering a larger share of their basic health care coverage through higher deductibles and premiums, and building retirement nest eggs in 401(k)s and IRAs.
Other reasons revolve around education and communication. Many employees simply don’t know why they need life insurance, how much coverage they need, the different types of life insurance available, and whom to trust when making this important decision. The good news is these are the very concerns an experienced benefits professional can help employees deal with.
The bad news–and perhaps the biggest factor at work here–is many insurance professionals just don’t know how to sell this very important and basic type of protection. Successful life insurance sales are built on a long-term relationship of trust, and that takes a commitment on the part of the producer and a dedication to serving customers’ needs rather than our own. Here are some things I’ve learned in more than two decades of successful life insurance sales.
1. Lead with income protection.
With a payroll deduction approach at the worksite, almost all of my life insurance sales follow disability sales. Both products are designed to protect an income and secure a family’s way of life.
One product will eventually lead to the other, so every time I sell disability coverage I know I am setting up a future life sale. At the same time, I’m establishing that all-important relationship of trust with the customer for the long term.
2. Meet customers where they are.
A customer with a permanent need for protection may want a policy where the premiums won’t increase with age, like a universal life policy. But when I’m talking with a firefighter making $25,000 and raising three children, he’s better served right now with a term life policy. Each year at enrollment time, that firefighter and I talk about his long-term needs and where we need to go. The next year we might look at increasing the amount of coverage and three or four years down the road converting to a universal life policy. The key is matching sales to needs.
3. Factor in underwriting.
It’s vital for producers to know their products inside out: the features, the conversion privileges and especially the underwriting requirements. Only then are you truly prepared to match a product with a customer’s needs. Premiums for larger face amounts of coverage can be much less than they are for lower face amounts–provided the applicant is willing to undergo a medical exam. And in worksite sales, that can be a deterrent for many would-be buyers, especially in blue-collar industries. Recommend an amount of coverage where the medical exam isn’t required so you know the policy will be issued. Some protection is better than none, and you always can look at increasing the amount later.
4. Involve the family.
New types of products come and go, but there are always opportunities for life insurance sales in any group: spouses change jobs, new children are born, and grandchildren arrive. Because you’re talking about protecting the family’s income, buying insurance is a family decision. Rather than pushing for a signature on the spot during an enrollment meeting, I suggest the employee take the application home and talk to his or her spouse. When the individual comes back to see me, he or she feels good about the decision, and that leads to better persistency and a stronger long-term relationship.
Helping employees understand their life insurance needs and the affordable options they have to protect themselves and their families is one of the most important things I do every day. Matching needs to products and setting up future sales with every sale has helped me develop the kind of long-term relationships to be successful along the way.
Common Misperceptions
In decades of meeting one on one with employees at every level to discuss their benefits needs, I often hear the same objections to buying life insurance.
Here are some of the most common misperceptions–and the real truth your customers should know:
