The road to a completed insurance sale, like that of true love, is never smooth. Bumps and snags and obstacles are inevitable. Technology, instead of easing the process, creates even more snags. And every insurance advisor thinks he or she is the only one who runs into them?especially when some officious veteran sniffs “I never have problems.” But it’s no secret that everyone does. So, the editors of Advisor Today set out to discover the snags today’s advisors hit, and how they cope.
From trying to get an appointment, to calming down a skittish prospect who’s in your office for the first time, through balkiness when the client is asked to sign an app, sales snags during the process can blindside even the most careful of agents and advisors.
Add to the mix snags outside of your direct control, such as sluggish underwriting (especially of term policies), physicians who dawdle about returning attending physician’s statements, and clients showing up with almost unreal competing rates they’ve gotten off the Internet, and your job?selling policies?can seem daunting.
Buying insurance is a highly charged emotional act. Recent studies have shown that people today will talk about their health?traditionally a bastion of personal secrecy?more readily than they will discuss their finances! And people are generally leery about talking to salesmen anyway. But agents have developed numerous ways to deal with both traditional and newfangled snags.
In the beginning
Getting that first appointment can be a huge headache?something all agents and advisors acknowledge. It can take up to 10 to 12 phone calls just to get that first appointment.
On the group side, employers often use their employees as excuses not to meet with insurance agents, says Patricia Redic, a benefits broker in the Cleveland area who has worked the market for almost a decade. “We don’t get a lot of positive response right off the bat,” she says. “I’ll call and ask the employer if I can come over and visit his worksite. What I get is, ’My workers aren’t interested in insurance.’ What he’s really saying is, ’I don’t want to deal with a salesman.’”
Redic overcomes this objection by agreeing with the employer.
“I tell him that he’s absolutely right,” she says. “If you’re in a room with a hundred employees and you call out ’Who wants to buy life insurance?’ everyone will run out of the room except for the one sick person.” This approach, she says, often results in getting her foot in the door.
Once the employer is sold on installing a group life plan or other voluntary payroll-deduction benefit, Redic will typically enroll around 50 percent of the office or plant, putting to rest the notion that “my workers aren’t interested in insurance.”
Unblock that fact-find
Getting knowledge about the customer requires a producer to collect a full set of personal facts about income, assets, health, goals and dreams?facts that many people don’t even tell family members, let alone someone expecting to sell something. So the fact-finding process can loom as an immediate obstacle?one an experienced agent can spot as early as 15 minutes into the first appointment.
Roddy Read, CLU, ChFC, LUTCF, a 20-year veteran, who is with National Life of Vermont in Loveland, Ohio, schedules one-hour interviews with the estate planning prospects he meets at seminars he sponsors. He tells them he will need “everything we can possibly know about your situation” before he can design a plan and bring it back at a second meeting.
But often, he says, the result is garbage in, garbage out. The higher a prospect’s net worth, the less cooperation he gets. “If their net worth is $2 million or more, it takes them a lot longer to divulge the information,” Read says.
Occasionally, he grants, this might be more a matter of disorganization than suspicion, but more commonly, it’s a chicken-and-egg problem. If the advisor and prospect already shared trust and familiarity, the prospect would be more open. But frequently, the relationship is new (especially when the prospect is not a referral), and he or she is being asked to supply a lot of personal data right away.
So, ironically, the fact-finding process can create obstacles to developing trust. If, after sincere attempts, the prospect won’t provide enough information, “we tell them we have to pass,” Read says.
Albert Reagan, a MONY agent in Lewiston, Idaho, runs into similar reticence. Recently, he had a new prospect?a couple with three children?and he met with the wife about a basic life insurance and college savings plan for the children. The husband, a nurse-anesthetist, was unable to be in the meeting because of work. Reagan quickly saw he was only getting one side of such sticky questions as how much discretionary income was available for premiums and investment contributions. He suspected if he met separately with the husband, he’d get a different set of facts.
