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Life, These Days

Reach out to clients with products designed to meet their present needs.

By Gregory E. Schwabe, FLMI

It’s easy for salespeople—including life producers—to fall into a particular rut. They become comfortable with certain products and find themselves making cookie-cutter recommendations. They’ve heard clients’ questions so many times that it’s easy to come up with the answers.

This approach may be efficient, but it doesn’t always work. The client may feel that you are not listening—that you are answering questions they aren’t asking. Clients have their individual concerns, and if you don’t address these concerns to their satisfaction, they will contact someone else. You can stay sharp by taking another look at several products that can meet the particular needs of certain clients.

Universal life
During the last two decades of the 20th century, universal life insurance was “hot.” Many agents were dazzling consumers with illustrations showing returns of 10 percent to 12 percent in UL plans. But today, many of those who bought these policies have discovered that the 1 percent to 4 percent guarantees are insufficient to maintain them, leaving more than a few of these customers surprised and dismayed. In addition, double-digit interest rates are history. As a result, few advisors even think about UL nowadays.

Because of a consumer outcry for better-performing UL plans, insurance companies created a secondary guarantee product. These plans, sold either as individual products or jointly in a survivorship plan, function like a level term policy to age 100 and beyond, with minimal cash value build-up (as the cash value is used to pay the premiums) but with an emphasis on the death-benefit protection.

But make sure you explain the secondary guarantees to your clients, who can lose these no-lapse guarantees by not paying close attention to payment requirements or misunderstanding their grace period or catch-up provisions.

Some policyholders have already jeopardized these guarantees and don’t even know it. If you have clients who purchased these types of UL plans four or five years ago from another agent, it is worth visiting with them to make sure their guarantees are still intact. If they aren’t, they probably cannot be reinstated—but, it could be an opportunity for you to help them solve this problem.

Return-of-premium term insurance
One product feature that can help you compete with the internet is return-of-premium. Many people know they can easily buy term insurance online. They can do a Google search and come up with “the lowest price” in a few seconds. But remember, life insurance is still sold—not bought.

Return-of-premium may be the best bet to compete in this marketplace. While the cost for ROP term insurance is somewhat higher, clients will be eligible to have some percentage of their premiums returned after five years, as the policy begins to develop surrender value. Over the course of the term, the surrender value grows until, at the end of the term, they receive the sum of the premiums that were paid into the policy. It now becomes an asset under management that should be reinvested into another life insurance or annuity product. Clients could also use it to convert to a single-pay final expense policy. In effect, it can really be two sales in one.

This approach makes good financial sense with a 20-year or 30-year term policy, but it’s less attractive if the term is less than 20 years. With this type of term insurance, the cost actually goes down the longer the coverage period is, rather than increasing as it does in regular level term plans.

Whole life and UL also have ROP options that can help you make the sale. Most of the new whole life policies have a guaranteed ROP starting around the 15th policy year. With secondary guarantee UL plans, you can have a ROP as a death-benefit option.

The faster, the better
Another way to attract business is make simplified issue plans available. With no blood test, few medical questions and a telephone interview with an underwriter, clients get their policy in a matter of days, rather than weeks or even months. They will pay a little more for the speed and convenience, but for some clients, it’s well worth it.

Gregory E. Schwabe, FLMI, is the national marketing director for First American Insurance Underwriters in Needham, Mass. He can be contacted at 800-952-0820 or



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