How to get customers to think differently and recognize the myriad benefits of life insurance
When it comes to life insurance, most people don’t know if they need it, or they don’t know how much they would need if they were to purchase it. Sadly, insurance agents aren’t always a big help.
In my 27 years of training insurance professionals, I’ve found that most agents lack a clear, consistent system of their own for determining the right amount of life insurance for a client or prospect. I’m not necessarily blaming the agents; for years, life insurance companies have provided a form called a “needs analysis.” This form guides agents to list all of their client’s debt, add in the cost of four years of college tuition-plus per child, include three to four years of salary, and add enough to pay off the mortgage—and maybe other outstanding debt—in the event of a premature death.
Does this sound familiar? In other words, insurers are asking agents to find out the least amount a client’s or prospect’s loved ones may need to get by, for the least amount of premium. This way of thinking goes along with how clients think: “I don’t really want any life insurance, but I should probably get some to protect my family. What is the most coverage I can get for the least amount of money?” If there was something you didn’t want to buy but you had to get it, wouldn’t you think the same way?
I believe that, when explained correctly, permanent life insurance is not a “need” product,but instead becomes a “want” product—a product your client or prospect is eager to purchase.
It’s easy for us as insurance professionals to become “order takers.” Once a prospect or client is ready to purchase, once they’re convinced of the need, we ask them, “How much are you wanting to get?” or, “How much did you want to spend?” The answer to one of these often-asked questions usually points agents to find out how much death benefit a person can get for the least amount of premium. We run a proposal based on this information, and both agent and client are happy. The agent gets the sale, and the client has life insurance they need to protect their family.
But what if you could go beyond need? What if you could present life insurance in a way that people will say, “I want that” and, “How much can I get?” I believe that, when explained correctly, permanent life insurance is not a need product, but instead becomes a “want” product—a product your client or prospect is eager to purchase.
Making the switch
To change the discussion requires getting clients and prospects to think outside the box. Everything your clients know to be true is true to them. So you need to be prepared to educate your clients and expand their thinking.
For example, I ask my clients, “Is your house a ‘need’ purchase or a ‘want’ purchase?” or, “The car you drive—was that a ‘need’ or a ‘want’ purchase?” Most of the time, the response to both questions is “need.” This is where I educate them and help the client to think outside the box.
I propose to them that their house actually is a “want” purchase. If they simply “need” shelter, they could pitch a tent in their parents’ back yard; that would provide shelter. But they purchased their house because they wanted a nice home to provide shelter, a safe environment for their family, and a place that would contribute to their quality of life.
It’s the same for the car they drive: It’s a “want” purchase. If they just needed transportation, they could take the bus, or get a cab or Uber. But they wanted a car to drive because it is reliable, safe, convenient—and often, it might express their personality or status.
I use a similar example with their children’s education. I ask if the education provided for their children needs to be the bare minimum that the state requires, or whether they want the best schools to provide the best education that their child can possibly receive.
These examples allow me to redirect the conversation—and the thinking behind it. “I say, “So, Mr. and Mrs. Client, while you are here on this earth you want your family to live in the nicest home, you want to drive your children around in the safest cars, and you want to provide the best education that your children could possibly receive. But in the event that you are not here, do you want them protected by the insurance we could get for the least amount of money?”
With that mind-shift accomplished, it’s time to ask the prospect or client, “When it comes to parking your money somewhere, what is it that you want?” It’s at this point that I set about educating them even more. I explain that, in 1988, the Congress passed the Technical and Miscellaneous Revenue Act (TAMRA), and in 1984, the Deficit Reduction Act (DEFRA), to try to restrict the amount of dollars that could be put into permanent life insurance contracts. Why would the government be so concerned about how much is in a life insurance contract?
Well, there are several reasons. The biggest, in my mind, is that people stopped putting dollars in their SEP, 401(k) and 403(b) plans and their IRAs. These are all qualified and deferred accounts. The way I see it, the government being concerned about your permanent life insurance contract should be a good indication that this is a good thing. Remember, they can’t tax life insurance contract dollars if the plans are set up correctly.
When people put their dollars in a qualified account, I think of it as them throwing their money into the future. They get a little tax break now, in their working years, when they can afford to pay taxes, and are setting themselves up to pay taxes later, and who knows what their income will be then? Throwing money into an uncertain future to take care of retirement is a big gamble. Rather than deferring the tax payment, I view it as “postponing” the tax calculation to a later date, when you’re retired and no longer receiving income, other than possibly Social Security.
We have no way of knowing what tax brackets will be in the future, or which one we’ll be in at retirement. Things may look completely different than they do today. I ask clients, “Do you think your taxes will increase or decrease in the future?”
Consider this example that I share with prospects of their throwing—or putting—dollars into the future. Here’s the scenario: I say, “You need $10,000, and you ask to borrow it from me. I respond, ‘I’m doing pretty well right now. So, yes, I’d be glad to lend you the $10,000. Now, you know I’ll need that money back sometime. When I do, I’ll simply calculate how much I need, and then I’ll tell you what the interest rate is on the money you borrowed and how much you need to repay me.’ What do you think?” No one in their right mind would do a deal like that. But it’s exactly what people are doing in their IRA, 401(k), 403(b) and SEP.
Another thing I talk about is other places where people “park” their money. Most financial service institutions charge fees for clients to do business with them. Those fees can range from 1% to 2% or more, and the money is routinely drafted from the customer’s account.
Along with these fees, there can be restrictions and penalties on the use of their account—for instance, limits on deposits and withdrawals.
One of the concerns customers should have when “parking” their money in an account with a brokerage house, a big bank, or other institution is the growing tax liability they create and the “risk” of losing their hard-earned dollars.
But they don’t have to worry about any of this.
Instead, I ask them to imagine a place where they could park their hard-earned dollars and have tax-deferred growth, tax-free withdrawals, and an awesome rate of return; a place that lets them experience market gains, but not have to worry about losses; a tool that offers liquidity—the ability to use and control their money, protection from creditors and predators, continued payments should they become disabled, and guaranteed income for life for their loved ones.
Oh, and there are absolutely no brokerage fees. Their money is their money.
Once imagined, the response is quite positive.
These are a few approaches I find to be successful when working with prospective life insurance clients. Of course, there are more—lots more—including those found at LifeHappens.org, the website behind Life Insurance Awareness Month, which takes place in September every year.
Check it out. And sell well.
Rodney Jones, LUTC, owns two business entities, RL Jones Insurance Group and RL Jones Financial Group. He is an author, speaker and trainer, having made appearances on ABC, NBC, CBS, and Fox affiliates.
You can contact Jones at firstname.lastname@example.org