“Don’t sell life insurance. Sell what life insurance can do.” Among the many great quotes from Ben Feldman—one of the most successful life insurance agents ever—this one resonates most with me. When you understand all that life insurance can accomplish, this approach can transform your business.
One scenario where I find this to be especially true is when working with clients at a specific point in their lives. For those who fit a certain profile—and in my experience, agents encounter many people who do—there’s a particularly effective, underutilized solution. It’s here that your communication skills and product knowledge come into play.
First, Ask the Most Important Question
Choosing the right life insurance product for a client often starts with a simple question: Are you putting money aside, and what’s your intended purpose for it?
Some clients may say that they’re looking for supplemental retirement income. Others may mention building a fund for unexpected property tax increases or a much-needed kitchen update.
However, a good portion will likely say that they intend to leave those funds to their children and/or grandchildren. Typically, these are people who’ve had a good run. They’re comfortably retired (or close to it) and are looking to pass some wealth to the next generation.
Perhaps they’ll even mention that, although they don’t anticipate needing these funds, they like knowing that the money will be there if long term care is needed down the road. For these clients, there’s a terrific life insurance option—one that not only provides the safety and control they desire but additional benefits that many other financial vehicles do not.
Match the Client Profile to the Solution
Before we dive into that solution, let’s better define that ideal client profile. In this scenario, we’re targeting people who are comfortably retired or soon will be. That’s because they are the most likely to have accumulated funds that they don’t need for current expenses—a critical point when prospecting clients for this particular solution.
Specifically, if a client anticipates that this money will be needed for necessities—or, say, a Bahamas cruise they’ve been eyeing—this is not the solution for them. Similarly, a younger client base may not have had time to accumulate such wealth or, at the least, feel confident it won’t be needed down the road.
When you ask a client what their intent is for specific funds, their answer will speak volumes. If they need it, they won’t shy away from sharing that. Or they may say, “Right now, it’s a safety net.” And if they do intend to leave it to their heirs, they’ll say that as well.
Another good indicator that clients fit the profile is that they have other accounts already designated as “Transfer on Death” or “Payable on Death.” This tells us that they’ve begun legacy planning. They’re already ensuring their money goes to their heir(s) without first going through probate—a good sign.
It’s always critical to keep our clients’ objectives in the forefront. Since these funds aren’t needed for current expenses, more than likely they’re sitting in some type of low-yield vehicle (and have been for some time). This tells us that maximizing returns is not the clients’ top priority. Plus, the fact that they want to leave this money to their children indicates that it is stashed somewhere safe, liquid, and easy to access.
The Solution: Single-Premium Whole Life Insurance
So, what financial services product will best help these clients achieve their purpose? Well, annuities are excellent for accumulation as well as fine distribution vehicles—but, chances are, someone has already presented this option to them and they turned it down.
This is your opportunity to suggest something the client may not be familiar with. Not just life insurance, but single-premium whole life insurance—a policy that provides lifetime protection with only one premium payment. No additional payments will ever be required.
For example, let’s look at a 65-year-old female client who’s in decent health. She’s currently using her pension and social security to cover her monthly expenses, and there’s a bit left over for the occasional getaway. Asset-wise, she has $250,000 in one alternative account and another $250,000 in a second account—which she intends to pass on to her daughter.
Why is whole life insurance her best answer? In one word: guarantees. It will give her a guaranteed death benefit…guaranteed cash value…and guaranteed increases in cash value as well guaranteed access to her money. And because it’s a single-premium policy, it’s guaranteed that she’ll never need to make another payment let alone deal with a premium increase.
For example, if we were to take the $250,000 from one alternative account and purchase a single-premium participating whole life policy, her guaranteed initial death benefit would be more than $400,000. In one stroke we’ve nearly doubled the amount that she intends to leave her daughter.
Now, what about access? Many life insurance products offer clients the ability to accelerate the death benefit. In our example the client may have access to the better part of $400,000 rather than the $250,000 that was stagnating in a low-interest account.
Where Has Whole Life Been Her Whole Life?
Once you educate your client, she may well think whole life insurance is the best thing ever (and it is). Make no mistake though: It’s important that she understands the true cost and implications of this insurance.
In our example the client’s single premium is $250,000. At the end of year one, her guaranteed cash surrender value is nearly $240,000. The roughly $10,000 difference is the cost of nearly doubling the value she will pass on to her daughter.
By year two, the difference between the single premium and cash surrender value shrinks all the way down to around $5,000, and by year three we’re at a guaranteed cash value of over $250,000. So, by year three, the client has access to every dollar she’s paid in and then some—plus, she’s nearly doubled the amount passed on to her daughter.
And the best part? It’s all guaranteed.
When It’s Right, It’s Right
Admittedly, this powerful concept isn’t for every person or situation. It should only be utilized after a complete financial analysis that indicates it’s right for a particular client. But when properly applied, this solution can help clients put their money to work for them, achieve their stated purpose for it and benefit future generations.
That’s where you come in. Do you have clients or prospects that may fit the profile? Then pick up the phone, give them a call, and ask a few pointed questions. If they have some underutilized assets earmarked for their children and/or grandchildren then you know what to do next: Introduce them to the single-premium whole life solution.