There are only two things your prospect needs in order to have a successful life insurance program. They should have enough of it, and it should be in force the day they die. So the most important questions to ask are: how much and how long?
The prospect wants to protect their loved ones if/when something happens to them. Most prospects only think about covering the cost of a funeral and paying off the house. Some of them even think about the kids going to college, but that is all.
But many prospects are not protecting their family members enough. They are not thinking about income.
If a husband is making $80,000 a year, we also need to account for the loss of his income. Sure, the house will be paid off, and the cost of the funeral will be taken care of. But is that really enough? The answer is no.
The wife will now be without the husband’s income forever. The family has grown accustomed to their lifestyle, and now the income is gone. Even if she is working also, the income that he was bringing in is now gone.
The question is: how many years of income does she need until she either replaces his income or won’t need as much? The house is paid off now, but the rest of the bills still come in each month.
Again, the problem is that a lot of agents and prospects are only thinking of paying off the house and paying for the funeral. This is a huge mistake.
You might want to talk to your prospect about insuring his current income for awhile also. You could, for example, include five years of income at the time he purchases the policy. You want to make sure the spouse would at least have the same amount of income coming in for five years, have the home paid off, the funeral taken care of and maybe also include some college money for the kids.
There are many other uses for life insurance. Some of the personal uses of life insurance are:
Burial expenses: Life insurance will pay for funeral expenses, and benefits can be assigned directly to the funeral home.
Mortgage and debt protection: Life insurance can pay off a mortgage, credit cards, a student loan and other personal debt.
Education: The cash value in a life insurance policy can provide funds for a college education.
Charitable giving: Life insurance can fund a donation to, or an annuity for, a charity, church, foundation or nonprofit.
Estate creation: Buying a whole life insurance policy gives the insured an instant estate and makes him worth a lot more money.
Estate taxes: Life insurance can be used to pay estate taxes when taxes are due.
Inheritance equalization: If the son inherits the family’s $2 million mansion, what does the daughter get of equal value? How about a $2 million death benefit from a life insurance policy? This gives both children an equal inheritance.
Survivor income: Life insurance can provide a lifetime income to a widow or widower when the spouse dies. It’s instant security.
Children’s insurance: Life insurance on a child not only guarantees a death benefit; it also ensures the child will be guaranteed insurable for future life insurance coverage.
Be careful. If a review of this list makes life insurance look like a cure-all for individual financial problems, take another look and realize that just because insurance can be the answer to a problem, it doesn’t mean it’s always the best answer. It’s not a one-size-fits-all tool.
Overcoming sales resistance
Prospects have more sales resistance training than agents usually have in sales presentation skills.
Prospect response to insurance agents is designed to get as much information as possible and be in control of the situation. Prospects often mislead insurance agents about their intentions, how much they’ll spend, who makes decisions, etc.
Prospects often turn agents into unpaid consultants, leading them on until they have all of the information they need. Often, they’ll then use the agent’s quotes to compare with their current agent or a competitor.
When prospects have what they need, they stop returning the agent’s phone calls.
Does this make prospects bad people? Of course not.
We all use this system for dealing with salespeople. It’s almost second nature. Why? Because it’s simple; it works.
The stereotype of an agent is not a good image for most of us, and prospects are afraid of being sold something they don’t want. In order to protect themselves, prospects feel they need a way to deal with agents. It is an instinctive reaction to the negative stereotype of agents that causes prospects to put up a defensive wall.
So how do most agents deal with the prospect’s system of defense? Most play right into it. Many don’t use a systematic approach to selling. They allow the prospect to take total control of the sales process. This type of agent eagerly:
• gives his knowledge,
• makes commitments without getting any in return,
• wastes resources on pursuing deals that will never close,
• gives quotes to non-prospects who never buy,
• and then misinterprets the ubiquitous “I’ll think it over and get back to you” as a future sale.
Let’s look at situations where the prospect lowers his sales resistance. Think of the last time you did not feel well. Let’s say you go to two different doctors. At the first doctor — Doctor A — you describe your symptoms. Doctor A says you can have this medicine, this medicine, this medicine or this medicine. Which medicine do you want? Now you go to Doctor B and describe your symptoms. Doctor B writes you a prescription, hands it to you and says, “Take this twice a day for 10 days and then come back and see me.”
Which doctor do you have more confidence in? If your answer was Doctor B, you’re like most people. Now, why do we have more confidence in Doctor B? Is it because he diagnosed the problem and prescribed the solution? Maybe we need to be more like Doctor B with our prospects. You are the highly trained, licensed professional. If we understand that our job is to disturb our prospects, move them off the center and prescribe the solution, maybe we will help protect more families and build a book of business that will ensure our financial future.
People don’t want to take their valuable time to deal with uncertain salespeople. They want to be sold on what you’re selling. The language you use when working with prospects has to be powerful, not passive. Remember, people buy on emotion, but they’re moved to action by logic. Even people who say they buy logically do so because that’s what makes them feel better. We have to provide an emotional justification to make a logical purchase. (Try some of the power phrases listed on page 60.)
In the aftermath of 9/11, countless Americans are re-evaluating their life insurance portfolios. Many people are taking a hard look at their coverage and asking themselves whether they are adequately protected. They are seeking our guidance in determining exactly how much is required to sufficiently provide for their loved ones if they were to die. So diagnose their situation, prescribe the solution and remember your ABCs: Always Be Closing.
Lloyd Lofton, LUTCF, CSA, is the vice president and chief operating officer for American Eagle Financial Services Inc, a national marketing organization. He began his life insurance career in 1977 and has held various management and leadership positions with career and independent companies. He speaks at industry-related events and conducts training across the country. Lofton has hired thousands of agents and hundreds of managers over the years and can be reached at lloyd@americaneaglefinancialservices or through www.linkedin.com/in/lloydlofton.