Have you come to terms with selling term life insurance? Given the state of the economy, many producers have embraced the affordability of term to get good candidates covered at a time when the expense of whole life might seem to put it out of reach.
Life Insurance Selling rounded up eight producers who are enjoying specific success in term life sales to query them about their best sales ideas, what objections they are hearing and how they counter those objections, and what else is on their minds. Please note that some responses have been edited.
-- The Editors
Meet the panelists:
o J. Grady Jennings, CLU, ChFC, The Dignity Group/Jennings and Associates, general agent, MTL Insurance, Ontario, Calif.
o David Johnson, CLU, The Johnson Financial Group, Norcross, Ga.
o Bill L. Levinson, vice president, Cary A. Levinson & Associates Inc., Coral Springs, Fla.
o Peggy Mace, COO and director of impaired risk branch office, Outlook Life, Fountain Hills, Ariz. and Hastings, Neb.
o Brian C. Moldt, CLU, LUTCF, OneAmerica, Indianapolis.
o Melvin L. Rohrer, LUTCF, president, Rohrer & Associates, Janesville, Wis. Rohrer is a registered representative with Series 6, 7 and 63 licenses.
o Loren Thetford, president, INA Services, Tulsa, Okla.
o Thomas W. Young, ChFC, CLU, RFC, current president of MTL Insurance Company's 1st Consultants Inc., Beaver, Pa.
Question #1: How has the market downturn of the past year affected the climate right now for term life sales?
Brian Moldt: "I am selling more term insurance this year than in previous years. My total number of contracts applied for has increased this year. I'm on pace to double my number from last year. In past years about 50% of my contracts applied for have been term insurance. This year it is around 60%. The average death benefit applied for has increased. I believe the market has had some affect on this. My clients seem to be more cautious about cash flow, but they also seem to be more concerned with having the appropriate amount of insurance. I am getting agreement on larger death benefits with less discussion than in past years. One of the reasons may be due to their assets losing value, but the death benefit can make up for that if a breadwinner passes away."
Loren Thetford: "In many ways, the market downturn and uncertainty has actually enhanced the opportunity to increase sales. People who before were counting on company benefits are now more willing to look at coverage that they can control and ensure stays with them regardless of the job situation. Also, those who have coverage are willing to revisit their life insurance needs given how in some instances rates have decreased."
Peggy Mace: "We have seen interest in life insurance increase dramatically this past year. I attribute some of our upturn to the poor performance of investments; this is reflected in renewed interest for return of premium term as well as regular term life insurance. Some new requests are from folks who lost their life insurance when they lost their jobs. In times of great unknowns, term insurance appeals to people as a secure way to generate enough dollars to meet their needs, even while on a tight budget."
Bill Levinson: "Current market conditions are unique. With approximately 10% unemployment in Florida, real estate distressed as I've never seen, the stock market at three-year lows and most people, in general, with little or no disposable income, the time to ask them to purchase life insurance may not be ideal. However, being a salesman who thinks 'outside the box,' I see it as a great time to market term insurance. My permanent sales (UL, IUL and WL) are down but my term and ROP sales are way up. For those prospects with extra dollars, ROP is a perfect product in this environment."
David Johnson: "My dad, who is also my general agent, has always said that we learn about recessions when we read about them in the newspaper. Ours is an agent-driven business, so my personal downturns have always been directly related to a decrease in my own activity. We live in a country with 300 million people, and we sell products that cost a couple of hundred dollars a month. There is plenty of that business still out there if we are willing to work to go get it. So I have seen very little change in the last year. As long as I keep working, all is well."
Melvin Rohrer: "One of the biggest challenges has been overcoming the missteps of a few high-profile carriers. Unfortunately, the overall industry's reputation has taken a hit as a result of financial troubles at just some companies. This makes it more difficult to convince customers of the value in putting their money with a life insurer. At the same time, affected carriers are rapidly removing, revising or repricing many of the core products and features they previously promoted quite heavily with producers. It's hard to know which products will even be there for us to sell down the road. For producers, one important lesson to emerge from all this turmoil is that you really have to look closely at the discipline and integrity of the carrier you partner with. Consistency matters most in the current environment."
Thomas Young: "My approach is to insure people to their 'economic human life value.' Term insurance has played a big part in accomplishing that. The current economic times are leading to term conversion to dividend paying whole life insurance with mutual companies. Business has increased substantially with whole life and term insurance."
J. Grady Jennings: "Been a complete change in marketing approaches. Trying to get families to understand the impact of this market has changed. Getting them to see the guarantees that any type of life insurance can provide provide the ultimate in security."
