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Are Your Clients Properly Insured?
by Brien P. Tilley
Have you ever considered why your clients consistently have $250K, $500K, or $1,000,000 of life insurance instead of $269K, $543K, or $1,098,000, etc.? Could this be true because of the needs/debts of most potential insureds equate to a nice round numbers? Furthermore, is the purchased face amount simply replacing exactly what the insured has in force?
The value that a reputable life insurance agent brings to an individual or family should be quite significant. In this respect, it is through an agent’s knowledge, skill, and savvy that countless families and businesses are able to successfully plan for their futures beyond the lifetime of a family member or key employee. Yet, this planning is only as good as the “tools” agents utilize for determining the amount of insurance a client needs. In order for a successful agent to distinguish himself from the competition, the client has to realize the value that is being presented. At ABS, our life insurance consultants are confident that we can help agents bring this value through such tools as our “Human Life Value Engine.”
Selling the proper amount of life insurance has been an ongoing issue for agents. For years, the life insurance industry has devised specific strategies to deal with this obstacle. Traditionally, carriers have marketed life insurance products based primarily on meeting a single dominant need, such as funeral costs or protecting a mortgage. While this financial needs approach often provides a short-term solution, it seldom replaces all of the contributions a breadwinner makes. The main emphasis of this approach was to provide clients with the proper amount of coverage, without “over-insuring” clients. Due to this prolonged dependency on this financial approach, many Americans might be greatly under-insured.
So how will agents deal with this potential under-insurance problem? Clearly, a different approach has to be taken when determining a person’s insurance coverage needs. One such approach that may be the most appropriate for determining this value is the Human Life Value method. This approach is nothing new to the life insurance market; it was developed by Dr. Soloman S. Huebner, who also founded The American College of Life Underwriters in 1927. Presently, this approach is quickly gaining new popularity among insurance professionals. Most courts use this approach when determining settlements in wrongful death cases. Most recently, the Department of Justice used this method when evaluating claims for victims of the terrorist attacks of September 11, 2001.
The Human Life Value approach focuses on value replacement rather than just final needs. Under this approach, the total contributions a breadwinner makes to his or her household over the course of a lifetime is calculated. As a life insurance professional, you have the opportunity to help your clients retire with the security of knowing they’ll never outlive their income.
It is through tools like this engine that ABS builds relationships with insurance professionals. It is our goal to make our life insurance agents more knowledgeable and as a result more productive. Now, we are providing thousands of agents throughout the country with the ability to make insightful, substantive recommendations to their clients, rather than using the “status quo” to determine the amount of insurance a client should purchase. If life insurance were just being purchased to replace mortgage, credit card, car, or other debts, a good portion of the general population might be insured properly. Still, do you want to be the agent who represents a client whose home and other debts were paid off upon a spouse’s untimely death, but now he/she cannot afford the monthly expenses associated with housing, daycare, or “familiar” lifestyle costs? Clearly, this client would have gotten over the “sticker shock” of the amount of insurance you would have suggested via the “Human Life Value” concept, instead of experiencing this unexpected burden. In the end, the more determined, skilled, and knowledgeable agent will advance in our industry. More importantly, these same agents might get 50% more business by simply providing a more thorough analysis of a client’s needs.
[PRINTER FRIENDLY VERSION]
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