Overcoming Cost Assumption

This is a guest post and re-published article from the Pinney Insurance Blog, by Nic West.

What is the number one challenge for all of us when it comes to selling life insurance? I’ll tell you what it is. It’s hearing and overcoming this phrase:

“Life insurance is too expensive.”

Before a word is even spoken, you can pretty much guarantee that it’s the cost that is on your prospect or client’s mind. You can highlight all of the benefits life insurance provides, including protection for beneficiaries and a supplement to retirement income, and all they’ll hear is “it costs X amount of dollars.”

Want to give up? Don’t.

I look at situations like these as the greatest of challenges. It is our responsibility as insurance professionals to not only provide unyielding coverage for our clients, but to also educate them on the why (it’s important) and the how (their dollars are at work for them). Turning a prospect into a client is a win, there’s no doubt about it. But earning their trust and helping them understand exactly what they are paying for is an even greater victory.

So don’t just sit back and wait for the inevitable “too expensive” excuse. Instead, take a proactive approach and meet the challenge head on.

“But Nic, how do I do it?” you ask.

The answer is easier than you’d expect.

Put Yourself in Your Client’s Shoes

Contrary to popular jokes about our industry, life insurance salesmen and women are people first. We have families, spouses, and children. We have mortgages, debt, and need retirement and life insurance just like everyone else.

It’s time to switch the pitch.

No longer should you simply tout benefits A, B, and C at the cost of X dollars.

It’s imperative that you make any meeting a conversation, and that means an equal (if not more) amount of listening on your part as there is talking. Find out your client’s goals, their financial fears, and the strategies they have in place already. Once you have this information, you’ll be able to more effectively offer solutions, rather than products.

Take me for an example.

I could easily tell a client they should get life insurance to protect their family. It’s that simple. But it won’t work.

But what if I told them why I personally have life insurance?

It becomes a different conversation if I explain that the one percent of my income spent on my policy provides coverage to my wife and two children should anything happen to me. As the sole provider for my family, if my income disappears, my debt, mortgage, children’s college funds, and much more go unpaid. That’s not a risk I’m willing to take.

After all, paying one percent is better than my family losing 100 percent.

I constantly find myself sharing this story with my clients, not because I want to sell them, but because it’s honest. I can relate to them. I have a family too. And I once shared their fears about paying too much as well.

Sharing this gives my clients a bit of insight into who I am outside of being “just an insurance salesman” in their eyes.  It humanizes me and brings down their walls at the same time. The conversation opens door for them to reciprocate, which helps me pinpoint strategies to help create affordability for an invaluable necessity.
Once they begin to reciprocate, really make an effort to listen to what they’re saying and ask engaging questions. Questions such as:

  • If you passed away, who would you want to own your house?
  • You obviously wanted to talk for a reason; what is concerning you?
  • What assets can be liquidated right away if you passed away?
  • If life insurance didn’t cost a thing, how much would you want and why?
  • What is the minimum amount of monthly income your family could survive on?

You’ve gained trust, swapped stories, and learned exactly what it is your client needs. Now it’s time to deliver solutions.

Providing solutions while reiterating the client’s needs (straight from their mouth) and without a mention of price is the most powerful presentation you have. Focus on satisfying the client and reducing those fears, not the price or the specific product. If you’ve explained the purpose well enough, those last two things are immaterial.

Be open. Share your story. Then listen, show you care, and focus on the goals.


Cover the Minimum and the Maximum

One approach I’ve found useful, especially for the client, is a minimum-maximum approach.

Rather than listening to them speak and immediately bestowing the “perfect” policy, prepare a minimum coverage policy and a maximum coverage policy. Often time you’ll be shot down if you provide one price, even if you are able to adjust it through decreases.

By using this much more broad price range based on the lowest and highest needs, you’re providing the client (and yourself really) a much easier range to work with. It’s a win-win.

If you’ve done your homework correctly, then there should be a slim chance the client rejects your first proposal, but the best agents always have alternative solutions.


“I Live Paycheck to Paycheck”

It’s not that uncommon these days. Many live with hardships. But in these cases, imagine how much harder it gets when that sole income disappears.

For the clients who live paycheck to paycheck, life insurance is even more important.

Luckily, there are still available options. A one-year annual renewable term plan is less expensive than a 30-year term plan so it will bring down rates. It isn’t the best solution for long-term planning, however, it does provide protection on a year-to-year basis.

For temporary fixes like this, be sure to revisit these clients annually to continue coverage and hopefully transition them into a long-term guarantee policy.


They May Have Purchased, But You’re Not Done Yet

Just as you would with the client who purchases a one-year renewable plan, you need to follow up with all of your clients annually.

First, things change.

Your clients have children, send them off to college, move, retire, and lose loved ones. When these things happen, I’m sorry, but you—their financial advisor or life insurance agent—won’t be the first person they think to call.

Again, be proactive.

Check in with them. Even if there is nothing to change, the fact that you reached out should sit positively with them. Over time, they’ll begin to pick up the phone first.

Second, short-term goals should be stepping stones to long-term goals.

Having the initial conversation will uncover the ultimate objective. There’s no need to go from zero to 60 in a heartbeat. In fact, by slowly building momentum, there’s a higher chance to discover opportunities—in this case, finding and freeing up income that can be used to fund a security plan.

Turn your sales pitch into a conversation. Provide a real life example of someone (you) who could benefit from life insurance. Explain the importance in a way that cost becomes no object, but still challenge yourself to find a cost-effective approach. Achieve an agreement first, then craft a plan. Follow up often.

These are incredibly simple steps that can drastically change someone’s life.

That is the definition of success.