Question #2: What is your best sales idea that applies to term life?
Levinson: "I've always drawn the analogy that covering one's family or business with term insurance is similar to renting an apartment. Right now, we need a roof over your head; allow me to do that with term insurance. At the point of sale and again at policy delivery, I tell my clients I will be back to discuss moving out of the apartment and into an equity-accumulating home. Obviously, one of the greatest features of term insurance is the convertibility option which allows him/her to leave the apartment and buy a home (UL or IUL) without proving insurability again. As an agent, I love it. It's not important to me that term is less expensive than permanent insurance. That's all I hear agents mumble all day long. 'Term is so cheap; I have to work twice as hard to make a lot less money.' That's not how I look at it. I see a term sale as that I'm making two sales - one now and one in the future. And, I have another client who trusts me and I have earned the right to ask for referrals. So I don't mind selling term now. I'll get you into a 'home' before you know it."
Jennings: "My primary market is working with families that have children with special needs. If there is ever a need for the security of life coverage it is with this market. I try to help families understand I am using the term insurance as a bridge to cover the insurability and convertibility. We are developing the strategies to ultimately convert, since the problem is a lifelong issue. For our families, the process of how we do things economically is so much more important than the products we buy."
Thetford: "I try to break term options down into very simple terms. Basically, there's what I regard as 'good' term policies for the price-conscious customer, which essentially involves a conventional straight term policy. Then, there's 'best' term, which involves a return of all premium and, on a perceived net cost basis, looks to deliver more value. This is helped by the fact that, even in this tough environment, a few carriers are still putting forward some very competitive return of premium term products."
Moldt: "I have been involved in many pension maximization cases in the past six to seven years. One idea that basically came from a series of discussions with a client is to layer term policies with different time periods to take care of a pension maximization issue. When you have limited resources to deal with and/or the client does not want to spend the dollars necessary to purchase 100% permanent insurance, you can use this option. We have applied for a series of up to three policies. If we needed $3,000,000, we may apply for $1,000,000 of whole life, $1,000,000 of 20-year level term and $1,000,000 of 10-year level term. The client was satisfied that as time went on, the insurance would be less important for the spouse to maintain the desired lifestyle.
Rohrer: "Interestingly, the unpredictable pricing outlook for life products has prompted many customers to seek to lock-in term policies now so as to avoid potential rate increases down the road. The fact is, you have to be able to wear a lot of different hats and develop a number of different business niches in order to cater to a broader set of customer needs. It's also important to remember that the more passive interactions you have with customers can go a long way toward augmenting your more direct customer engagements and affirming your overall commitment to them."
Johnson: "The idea of Human Life Value, which I learned as a LEAP licensee, has helped me write bigger face amounts. My goal has always been to write as large a face amount as possible initially, then work over time to get it converted to a cash value product."
Mace: "In the past few years two things have really affected the type of policy we sell: 1) the ever-increasing stringency and requirements by underwriters for medically underwritten policies; and 2) a huge interest in non-med policies to avoid that. With the tightening economy, we welcomed a third choice this year - a policy that requires an exam but no medical records. This last option, where every approval is rated preferred, costs less than non-med policies due to: a) the exam requirement and b) their consolidation of multiple ratings into one rate class. Therefore, our best sales idea has been to routinely offer a no exam and/or one rate class option along with a medically underwritten policy when feasible. Our clients like the choice and we get fewer 'not takens' due to them having near certainty of the final price from the start."
Young: "Establishing that a client really wants to be insured properly. The goal becomes to get life insurance equal to 'economic human life value.' This is done by focusing on cash flow efficiency for clients - finding money that the client is paying unknowingly and unnecessarily to others; recovering these dollars and focus them toward life insurance."
Question #3: Can you provide an example of how a particularly satisfying recent term life sale came about?
Rohrer: "We're able to offer valuable financial protection at a time when our community needs it most. Unemployment is running somewhere around 16% in the area where we're located. Large employers have laid off literally thousands of workers. As a result, these people have lost an important group benefit in the form of employer-sponsored life insurance. We're helping fill that void. We have a number of cost-effective solutions so people can essentially replace their employer-sponsored life insurance. It means a lot to be able to help ensure families of unemployed workers are protected against additional financial hardship if they were to lose a loved one."
Thetford: "I recently interviewed a 50-year-old oil company service owner with a company-paid universal life policy. Turns out he was becoming less interested in the death benefit at this stage, but rather was looking at it more as an option to set aside money for retirement. His magic number in terms of retirement age was 65. After running the numbers on the return of premium term policy I had available, comparatively, it actually returned both a higher death benefit and much higher value at 65. He was a happy camper."