“If it comes down to what they can afford and I’m getting a number from only one party,” that’s not satisfactory, Reagan says. “That number is obviously biased by what he or she thinks about life insurance. Without both of them there, I can’t get a true understanding of how much they really want to do this.”
Reagan also finds, like Read, that people are getting more private and secretive. “They don’t want to tell you everything they’ve got. If it’s the first time I’ve sat down with them, chances are they’re not going to divulge everything if they have any kind of net worth.”
Reagan’s strategy in such cases is simple: just try to get along and create a closer relationship, and the climate will be right for more discoveries. But he knows some prospects have had negative experiences with insurance agents or bankers or lawyers, and that history will always put a new agent at a disadvantage in fact-gathering.
Bert Reames, CLU, owner of Bert Reames Insurance Services in Daytona Beach, Fla., says he does whatever he can to put a client or prospect at ease in the early stages. “I say, ’Let’s do it this way: I’ll put together some information for you to look at. If it looks interesting, we’ll go further. If not, we’ll still be buddies. Fair deal?’ Never once had an objection to this approach!”
For Thomas Reeves, LUTCF, of Thomas M. Reeves & Associates in Nashville, Tenn., the solution is to dispense with traditional fact-finding questionnaires. “I [get what I need] through a casual, comfortable interview. Just you and me talking,” he says.
Reeves, who started in insurance 29 years ago, quit using formal fact-finders about 10 years ago. “People don’t like them. Look at the uproar about the long-form census,” he says. He scoffs at what comes back, anyway. “Go to an American Express financial planner and fill out all their stuff. You get a printout with 50 pages.” People, he says, can’t make sense of it, so they bring their books to Reeves for a more personal, plain-spoken approach. “I ask where have you been, where are you now, and where are you going,” he explains. “I want to show you how to decrease your taxable income and increase your spendable income and conserve your assets no matter how long you live or when you die. That’s it right there.”
Such clarity clears the air, and soon discussions follow about concepts like powers of attorney, testamentary trusts, disability income, split-dollar plans (if appropriate), and more. Reeves uses some software, such as the Back Room Technician from Kettley Publishing, but mostly he writes out a little checklist as he and the prospect talk, and fills in information as it emerges during the conversations. He figures, “People do not like to be interrogated. They would rather talk than fill out forms.”
When they hesitate to sign
Every advisor has been at the stage when they thought they were ready to close an insurance sale, but then the client freezes. Whether it’s expressed with body language or verbally, a definite sense of backing-off has become evident. What caused it? The types of coverage you recommended? The cost? The risk factor? And how do you react?
Some advisors assume an air of Olympian indifference. “I give my clients good information. If they decide not to act on it, I usually don’t bug them about it,” says Patrick D. Reaume, of Transit Insurance Services in Ontario, Calif. He admits, however, that he’s probably left a lot of business on the table because he declined to press the point. He also believes some agents create the situation that leads a client to balk just before signing by failing to make everything clear during every stage of the sales process. “You’re setting yourself up for it, if there are any surprises at the close. There should be no mystery. Give them what they need to know to make a decision simply and quickly, and then let them decide what to do,” he says.
Convinced that most buyers today want information fast, Reaume tries not to overwhelm his customers. He provides the details in an easy one-page summary. “I think many agents overwhelm prospects with legalese and too many numbers. Some health insurance proposals I’ve seen are 50 pages long,” he says. “When people call me, they want insurance, not 20 pages of gobbledygook. They want to know what the professional thinks, and I tell them what I have and what’s good and leave it at that. That way, they make a decision that they feel good about and then get on with their lives.”
Paul David Reavis, LUTCF, of Bethesda, Md., believes most situations are salvageable. When clients hesitate, saying they’d like to think about it, he says, “Fine. Let’s do that. What would be the first thing you want to think about? Let’s list the things you want to explore that you’re not entirely comfortable with. What among the needs that we’ve discussed have we failed to meet here?”
