Time is the enemy of the producer. It is said for every day beyond a life insurance application date, the probability of placing the case goes down by 1 percent. Even more frustrating is finding out all of the effort you put forth, once the case is finally placed, generates a $500 to $1,000 annualized premium and perhaps even less.
The challenge for advisors is to develop new business that flows quickly through the underwriting pipeline, provides larger commissions and minimizes the likelihood of generating another application on the same client. Two ways to accomplish this are:
1. Minimize the obstacles. Do what you can to get the best possible shot at closing the case. This includes some basic field underwriting by asking basic medical questions, so there’s less chance for an underwriter to come back requesting additional information.
A red flag should go up when you’re meeting with a client to review a sales ledger run, and you see him or her take three or four prescription drugs. Always give clients a realistic expectation of what the proposed coverage is going to cost. Set the bar low enough, so you can under promise and over deliver.
2. Promote products and ideas that lead to transactional sales, especially those that don’t take disposable income out of a client’s pocket. When a case comes back from underwriting as standard, for example, rather than preferred, the change may be more palatable to the client by showing the premium is unchanged, although the face amount has been reduced somewhat.
What leads to transactional sales? Wealth transfer of idle assets. Included in idle assets are money market accounts, CDs, annuities, excess savings, mutual funds or anything else a client is waiting to pass on to heirs or to have available in case of an emergency. First, identify assets that will not be needed to supplement retirement. Reposition these funds, so they work harder for clients. The goal is to give them an income tax-free benefit for an asset that is otherwise taxable at death. A few simplified issue plans offer a benefit that is roughly double the size of the deposit to pass on to heirs or provide long-term care protection that offers upwards of $5 for every $1 invested in these multi-dimensional products. If insurability is an issue, then consider annuity products that offer some long-term care benefits.
Products such as the Lincoln MoneyGuard, JHL LifeCare and Nationwide SPUL (life) all accomplish this objective and are generally underwritten and issued in six to eight days, rather than six to eight weeks. Some plans can actually be underwritten at the point of sale, and the advisor can leave with not only the application and a check to place the case but actually hand the policy to the client.
Transactional life sales don’t fit every situation. Yet there are many where they meet a client’s needs. By being realistic, you can get a policy in the client’s hands faster than the competition and exceed the client’s expectations.
Gregory E. Schwabe, FLMI, is the national marketing director for First American Insurance Underwriters, a Needham, Mass.-based insurance brokerage firm specializing in coaching successful producers. During his 25 years in the life insurance brokerage business, Schwabe has been a presenter at national meetings and has spoken at life association events and career agency offices about working in the brokerage marketplace. Contact him at (800) 952-0820 or firstname.lastname@example.org.