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Life Health > Life Insurance

The Little Life Insurance Exercise

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It is my honor to have an opportunity to speak to all of you today here in Atlanta. Some of you may be curious and apprehensive as to why I am giving this session in Chinese. My family and I spent five years in Taiwan when I was ten due to my father’s business assignment.

Let me start by asking, how many of you have been in the insurance business for less than ten years? How about more than 15 years? In the next 40 minutes, I will share with you some sales ideas as I take you through my journey from Japan to where I am today as I embark on the second half of my career in the life insurance industry.

The last 25 years have been quite challenging yet fulfilling for me in the life insurance business. I came to the United States after college in December 1981.

During my junior and senior years in college, I prepared and studied very hard for a future in foreign services under a fairly well-known professor. He probably thought I would never even pass the first written exam, but I did. He quickly advised me that it would be extremely unlikely that I would pass the subsequent interviews since I was not a graduate from one of the most prestigious national universities. Needless to say, there was also a gender issue in Japan. Becoming a teacher or a civil servant did not interest me. Furthermore, working for a major bank was out of the question, because I was told by the human resources manager that it was expected I would work only for three years and then quit. He subtly suggested that by then I would have become an “old maid” and not welcomed.

Out of frustration and with much deliberation, I decided to pursue graduate studies in the United States, and business school seemed to offer the most practical route for me. Some of you might recall that the exchange rate in the early 1980s was 245 yen per U.S. dollar compared to today’s rate of 81 yen. It would have saved my parents two-thirds of their investment in me if I were just coming to the States now.

I obtained my master’s degree in business administration in two years and a semester. It took longer than normal since I did not have my undergraduate degree in business. I studied and learned a lot and, generally speaking, enjoyed most classes. However, to be honest with you, what I leaned most during this time period, and that turned out to be quite useful in this business practice, was effective time management and the skills of active discussion and negotiation. Furthermore, I believe that I also learned to become resilient and persistent.

I signed my agent contract on February 2, 1985, at the age of 27, nine months after getting married to Art. The most memorable moment in the final decision to come into the life insurance business was when my husband, Art, at the dinner table with my then general manager and his wife, was asked whether he would feel less of a man if his wife earned more. Without any hesitation, Art said, “Absolutely NOT! I would be able to retire early. That is wonderful. What can I do to help Yuka to be successful?” You see, my husband was an assistant professor in the early stage of his academic and research career with a meager state salary, and he became quite fascinated with what I would eventually do and excited with the potential of the financial reward that accompanied the hard work and success.

Being in the U.S. for only three years after arriving from Japan, I had to quickly and strategically select my target market. Cold calling small businesses in the area (the Dallas/Fort Worth, North Texas area) using vital data from Dun & Bradstreet Research was a logical choice. It provided me with not only daytime activities, but also the client base I had envisioned for my practice. I set as my goal to be established in this business in four years so that I would be able to start a family. This is still a major challenge that we, as females, face in pursuing our careers, especially in the life insurance industry today.

I started contacting businesses early in the morning or later in the afternoon, typically around 7 a.m. or 6 p.m., to secure appointments. My efforts were met with success because I would always get ahold of the business owners themselves. The telephone approach was very short, under 30 seconds, and I had good luck securing most appointments. I suspect that the reason I was granted some first appointments was due to my long, foreign-sounding name and the fact that I was a female in this business, which was still quite rare back then.

Sales Idea #1–Term Insurance Versus Permanent Life Insurance

Even though I was prospecting in the business market, I was still talking to the individual business owners. Thus, I always explained to my prospects that there are two types of life insurance-term life and permanent life insurance.

Purchasing term life insurance is similar to renting an apartment or a house and is a temporary solution or arrangement, whereas buying permanent life insurance can be equated to buying your own house with a fixed number of years of mortgage payment. Although buying a house could be more expensive in the short term, it builds up equity over the long term.

Permanent life insurance shares the same characteristics as buying a house. The premiums are higher; however, the cash value buildup needs to be taken into consideration. Cash value can be utilized in later years for various purposes, such as to supplement a kid’s college education, business expansion, or retirement. Similarly, equity in the house can be tapped for the same reasons.

The prospect will often object to the much higher premium under a permanent life contract in comparison to that of term life insurance. Thus, it is important to always show the prospect/client the cumulative premiums under a term policy. As we all know, long-term cumulative premiums of a term policy will eventually surpass the net death benefit it provides. It would disturb them to ask, “Do you think it is wise to possibly pay more for what you may eventually receive?”

I previously mentioned that I had the goal of being established in this business in four years. By day I attended all required training courses and absorbed as much knowledge as I could, and had at least five face-to-face contacts day in and day out. By night Art was my partner in practicing sales talk for two to three hours after dinner. This nightly routine continued for the first three years. No wonder he has become as proficient. Every Saturday Art would also attend the mandatory weekly review session with me, along with my sales manager and his unit. It was so natural because I was the only female agent, and he would enjoy his visit with other male agents.