Moldt: "In the past four months or so, I was introduced to a family who was ready to have their second child. Their first child is now 16 and getting ready for college and the second baby is on the way. Due to some unfortunate circumstances, the family had declared bankruptcy a few years before. Both parents have good jobs now with the husband being the main breadwinner. They have been crawling out of debt slowly, but with a bankruptcy, they can only get loans at the highest interest rates. With a baby on the way and college in the near future, you can imagine how tight their cash flow is. We were able to cover each spouse for an appropriate amount of term life insurance and put a plan into place that will pay off the debts and in the future, convert some of the term to whole life insurance. This is not one of my largest policies I have been involved with, but when you get a hug from the wife and you see the genuine smile on a face as she thanks you for taking the time to take them through a process that helps them, it makes all the late nights worth it."
Jennings: "In dealing with a family that had twins with special needs, they were 17 years old had approximately $40,000 in UGMA accounts that was going to prevent them from getting government benefits for a period of time. Further, the parents had an estate of approximately $2.6 million, of which $1.8 million was qualified money. The income and potential estate tax damages were going to be incredible. Showing the family the 'costs' of this to their special needs children was huge. Again we were able to use the term insurance as a bridge to establish the insurability at a relatively low cost until the strategies could be fully developed to protect their children from the long-term costs of their present plan."
Levinson: "I have a personal friend who is 34 years of age. He is in the middle of a divorce and most unfortunately, there is a 3-year-old son involved. The judge has mandated that he maintain a $1,000,000 life insurance policy until his child is 21. He came to me and informed me of the judge's decision. I showed him a traditional 20-year term and a 20-year ROP. There was no question what he would choose and I knew it. The ROP was great. It provided the court-mandated coverage, and the guarantee of getting all of the money back in 20 years appealed to him as well. This way, he would have the funds to reimburse his son's college loans or use the cash value for graduate school or post-college education. Perfect solution for a very difficult problem."
Young: "My own self. Three years ago, I had a 100% blocked right coronary artery. Because I had lots of term equal to my Economic Life Value, I was able to convert to good dividend-paying whole life with waiver of premium, getting standard rates.
Johnson: "Term insurance by itself has never been especially satisfying, because he's buying something that will quit before he does and I don't get anything. The thrill comes when we reach agreement that a portion of it should be permanent. A lot of our business in our office comes from term conversions, which is my favorite part of the business."
Mace: "I had a recent request from a 50-year-old male just retiring from the Armed Services. He was a pleasant guy, trying to get his financial affairs in order for his family. He really liked the one rate class price and not having to wait for a carrier to request all his VA records. He had a family history that would have bumped him to standard with most other carriers, anyway. With this A+ rated carrier he was able to be rated preferred with very little hassle. I think it made me feel especially good after all he'd been through serving our country, to not have to jump through hoops just to get a reasonably priced life insurance policy."
Question #4: What is the most common objection you hear these days, and how do you counter it?
Young: "How to pay for the coverage! I have found that most people are spending unknowingly and unnecessarily for insurances (P&C) with low deductibles. Debt is out of control and people really don't have a good strategy to turn that around to the point that they are paying themselves the interest that would usually go to others. I ask, if I can show you how to get back all the interest in principal you'll pay on loans for the rest of your life, would you want it?"
Levinson: "'I have plenty of life insurance and I certainly can't afford any more right now.' I love to hear that as it is a perfect 'lead-in' to my policy review. I tell my prospects that in some cases rates are actually lower today than they were five years ago. Or, we now have classifications that we didn't have years ago like Standard-Plus. If someone has a Standard policy they were offered three or four years ago, they could very well qualify for a Standard Plus today, if their health hasn't deteriorated. Perhaps, if their health has actually improved, of if they've lost weight, or improved their blood pressure readings or cholesterol levels, they can even lower their rates. A policy review is a must for all agents who want to build, maintain and cultivate a client base, not just sell policies."
Johnson: "Our greatest enemy is inaction. I try to couch things in such a way that the client doesn't feel like he is making a long-term, irreversible commitment. I try to reach a point of complete agreement - 'Mr. Client, are we in agreement that you should have more life insurance than you currently have? Are we also in agreement about the total amount? Then let's get the underwriting completed and you can make your final decision about how to structure it later.' I'm just trying to get him moving forward in some small way."
