Experts try to make sense of the LIMRA statistics: Fifty-two million American households with incomes between $50,000 and $250,000 have zero life insurance. The 40 percent who do have coverage feel they don’t have enough—which makes sense, considering that the average face amount for the American adult is $155,000.
Trends, graphs, macro and micro analyses seem to be ignoring the most obvious explanation:
Selling life insurance is hard. Really, really hard. Harder than buying it, even.
Is there anything more difficult to sell than a life insurance policy? Certainly not cars—I want a new car every other day. Food seems pretty easy to sell—large market, high motivation to buy.
Maybe funeral plots?
The fact is we get to hound prospects, interrupt their days, and ask them if they’ve thought lately about being dead. Healthy 30-year-old couples—“Congratulations on your marriage, your new home, your promotion, your beautiful baby. Let’s talk about you dying. Or your spouse dying. Maybe both of you. We need to talk about losing everything for which you’ve worked so hard. Is Tuesday morning good?”
Even if we’re “lucky” enough to make the appointment, we get to sit them down, grill them from the mole on their forehead to the wart on their toe, pry them for sensitive financial information, ask them if they really love anybody, and then—only then—begin the 35-page application process, complete with sharp needles and empty plastic cups. And a scale. Oh yes. The scale.
The question is How do we make it easier? Easier on everybody?
Maybe the answer is to reframe the whole process, using a consumer-friendly strategy. Call it the RECAPTURE method—a loose acronym for the following steps:
1. Review. Virtually every sale ever made is the result of an inventory. Lemons are purchased because we’re out of lemons. New phones replace old and broken phones. The critical piece for this step is the type of review, and the options are virtually unlimited. I have seen life insurance reviews with literally hundreds of fields to complete, from interest rates, surrender charges, contingent beneficiaries—any and every possible detail on any and every existing policy. At the other end of the spectrum, I met a broker who writes $3 million of premium whose review says, in essence, “You have X. You need Y. My phone number is Z.” The point is, when conducting a policy review, use the process your client wants to use, not you.
2. Calculate. But in a different way. Conduct the review and do a needs analysis. Together with the client, decide on a number. Let’s call it $500,000. You price it out and the cost is $250 a month. What does your client say?
“Ooh. That’s a lot. I can’t do that. I can do maybe $150.”
That’s because financial decisions—from lemons to life insurance—are based on budget, not need. We may need a thousand rolls of toilet paper before we’re gone. And while storage space is indeed a consideration, we don’t buy everything we need because we can’t afford to do so. So we budget. There’s a place for a needs analysis. Most clients have little idea how much coverage makes sense. But somewhere in the process, usually at the end, budget becomes the deciding factor. So switch it from the end to the beginning.
While you’re doing this, it just might help to keep in mind why your client is looking for coverage. A recent study conducted by Genworth lists trigger events by gender. For women, birth of a child is first on the list. For men, it was last. Get this study, and remember who you’re talking to!
3. Apply and Approve. It’s the only way to learn anything real. Few if any clients enjoy this step. So why not make the most of it? While there is a wonderful place for the “drop ticket” method of applying for coverage, don’t forget that there’s still an art to the process, and it’s a great way to nurture and earn the trust of your client. You know the answers that work, so use them. Stress the “no obligation” piece of this step. There is very little downside to applying for life insurance, while the ultimate upside is protection, peace of mind, a message of love–and a free physical.
Apply for as much as your client might need, for as long as your client might need it. When I told my wife I had been approved for $1 million of coverage, the first words out of her mouth were, “How much more can you get?” Explain to your client that it’s much easier to come down than go up, and that completing all the (free) underwriting requirements up front makes the process smoother.
4. Truth Moment. Time to “set sale.” This is really the final step. Does anybody ever “cut the check” before they really know how much the thing costs? The fact is, without an approval from a home office, we’re just guessing. Now we know. We go back to the client with actual figures, get the final answer, and then go back to the home office with clear instructions on how the policy should be issued.
This is where, together, you settle on the plan, the duration and the amount. This is where the sale is made.
5. Unit Cost Technique. Based on budget, then on need. Calculate a cost per unit, whether it’s $100,000, $500,000, $1 million, whatever makes sense. Remember, we buy what we can afford to buy, not what we need—especially these days.
This step isn’t always necessary, but it helps build trust and helps your client get a handle on what he’s getting.
6. Rejoice! This isn’t really a step, but
the whole “RECAPTURE” thing doesn’t fit very well without it. It’s closer to RECAPTU, which makes no sense.
Finally, don’t be ashamed to sell term insurance. Successful salespeople sell what people buy. One of my most successful brokers likes to tell me that when he delivers a large benefit check, nobody has ever asked him the type of coverage they had. They simply cash the check, and usually say “thank you.”