With this approach, Reavis can usually get balky clients to reveal what, specifically, is making them hesitate. Once they verbalize their misgivings, he has something definite to which to respond. If it’s price, he can ask, “Are you afraid this won’t be affordable or not a good value?”?an indirect, polite way to say, “Do you not have the money, or do you not want to spend it on this?,” he says.
“When a person doesn’t want to move ahead, my goal is to filter out their real objection. I use the list method?a step-by-step process of elimination,” Reavis explains. “I say, ’Let’s talk about what it is about this plan that doesn’t suit you,’” he suggests. For example, he’ll say, “If something seems too risky in the investment aspects of this proposal, then let’s talk about risk tolerance.”
As he deals with each objection, he continues to ask, “Is there anything else?” Proceeding cautiously, Reavis doesn’t want to start answering the objections until the client has articulated each one. “That way, they can’t keep throwing another one in the ring,” he says. Even when they seem to have aired all their difficulties, he’ll still say, “Obviously this is not the perfect plan for you. Let’s see what we can do to make it right. Let’s have the perfect plan.”
As Jack D. Reaves of Richardson, Texas, points out, most of the time, there’s just a misunderstanding. He contends it’s always best to be forthright. Ask, “Does this meet your need?” If the prospect says it does, then ask, “What other objections do you have? Let’s talk about them.” At this point he usually suggests reviewing the needs analysis. This process either convinces them the proposal is right, or else the uncomfortable element will reveal itself.
“You must be realistic,” Reaves insists. “There will always be people who have the need staring them in the face, but decline to act. In that case, regardless of what they’ve told you, it’s not really a need for them.”
Undermining through underwriting
Once the client’s signature is on the application, you probably think you’ve reached the home stretch. What can go wrong now? Plenty.
The number one advisor headache at this stage is when an application takes a long time to be underwritten. In term insurance, insurers often delay policy delivery after they receive the app. &quo;They just drag their feet,&quo; says an exasperated Mickey Redwine, a general agent with Canada Life in Abilene, Texas. He’s been an agent 32 years and says more than half of his business is term life.
“I can’t figure it out,” he says. “I make the sale, I submit the app. All they have to do is approve it, but they keep coming up with excuses to delay issue, sometimes two or three months. I mean, they’re in business, right? Don’t they want the premium check? They don’t get their money until the policy is delivered to the customer, so why stretch it out until the customer changes his mind or loses interest?”
This frustration feeds into another problem, Redwine says. In the term business, insurers often run promotions and lower their rates during certain months to generate extra business. “We’ll date an app in December, let’s say, to take advantage of the low rate,” he explains. “The company will hold onto the app for two or three months before issuing the policy. Now it’s March when they finally deliver it, and because the app was dated in December, my client gets socked for premiums for December, January, February and March. That’s quite a big check to write for some of them.”
“And it makes me look bad, too,” Redwine complains. “If the company drags its feet, I look incompetent for stringing my client along all those months. It’s embarrassing.”
One way Redwine deals with this situation is to cancel the app and go to another company that won’t delay issue. “There’s no rule against replacing term insurance,” he says. “If I’m being led around by a company, I’ll just switch companies. I deal with enough of them that I’ve always got a choice. My clients always have a choice. I’ll get it issued.”
Delays also come from waiting for the attending physician’s statement. “Doctors can make or break you when they don’t respond,” says Richard S. Reesey, CLU, a 31-year veteran Northwestern Mutual agent in Cincinnati. “Stay on it.”
When a delay occurs, the best course is to stay in close touch with the client. This can turn a potential problem into a steppingstone toward new business, says 20-year agent Charles L. Reese, LUTCF, owner of Secure Financial Services, an independent agency in Owings Mills, Md.
