Every life insurance advisor knows the basics of the business. Unfortunately, that’s not enough today. The work of even the most diligent producer can be undermined by failing to take into account the significance of the three relationships that profoundly influence the outcome of life insurance cases: the producer-client relationship, the advisor-general agent/broker-general agent relationship and the GA/BGA-carrier and underwriter relationship. At no point are they more critical than with a difficult or impaired risk case. This segment focuses on producer-client relationships.

The producer-client relationship

There is nothing more fundamental to success than the interaction between producer and client. Any life insurance purchase is necessarily personal, which is why it’s critical that the communication between client and producer be open and candid, so it includes the individual’s most confidential business and personal details.

Because clients are called on to face the reality of death – their death – when buying life insurance, this makes the sale inherently challenging. When we probe further about their health history and prognosis and ask them to recognize that they will not live forever and, in fact, may have a shorter life expectancy than was anticipated – the difficulty escalates even further.

In many cases, an advisor may not appreciate the value of knowing as much about a client’s medical situation that may affect the underwriting and pricing of the proposed coverage. While this may apply more to financial planners, it applies to all advisors because some are reluctant to touch upon issues that may negatively impact a sale. However, an advisor must not let anything stand in the way of gathering all available information from the client. To accomplish this, both client and the advisor need to work together regarding the reality of the client’s situation.

This can be challenging, particularly when clients are in denial or fail to grasp the full reality of their medical history or insurable situation. Once this is understood, the client can then be motivated to do what’s necessary, and the broker can be prepared to ask further questions as a result of the new level of understanding that’s been established.

Once advisor and client agree on a framework of solutions that meet the client’s needs, the broker can outline the steps necessary to obtain a bona fide carrier offer.

A word of caution: It’s important not to speculate as to the implications of a particular health issue for the underwriting process, including previous applications, since that may have little or no relevance to future underwriting situations. The producer and the client should discuss the client’s medical status, history and prognosis from the client’s viewpoint.

Allan D. Gersten, CLU, ChFC, CFP, is the chairman, CEO and the chief Underwriter of First American Insurance Underwriters Inc, a Needham, Mass-based insurance brokerage firm. He has been in life insurance sales since 1969. He can be reached at 800-444-8715 or agersten@faiu.com.