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   LIFE INSURANCE
Selling Life Insurance Today Success begins with profiling your clients, offering them value, partnering with other professionals and—above all—developing a passion for your product. Turn on the television set and there is a two-hour do-it-yourself seminar on creating financial security. Open the mailbox and there sits a catalog from a community college offering a course on how to choose the right life insurance. Log onto the Internet and those annoying pop-up boxes holler, “Buy term insurance NOW for LOW monthly premiums.” As an insurance and financial advisor, you can resist these invitations to chaos. But it’s possible, even likely, that many of your clients and potential customers can’t.
You’ve got competition out there in all forms; there’s no doubt about that. But just as there are hundreds of other advisors, companies and vendors trying to horn in on your clients and prospects, so too are there hundreds of thousands of uninsured or inadequately insured Americans who would make great prospects and clients. They need you. The question remains, however: What does it take to sell life insurance today? What can you do to improve your own numbers? We talked to insurance and financial professionals from across the country to get their views on what works and why. Charles F. McAleer, III, CLU, ChFC, LLIF, RHU, is senior vice president and chief marketing officer of Mutual Trust Financial Group in Oak Brook, Ill. A member of NAIFA-Chicago since 1977, McAleer says that to be successful in this business today, an advisor “has to have a passion for the business.” What’s more, he adds, a successful advisor is “constantly trying to learn, acquiring an education, earning professional designations, getting involved in associations and surrounding himself with other successful people.” Partnering for sales success
Hale says that when an advisor begins to partner with other financial professionals, he shouldn’t be worried about clients becoming frustrated because he doesn’t know everything about everything. “Many clients appreciate somebody who is open and honest with them and tells them, ‘That’s not my area of expertise, but let me get you to somebody who has that expertise,’” says Hale. Time-tested techniques “It’s getting harder and harder to develop those prospects; yet that’s where a lot of referrals come in,” Hale says. His job is to reverse this Catch-22. “We are trying to help agents and advisors actually go through their client base and profile different markets against it to look for missed cross-selling opportunities.” Hale describes profiling as “painting a picture of what a particular market looks like.” This helps advisors identify customers who are ideal prospects for markets they have not yet entered. Hale uses the example of the 412(i) marketplace. A 412(i) plan is a special type of defined-benefit plan that’s funded entirely through annuity or life insurance contracts. “Typically, we’re looking for business owners of companies with relatively few employees, with stable cash flow, and who are looking for large tax deductions,” Hale says. When an advisor looks at his book of business with this template in mind, he can identify many missed opportunities. “It’s a very large number because as advisors, we go with the path of least resistance and too often we’re looking at transactions instead of taking a more holistic approach,” he adds. Drying up “I think most people would agree that a lot of the [new] life premium, what people are calling policy reviews, is really replacement work. Certainly it is valid to sit down and see if policies still meet the needs of the customer. But what’s riding a lot of this replacement right now are guaranteed universal life (UL) policies, which are hyper-competitively priced at the moment. It’s a very easy sale,” Hale explains. However, cost pressures on insurance companies—coming from reinsurers, a low-interest rate environment and soon a new mortality table—must eventually be dealt with and will affect the replacement landscape. “Because of these cost pressures, the guaranteed UL marketplace is going to slow down or dry up at some point,” says Hale. Reaching clients
Even when you’re popular among your clients, just getting them on the phone can be tough. Knoxville AIFA member Jeff Headrick has been selling for Woodmen of the World in Knoxville, Tenn., for the past five years. He almost remembers cold-calling being easier than trying to talk to someone in person. “Getting in contact with people in an era in which there’s more voice mail and caller ID than people on the other end is my biggest challenge,” says Headrick. “Just five years ago, if I called people, they would generally answer the phone. Let’s say I would call a referral, even if they didn’t know me, they’d still pick up the phone. “But now, even if I’ve got a client of four years who’s paying premiums and going to seminars, they’re not answering the phone. The clients are still there, but they’re harder to get hold of.” Making a switch, or not “Sometimes we’ll get a couple in the six-figure range, and then a bunch of around $10,000,” says Colangelo, “but that’s what you can get working with business owners and corporate executives.” David Harjoe, president of St. Louis NAIFA and a veteran of 25 years, hasn’t necessarily switched his focus to wealthier clients; he’s just held onto clients for so long that they’ve become highly affluent over time. “Many of my clients have moved around the country and have grown into more prominent positions,” explains Harjoe, who has licenses to sell insurance in most states. On a recent trip to Washington, D.C., for a NAIFA leadership conference, for example, Harjoe decided to expand his trip to see clients he usually can’t see face-to-face. He made client visits to Chicago, Baltimore and