The first five years, or specifically four years, of my business were totally devoted to building up my client base and relationships. During this time I also made two major investments that deepened my commitment in this business. The first was to hire an assistant on a part-time basis six month after I signed the agent contract. The second was to take out a $25,000 bank loan to purchase office equipment and furniture. I was told by my sales manager that an assistant was vital to my success, and I faithfully took in his words. My part-time assistant turned into a full-time one, and she is still working with me 25 years later.

We have learned a lot and gone through a lot together, including having babies one month apart. The proceeds from the loan were used to purchase a PC, an IBM PS/2 computer, which performed a little bit better than a word processor (yet cost $8,500!) and a first-generation HP laser jet printer ($3,500), which was quite bulky but lasted for more than ten years till it ran out of memory. The remaining loan proceed was used to purchase customized furniture to outfit my office as recommended by one of my first clients, who owned an interior design firm. It was vital for me to set up a professional business environment, as I was targeting the business owners market. I was also a small business owner myself.

By the end of my fourth year in the business, my first and only child was on its way. I used to take an hour nap every day in my office with a mat on the floor during the last trimester, and I worked up till the day before I delivered my daughter. I returned back to my office as soon as I was allowed to drive, which took 12 weeks. In the meantime, all customer service work was handled by my assistant, who had returned to the office four weeks after she delivered her baby and right before I had mine.

Sales Idea #2: Are You Really “Insurance Poor”?

As I had added responsibilities in my family, I came to focus more on talking to prospects about their life insurance coverage. Many prospects usually felt they were overinsured or insurance poor because the face amount they needed seemed like a large pile of money to them, while in reality, it was the minimum their family needed. The term insurance poor is used quite often in the United States due to the fact that most American consumers do not save, and any amount of monies they use for insurance purposes makes them feel like they are spending a fortune.

My main focus was to help them understand and feel the impact the insurance coverage could have by going through a little “life insurance exercise” with them. This is a three-step process:

1. Have them write down the amount of life insurance they personally own, excluding group life insurance.

2. Cross off the last four numbers (for analytical clients, divide by 10,000 to move the decimal point four places for the interest rate).

3. Multiply by 2.

I will then point at the number and say to the prospects, “That is the approximate amount of money your family would have to live on from your life insurance every day after your death.” Watch their eyes; they will look at that number, as you just did.

Then say, “I have several more questions for you: Is it enough? Do you care?” If they care, say: “We need to get together and do a full analysis of your situation to see how much insurance you should have.”

Let me show you the above exercise with the actual figures. It is a quick and simple way to demonstrate how much their family would have to live on each day-before taxes-if the beneficiaries lived only off the principal created by investing the death benefit at an assumed rate of 7.35% (this was reasonable in 1985). By using $100,000 for the exercise, it would yield $20/day. It would just pay for four cups of “Tall” Starbucks coffees. By the same reasoning, it would be $10/day @ 3.675%, and so on.

This demonstration can also be easily extrapolated for an even much larger death benefit protection. It also illustrates the importance of plans to replace human capital. Although family ties are close-knit in our Asian culture, it is still ideal to plan for not having to rely on and put a burden on other family members financially if the breadwinners were to die prematurely.

The second five years of my practice turned out to be more challenging than the first five years. Time management became much more critical. Fortunately, with help from my mother, mother-in-law, and also my husband, it all worked out. Art would even take care of our baby during the summer months of the first year of her life.

I can tell you that being a businesswoman is much easier and less challenging than being a mother. I believed myself to be an intrinsic self-motivator, which meant that the company contests with prizes (and they were mostly targeting male agents) never interested me or motivated me. Of course, like everyone else, my level of motivation was sometimes low. I did not have a role model. The usual motivational talks given by highly successful male agents, with mentors who helped with their career and with full-time support at home, did not inspire me.

I understood at that time why there were so few females in our business in this country. I worked it through by trial and error and with the support of and encouragement from my husband. I realized that I could be a good mentor to other female agents who would aspire to make it in this business.

Most of you in the audience today probably do not even have cassette tape players in your cars. I used to listen to audio collections by Napoleon Hill, Stephen Covey, and Anthony Robbins, to name a few, while I was driving. I have also read books across the genre in search of inspiration.

The one book that I read repeatedly and still do was written by a renowned University of Pennsylvania psychology professor, Martin E. P. Seligman, Ph.D., called Learned Optimism. I have learned from the book how I could change my interior dialogue and experience the amazing positive results.

In essence, many things happen in our lives that we cannot prevent, but we have a right to choose whether we want to be optimistic or pessimistic in interpreting the effect. Nobody has permission to ruin my day unless I allow it. This is also what I have taught my daughter, Erica.

During Erica’s grade school years, I started to take her to my clients’ businesses on weekends, with their permission. They usually also had their children with them as well. Not only did this give me an opportunity to show Erica my work, but it also established a closer relationship with my clients. This would continue into her middle school years. I used to smile to myself when I heard her deliver sales talk to her friends, asking whether their parents have enough life insurance coverage.