Reese once sold a $6 million keyperson policy with a $14,000 annual premium that took two months to be issued, because the client’s physician delayed returning the APS. Reese kept him apprised of the case’s progress with weekly phone calls. “The client knew the situation at all times,” he says. “The longer you go without talking to the client, the more likely they’re not going to buy what you bring back.”
Reese’s calls built him a better relationship with his client. After eight weeks, when he called to deliver the policy, he left with two more applications. “And it was only the third time I was in front of him,” Reese says.
Advisor calls and faxes to doctors and their clerical staff, as well as client calls, may get the doctors to move faster on sending back the APS, says Chad Rexius, a manager for Mutual of Omaha in Casper, Wyo.
Underwriting problems are most acute with disability policies. Richard Reesey recommends trying to anticipate any DI underwriting hassles by writing a cover letter to accompany the application. This is especially true for clients who work in risky or poorly-understood, uncommon occupations.
Getting the physical done can be another sales-stopper. Some clients may bridle at the thought of the needle used for blood work, says Patricia Reeder, LUTCF, owner of Reeder Insurance, an Allstate agency in Manteca, Calif. Usually, she says, the work can be done by less invasive means, such as pricking the finger or taking a saliva sample. But when clients balk at the physical, they may be hiding something, Rexius says.
Most potential time-consuming sales snags can be avoided if the agent properly and carefully explains the underwriting process during the fact-finding interview. At the end of the application process, Rexius says, “We train our agents to ask: ’Do you have any objections to our underwriting process?’ Also, agents are supposed to emphasize that answers to health questions must be truthful and that coverage may be lost if they are not. Still, sometimes a client may perceive the words ’being in good health’ as meaning ’being in good health as controlled by medication.’”
Untying the final knots
Now you’ve got the policy in hand to deliver to the client. Are you home free? Not yet. Sales snags still loom, even at this late stage.
The most frequent back-end snag is when policies come back rated up for health reasons. In spite of his best efforts to give a client a preliminary rating, Daniel Reid, CLU, ChFC, owner of Reid Insurance Agency, a multiline agency in Upper Sandusky, Ohio, has found that sometimes the home office will rate a policy more expensively than he thought it would. “People don’t like that,” he says. “You’re telling them that health-wise, they’re not up to speed.”
Rating-up can also occur when a client is less than forthcoming when answering questions about personal health habits on the app.
“A lot of times, someone will say they’re not a smoker, and they are,” says Adelaide Regine, a 20-year Mutual of Omaha agent in Hauppauge, N.Y. “My company provides a kit so that I can give a saliva test for HIV, cocaine and tobacco while I’m taking the app. But if the lab work comes back positive for nicotine, some people get insulted and angry that they’re rated as a smoker. And they smoke!”
One way advisors avoid arguments over rating decisions is to do as much medical fact-finding as possible at the front end. Reid, for example, reviews the client’s medical records first before sending the application to the home office.
Still, in 95 percent of rated-up cases, the agent can convince the applicant that since they needed the coverage in the first place, they still need it even at a higher cost, says Patricia Reeder. “Perhaps the motivator was seeing what happened to someone in the family who died without proper coverage. That fact will not have changed,” she adds.
And sometimes, back-end snags can save a life. “I had one woman with galloping diabetes who didn’t even know it. Her medical exam for a policy discovered it,” Reid says. She refused the policy then, because it was too expensive, but she got treatment. “And 18 months later, I was able to get her a rated policy,” he says.
Even though it’s not easy, several agents also strongly recommended getting the first premium check before submitting the app. This step reduces the client refusal rate at the end.
“Sometimes, they’re just shopping. I’ll give them a preliminary quote and ask for the check, and they’ll say ’Eeaah, get back to me in two months.’ If they give me the check beforehand, I know they’re serious,” says T. Eric Reich, a 29-year-old advisor with Arbor Associates in Cherry Hill, N.J.