Washington. He collected $42,000 in premiums while on the road and $25,000 more when he got back to his office. His lesson? Referrals are great, but client retention is better. Colangelo agrees. “We have relationships with CPAs and law firms. They are trusted advisors. If they bring clients or prospects to us, there’s a good comfort level and the client knows his accountant or attorney will review our advice. As a result, we have an extremely high client-retention ratio, and if they’re happy, they’re also eager to give us referrals.” Executive consultant Maury Stewart, a NAIFA-Greater Philadelphia member, isn’t surprised by the lure of the affluent client. He believes, however, that chasing dollars leaves a huge slice of the market without service: “There has been a lot of chasing of elephants and little concentration on the middle-income markets. Agents are going after larger cases and fewer clients. We have to get that activity level back up.” Advisors who do go after the middle market will likely be received with open arms—and reap the benefits of their efforts. LIMRA, in its report titled Purchase Preferences of the Middle Market: Life Insurance (2004), reveals that most middle-market consumers “prefer to purchase life insurance through someone they meet in person.” However, the report also says that “almost two-thirds report they do not have someone they consider to be their personal life insurance agent.” An advisor trying to increase his life sales would be wise to put himself in the middle of the middle market. Serving the customer Being a service-oriented advisor is the key to success in this business, Harjoe says. “I believe in the product and what it does, and I take that out to the people. I discuss rate of return and use a calculator like everyone else, but I talk to them about what will work for their family. That’s the reason I made it this far.” Stewart likens product-based sales to “picking low-hanging fruit. Instead of planning with clients to help them see the overall picture, [some advisors] go out with a specific policy for a specific need rather than look over the landscape of the clients’ needs.” Adam Sachs, a member of NAIFA-Boston, is much younger than Stewart, but his values are similar. Only 34, Sachs has qualified for the Million Dollar Round Table six of his 11 years in the business. His work in the Signator Financial Network office in Wellesley Hills, Mass., has allowed him to get most of his new business through referrals. “You really have to sell yourself,” says Sachs. “You need to separate yourself from the product—be familiar with the product, of course—but relate to the client and sell to his values. The cost of the product is lessened in the conversation, and protecting their family becomes more important.” Everybody’s an expert “There’s so much information and transparency in disclosure, that it’s almost muddied the water,” says Colangelo. “They hear it on the radio, and everyone on TV has an opinion. It makes clients wonder if they’re doing the right thing. I have clients call me about something they see on CNBC.”
Colangelo finds that this information doesn’t make the selling process go more smoothly. In fact, closings can become delayed for months. “My biggest challenge is time management and closing the prospects you meet with,” he says. “There are times when you can meet with someone three times and close a deal, but some are in the pipeline for three to six months.” While Colangelo works diligently to shorten these long periods of indecision, he uses the down time wisely by meeting with new clients. Tell your story “Insurance was more of an opportunity for me when I [started in the business], and I didn’t see the value in it until my first claim,” explains Sachs. “Six months into this business, my first clients were a couple, 38 and 39 years old. They had no kids but decided they needed insurance to cover mortgage and other expenses. They agreed to change their beneficiaries on their retirement accounts and even drafted some wills during this period. Three weeks after they applied, I left a message on their answering machine that they were bound and approved. I later learned that two hours after I left the message, the wife died from a blood clot. ”Most people don’t plan for the future. Not because they don’t love their families, but because they feel they’re going to live a long time and they have time to plan the insurance needs,” Sachs says. “If it takes a story like that to get them motivated to take action and meet with an attorney and get trusts set up, then I will certainly share it.” Harjoe didn’t actually deliver a claim to realize the value of life insurance; it was the lack of a death benefit in his own family that affected his career plans. “My dad died while I was a freshman in college and my family’s finances fell apart afterward,” remembers Harjoe. “My mother told me that things became different because he didn’t have enough life insurance. He was sick and couldn’t afford it.” While at college, Harjoe met with a Northwestern Mutual agent to buy his own life insurance and ended up with an internship that turned into a quarter-century career. The right tool in the right amount What’s more, advisors must ensure their clients are not just insured, but adequately insured. “The amount of life insurance people need is substantially greater today than it was in the past 15 years,” says Stewart. “The cost of homes, the cost of living and today’s lifestyles all mean that the average size of a policy is going up.” In the end, talking about the size of a policy won’t matter much if there is no policy in place. Although selling life insurance has never been as difficult as it is today, the need has never been greater. Karl Lueders is a contributor to Advisor Today.
© Advisor Today 2008. All rights reserved.
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