Sales Idea #3: Supplemental Retirement Benefit for Business Owners

As I matured in the business at around the 15th year, I started approaching business owners by using analogies:

“Mr. Business Owner, are you satisfied with the progress you have made toward your retirement? Would you be interested in another idea on how to build for retirement?

“What if you could hire one additional employee-one that costs you somewhere between what you pay your highest paid employee and your lowest paid one. Let’s say the new employee costs you $50,000 with salary and benefits, but the net cost to you is about $30,000. You’re going to keep this employee for the next 15 years. At the end of 15 years, you eliminate that job-no strings, no regrets.

“Then, when you get to retirement-let’s assume at age 67-this “employee” pays you back a tax-free income of $50,000 per year for 15 years.

“Oh, by the way, if the “employee” becomes disabled for more than six months during those years, someone else will pay this salary for you!

If you could do that, would you??”

The answer usually will be “Absolutely, but that doesn’t exist.” Or does it?!

In the United States, social security benefits are the major source of retirement income for two-thirds of retirees. However, the monthly benefit falls far short of a retiree’s preretirement income, especially if he or she is a higher income earner. Of course, there is also a 401(k) plan sponsored by businesses. The financial strategy I have just shown you is funded by a cash value permanent life insurance and provides much needed supplemental income and death benefit protection for business owners.

By the beginning of the 20th year, I had established a large enough client base that I decided to concentrate on my top tier clients. It was a matter of priority for me, because Erica had entered her high school years and started to have extracurricular activities that I would want to be involved in as parent volunteer.

In the United States, parents’ involvement in their children’s school is expected and indispensable. With that said, we do not interfere with teachers on what they teach or with the academic side of the school. Our activities are mainly in the area of fundraising for the school’s various needs, especially raising funds for extracurricular activities. A great emphasis is placed on leadership and teamwork, and these qualities can be attained only through participation in school activities and community volunteer projects.

I felt extremely fortunate to be able to spend as much time as I desired with my daughter during the most critical four years of her schooling. I am proud to say that neither I nor my husband ever missed a single event in which Erica was involved in. This is what our business is about. We are in control of our time, and what better way to spend meaningful time than with those we love most!

By this time, I was already quite active in various industry-related organizations, which took me out of town and out of the country. I am sure you are familiar with the 80/20 Rule: that 20 percent of clients generate 80 percent of the revenue. We just cannot be everything to everyone. While I worked actively with the top 20 percent of my clients, I would team up with new agents on the other 80 percent. The end result is that I was not only able to serve my rather neglected clients better, but also able to mentor the new agents.

MDRT’s Whole Person Concept has always resonated with me. The number one priority for me and my husband is to build and nurture a happy family. We also firmly believe that our next generation must surpass us, and that we are to raise our children to be productive members of our society.

All of us make choices in our lives. In my case, it is the decision for me to persist in the life insurance industry for as long as I am physically and mentally able. For my husband, it is to maximize his personal and professional potential both in academics and administrative capacities where he started. As the Chinese proverb says, “It is better to be the head of a rooster than the tail of a cow,” meaning that you should always strive to be a leader no matter where you are and to be your own boss.

In Closing

I would like to close my presentation with the following poem, titled “He Was a Friend of Mine.”

He Was a Friend of Mine

He was a friend of mine and I never asked him to buy Life Insurance because I didn’t want him to think I was the kind of person who would use friendship for personal gain.

He was a friend of mine and when he married, I was glad. Because I know his wife, too, and I knew they were the kind of people who deserved all the good things in life that a happy marriage brings. But, I didn’t want to embarrass him, so I never tried to find out how much he could afford to start a Life Insurance policy.

He was a friend of mine and when the twins came along a year or so ago I was awfully proud when he asked me to be their Godfather, but I never told him how he could help provide for their education in the event of pre-mature death.

He was a friend of mine and when I attended the housewarming in his new home, six months later, I thought about mentioning life insurance to protect the mortgage in the event of pre-mature death, but I decided to wait until he had a chance to catch up with all his new expenses.

He was a friend of mine and when his car missed the curve in the storm last night, I was the first one his widow called.

The day after tomorrow, I’ll be standing beside my friend’s grave, and I’ll still be trying to rationalize my failure ever to talk to him about Life Insurance. I’ll be thinking too, even more bitterly than I am now, about the staggering price his family paid for my false pride and foolish sensitivity.

But, most of all, I’ll be wondering when the time comes to pay my last respects, whether, if he could speak, he would say of me as I do of him, “He was a friend of mine.” –Author unknown

This is a published version of a focus session presented by Yuka Nakahara-Goven at the 2011 MDRT annual meeting in Atlanta. Nakahara-Goven, CLU, MBA, is a Dallas, Tex.-based financial advisor at New York Life.


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