In a new twist on an old snag, the “Uncle Murray&quo; syndrome, where a client will come back and say that someone else can get them a better deal, has also emerged. Now it’s the ”Uncle Internet&quo; syndrome, where clients say they can get a better deal off some web site. This snag truly frustrates agents.
“Internet price-shopping is a real problem on the term side,&quo; says Ron Policy, a 25-year veteran with Waddell & Reed in Austin, Texas. The problem, he says, is that the Internet quotes super-preferred rates. ”We call them ’walk on water’ rates,&quo; he says. But such snags can be overcome. Avrom Reichman, a general agent with SKL Brokerage, Flushing, N.Y., says he works with most of the same companies as those which sell through Internet brokerages. So if the web site quotes a lower rate than the one he got, “I can call the company and help my client get the better rate. That’s my edge,” he says.
Most agents, to stay on the safe side, will not quote rates better than standard at the start for any term insurance, even if the client might actually be in the preferred or better category. “I’d rather look like a hero and bring a refund check than have to ask for more money,” Reich says.
Sales snags can arise during the 30-day free look period, too, especially if the client’s accountant and/or attorney aren’t totally on board. This happened to Reich when an accountant wanted a different kind of coverage for the client than what Reich recommended. “I had asked the client to see his accountant beforehand, because I thought this might happen, but the client didn’t do so until after the policy was issued. So I had to reissue,” he says. Reich is now very insistent about making sure a client’s other advisors are comfortable with his coverage recommendations before he submits the app.
Sometimes, sales snags will come up for no other reason than a lack of personal chemistry between the advisor and the prospect. Almost everyone has experienced the feeling of dislike upon meeting someone for the first time. It’s sort of the opposite of love at first sight.
The situation may be similar to what broker Jerome Redston, CLU, RHU, of Beverly Hills, Calif., describes. “A doctor and his wife needed insurance. They met with an agent, filled out the app, but for some reason, the couple found that they didn’t like the agent. It was just a feeling.”
Was he the agent? “No, it wasn’t me, but the couple wound up coming to me to help them out in the situation,” explains Redston, who has sold insurance for 45 years. “They were applying for $1.5 million in whole life. The doctor wanted to stay with the agent even though he didn’t like him personally. He felt the other agent had done a lot of work on their behalf?a lot of proposals, working up the numbers?and he didn’t feel right just leaving him. He asked me what to do.”
No matter how competitive the insurance market can be in Beverly Hills, Redston is not a cutthroat. “I suggested he split the coverage between me and the other agent,” he says. “They trusted me, so they placed $1 million of the coverage with me and half a million with the other agent. Besides, my rates were better.”
And when the shoe is on the other foot and Redston is in the animosity chair, he considers it a learning experience. “An unsuccessful sale is not a waste of time,” he says. “If things don’t work out, I send them a note saying, ’I’m sorry our meeting didn’t work out, but if I can be of service in the future, please call me.’”
Making it work
The majority of problems that emerge in the sales process do so because of the nature of the insurance sales process itself, and how it unfolds over many steps. Eagerness to get the appointment can backfire. Advisors sometimes collect insufficient information at the front end for fear of alienating the prospect, and conversely, some advisors (especially newer ones) will ask the questions too aggressively. Others will quote a too-low rate and be forced to come back with a higher premium. Still others will neglect to get the client’s other advisors to agree. “Too often we miss something crucial by being focused on what we want to achieve, then blame everyone else, including the prospect, for something that is our professional responsibility,” says Roger Relfe, an agent with Ohio National Financial Services in Belleville, Ill.
Successful agents and advisors bring to the job a finely-tuned sense of how to establish and develop relationships, something strongly evident from these conversations with the above men and women. As these producers progressed in their careers, they smoothed their rough edges and learned how not to be tangled in the common snares. In the final analysis, no relationship between two people, whether business or personal, is entirely free of snags. But when making an insurance sale, as long as there is a relationship, there’s something to build on. And that’s a plus.