Question: Sometimes when a client is considering a larger deposit life insurance policy or a more complex ownership structure, they delay the purchase until they figure out all the details. Then, I worry that they are thinking while exposed to an easily insured threat. How can I help them and avoid that problem?
You’re right to be concerned. Planning the side details of a case like ownership, product, or deposit while exposed to an easily insured threat means they and their family are unprotected unnecessarily. All the life insurance in the world is of no value to anyone unless it is in place and in force. Most advisors know of a case where, as someone was considering their coverage, they crossed the line of insurability and became uninsurable at a reasonable price – or worse. Then, all the details and planning meant nothing to anyone.
Remember the second of those 3 opening statements I recommend recently? “We don’t buy life insurance because of the probability of dying but because of the consequences of dying without it.” Life insurance can do many jobs and fulfill many roles but above all, it is “tax-free cash at death”. That’s the essence of the product. The rest is details. When you are worried about the delay affecting the delivery of tax-free cash at death, you are concerned about the priority of consequences.
When the consequences of an untimely death are severe enough, people find the money and buy. But sometimes in the sales process we get so excited about a big idea strategy that we forget all about helping them protect against their severe consequences. Instead of getting the priority job done first, we want to sell the consequences and the big idea strategy together. It makes sense, because we know we are enhancing value and making the plan even better for them.
But what if prospect agrees on the importance of the consequences but stalls on the big idea strategy and doesn’t do anything, just as you are saying? This is where they are planning while exposed. You can fix this critical issue with a simple lesson: “Speed up the sale but slow down the sales process”.
This means that when you get into a situation like you are describing, you consciously split the sale into two parts - the consequences part and the big idea part. You help them focus on the protection priority first and then you and they can do the detail planning while protected.
When a prospect or client agrees on the importance of mitigating their severe consequences but isn’t sure about the big idea, minimize the severe consequences first. Get that sale first and slow down the bigger sales process for the big idea. Add this step when required and you and your prospect will sleep easier knowing that you have taken the most important consideration off the table.
You can say something like, “Prospect, as I said at the beginning, we can only apply for life insurance we cannot buy it. The deposit, plan, and ownership details are most important when we have the protection in place. Would it be beneficial in your situation to be sure the most inexpensive protection was in place first instead of risking planning while you were exposed? Would it be sensible to apply to see what happens and work out the specific details later?”
Then, you can make changes to the term insurance policy at delivery, in a 30-day check in, at an annual review, or frankly any time that makes sense for them. Don’t worry about commission rules. Help your client protect against severe consequences and then help them create the most beneficial and valuable plan for them later.
When you agree with them about the consequences first and relieve the purchasing pressure like this, you will get more sales today. The term decision is much easier and it’s one decision at a time.
You can work on your big idea strategy later. It’s always easier to deal with a client than a prospect anyway. Besides, this way you will have already been paid to do work with them.
And even if your client decides against this “consequences and strategy splitting” approach, you will know that you gave them the option and you did your job to help them protect what matters most, first. Having these notes in your client file is a critical compliance consideration too. If something untoward were to happen in the intervening time, you’ll have proof that you made the offer and they declined. It’s not great for them, but it protects you better against having your liability policy being their life insurance benefit.
Speed up the sale but slow down the sales process and you will close many more sales and more big idea cases too.
This column by renowned advisor coach Jim Ruta was first published in the October 2024 edition of Insurance Journal magazine.
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Jim Ruta’s mission is simple – to preserve, promote and propel the financial advisor business. A former insurance advisor and executive manager of a 250-advisor agency, Jim is a highly regarded coach, author, podcaster and keynote speaker. He has spoken 4 times at the MDRT Annual Meeting including the Main Platform. Jim Ruta is an Executive Coach and Keynote speaker specializing in life insurance advisors and leaders. He works with top advisors around the world and re-energizes audiences with his deep insight and passion.
If you have a question for Jim, you may send an email to [email protected]