Rohrer: "There tends to be this nostalgic notion that life insurance is still sold as part of an in-depth discussion with a customer over the kitchen table. But nowadays, you don't earn trust just by sitting down for a lot of chit-chat. My experience is that most customers respond better to a more transactional sales approach. In today's market, you have to be very efficient and make things hassle-free for the customer. Some carriers understand this, some don't. I've worked with a couple innovative providers - Symetra and West Coast Life - that have grasped the importance of streamlining the sales process. Symetra has an online tool, called Express, where you can quote and bind a policy over the phone in about 10 minutes. Customers simply expect that type of responsiveness in this day and age.
Jennings: "The objection we see in my office is mostly fear-based uncertainty, with jobs, the market, and housing drops. The hesitancy in planning is what we see the most. Being a 50-year-old widower whose wife passed away three years ago, while personally raising a son with special needs and trying to run a business, has been helpful to stress the importance of dealing with one's own mortality. We are our children's last line of defense and we truly need to be proactive in our planning. No opportunity to change outcomes if I am dead without the proper strategies."
Moldt: "The most common objection I hear is, 'I won't need life insurance when I retire.' There are many ways to counter this objection. The most effective way I've heard to counter this came from a veteran life insurance salesman in our office. He tells the story about how when he was in his 30s and 40s, he had a picture on his desk with seven people in it -- his wife, himself and five children. He mentions that for a time, he had a financial obligation to each one. He says now, there is a new picture on his desk and it has 21 people in the picture. It includes grandchildren. He now has no financial obligation to take care of any of them, except his wife. Then he tells his clients that the 'want' to take care of them is far more compelling than the obligation. I could counter with how life insurance can give our clients freedom to use assets during retirement in ways not available if no life insurance is in force. I have spent a large amount of time setting up life insurance policies for 55-, 60- and 65-year-olds. It seems that many times, it takes age and experience to see the value in life insurance for the long haul.
Mace: "Don't want the hassle of a long application and all the requirements. Too much intrusion. Takes too long. We try to counter those frustrations by instructing our clients at each step and doing all we can for them. But using policies with minimal requirements is the most satisfying for them. We offer some 'no exam' policies that are wonderful for those with health conditions. However, the average healthy person will spend more on a 'no exam' policy, so One Rate Class Preferred policies are a good compromise (medical records not required) to get the best price with least hassle."
Question #5: Any final thoughts on the subject of term life sales?
Mace: "Carriers of term products have gone to great lengths to provide underwriting guides and quick quotes to enable us agents to prequalify our clients. I find it very troubling when leads come to me with a ridiculously low quote from another 'agent' who didn't gather the necessary health details (I won't even go there if they did gather the facts and still quoted that)."
Levinson: "As I mentioned before, the economy is chaotic and stressful. People worry about their jobs, their income, and most definitely, their futures. Words like 'guaranteed,' 'security' and 'worry-free' have never been more important. That's why guaranteed term life insurance, which is renewable and convertible, is being chosen more and more by cost-conscious consumers. Rates are always important but the strength, dependability and ratings of the carrier are crucial in the equation, too. And, certainly, discuss the merits of ROP. For those prospects who can afford the difference in premium between term and ROP, what better forced savings is there to get all your money back at the end of the term? When times are tough and people need even more counseling and guidance, it's our duty and responsibility to help. And, in these difficult times, the solution is more commonly than not, a term or ROP policy."
Young: "Term insurance should never be the cheap kind. If you always sell or buy the cheap stuff, you have no good products to convert it to. Planning is not for needs, as most think. Financial success comes from strategies that are developed based on what the client wants and they must be lifelong and generational. That means what we do today should also better the next generations."
Johnson: "As with any other sale, it all begins with proper prospecting. Know your client profile, and figure out who you know that can introduce you to more of those people."
Jennings: "To utilize what has been said over many years by tons of professionals before me, any type of insurance is good, especially the one in force at the time of need, but the importance of having a permanent client. Still nobody asks what type of insurance you had at death. Though my wife passed away three years ago, she had been uninsurable since 1987, I was grateful for what I had, but sure wish it could have been a whole lot more."
Moldt: "I would say that we have an obligation to our clients to make sure that above all, they have the proper amount of life insurance in force for their situation. Most of the time that includes large amounts of term insurance. Term insurance has its place. When the economy is slow and unemployment is high, term insurance can ensure a family has a good chance to not suffer financially if a breadwinner dies. If the economy is roaring and unemployment is low, term insurance can still make sure a family does not suffer financially. So any way you look at term insurance, it can help insure a way of life."
Rohrer: "Term life sales clearly benefit when you use technology effectively. We've always tried to reinforce the use of technology with our network of producers. We have a turnkey Web site available to sellers where they can quickly spreadsheet and quote a variety of different policies. We try to make it as easy as possible for producers to get into the term life business.
