Quantity trumps quality when budgets are tight

By Jim Ruta | November 01 2013 03:57PM

How do I help clients purchase the right amount of insurance when they can’t stretch their budgets to buy what they need?
People buy life insurance to protect someone or something they love. They expect that they are buying well enough so that their dreams live on even if they don’t. It’s a big responsibility handling their big responsibilities. It’s one reason life agents are paid so well.

Some readers raised this issue last month when I wrote about the importance of life insurance. I said that a good life agent prevents ten awful words from ever being written at the end of an obituary – “A trust fund has been set up for the children.”

This relates directly to today’s question. Most consumers have limited funds to direct towards their life insurance portfolio. There is only so much money to go around for “will funding” insuring a lifestyle and legacy. (If you still don’t have your copy of The Last Un-Will and Testament and Will Funding Review Summary Form, please ask for your copy.)

Limited resources mean that agents always have to balance the quality of a program with the quantity of a program. For some agents, this has been a major question. For me, it has always been straight forward.

The rule you can never break when selling life insurance is “Never compromise quantity for quality when money is not sufficient to cover total needs”. No amount of the “right” or “best” or “latest” product will ever compensate or not having enough to cover family’s or business’s needs. I’m a big fan of whole life but if only term can meet the need for the money available, it has to be term. Period.

A surviving family will take no consolation in finding out that their breadwinner had a great policy, just not enough of it to make things right. It will not help to say that “If he only had enough time she would have purchased the right amount of the right product and it would have been perfect”.

Life Insurance should supply all the tax-free cash necessary to meet the needs of the survivors. Why else would you buy it? Of course, we never know when that time is exactly so the amount has to be available from the beginning. That means low cost coverage is more valuable to survivors than high quality coverage.

Remind people of this too. For most life insurance buyers, it only costs as much to buy the money your family will need if you aren’t here (in term insurance) as it does to manage the money you have set aside for your retirement (as a management fee in your RRSP). That 1 to 3 percent will buy a lot of term insurance for most people. That’s the same cost as managing their RRSP nest egg. Think about it.

So, when budgets are squeezed, and many are – be sure you will be proud to deliver the death benefit cheque and will know the family live on in dignity. Your compensation can never be a consideration in this situation. When you help more, you will always sell more.

Short of hiring a coach to supervise me, what can I do to stick to my activity and performance objectives?

Unless you do the necessary activity, you will never get the performance you want. There is nothing more important than doing what has to be done to achieve your potential. Sorry.

Some advisors put their faith in the theory of small numbers. They pretend that just being good is good enough to get results without a lot of activity. These advisors tend to be poor. You have to have a “batting average” to hit home runs in baseball. It’s the same in business.

Success in any personal performance business is the natural consequence of large numbers of everything – leads, prospects, contacts, appointments, openings, presentations and closes. I have never seen it work any differently.

This is why many people hire a coach. They need or want someone to “ride shotgun” over their activity so they get it done. But, there is another way. It comes about courtesy of today’s technology.

I learned this new twist on an old idea from my LifeAssist partners. It’s a new twist because it uses your smartphone to do something that was always necessary - make a responsible commitment to the required activity. When you could make it to yourself and stick to it, you were self-managing. That’s still relatively rare. The new twist is the way we make the commitment.

Most people do better when they make a commitment to someone who really matters to them. Coaches, sales managers, supervisors all usually take on that role in a corporate environment. But, that can fail easily. There are also fewer of these types out there today too.

There’s something else. Commitments to supervisors are often coerced and therefore not so effective. A coerced commitment just doesn’t have the same power to inspire action in the face of distraction and fear. Volunteered commitments though, are much more compelling and successful because they come from within.

Here’s the magic. This idea is so simple, you might dismiss it, but don’t. The most powerful ideas are always simple.

First, find yourself an “accountability partner”. Make this someone a fellow advisor. This helps because the accountability can then be mutual – it can work both ways.

Each morning, before 8 a.m., text or email the top 3 things you are going to do that day to generate business to the other person. Make a simple, point form commitment. Think “By 8 or late” too. And, if you’re late, you owe your partner a coffee.

Look what this forces you to do. You have to think up 3 things to do every morning – that’s planning. You have to do it on time – that’s urgency. You have to compare it to what you need to do – that’s adapting. You have to check to see you haven’t already done it – that’s monitoring. Sharing it with someone who matters - makes it personally important and a real commitment in writing. It’s self-coaching simplicity!

It’s so simple that it’s easy to do and also easy not to do. Promise your performance to a partner and you are much more likely to stick to your commitments.