Monday Memos

How to deal with a lack of medical records for prequalification

A major challenge in prequalifying people for life insurance, is the lack of current medical records. Sometimes people get a lab test done, and the results show abnormalities.  However, due to all kinds of reasons, they never follow up. This makes their medical records incomplete; therefore, they are typically not yet eligible for coverage. The emphasis is on the word “yet”, because with a follow up, they very well may qualify for a policy, and at a reasonable price.



If there are indications of organ dysfunction from lab results or prior records, it is perfectly reasonable for an underwriter to demand current test results. No carrier would want to insure somebody who could unfortunately be a walking health time bomb. I make this point to my clients. I stress that, putting aside the need for life insurance, it is entirely in their self interest to go to a physician and determine the current state of their health. They need to know if they have issues that should be addressed. Then, armed with current health data, we can prequalify them and confirm their eligibility for coverage – and at what price.



It is understandable that people often put off medical visits. It’s a big hassle, and costs time and money. People need to feel comfortable. I have a client who was referred to me by his property and liability broker. That fellow had been searching for life insurance for a year, and found no takers. When I got a hold of the case, I quickly determined that the dealbreaker was a lack of recent medical records. The man had had major heart surgery four years prior, but had gone for no follow-ups since!



I told him that unfortunately, every insurance underwriter he had approached was considering him to be a potential claim pending. Putting that aside, didn’t he want to know how well the surgery had worked? I asked him why he had seen no doctors. He explained that he had moved from one state to another, and hadn’t yet connected with a local cardiologist. I politely but persistently emphasized that he owed it to himself, his family, and his business to find out what was going on.



He agreed, and actually went back to his former state to see his original cardiologist. He made a whole trip out of it, visiting relatives and such. A few weeks later he came back with sufficient records to show that his health was OK, and was able to purchase a policy.


Part of our function as impaired risk specialists, is to coach people on becoming eligible for coverage. In fulfilling this responsibility, we are doing them a great favor, for both their health and their life insurance.

What to do when a client says “no”

There are some times when a client refuses to take an offer for life insurance. As good as we all may get at closing sales, this can happen. The question is, what has to be done to tilt the odds in favor of a “yes” and against a “no”.  And, if you do get a no, how do you handle it?



Here are some points to remember when preparing for such a contingency:



1. Be sure you have a ready buyer. They must have a need for life insurance; the means to pay for it; and an imperative to buy now. If any one of these factors are not in place, odds are they will not do business with you at this time.



2. Prequalify your client. Prequalification should produce a rate about which you are confident your client will be approved. If for some reason they are not interested in that preliminary number, then you don’t go through underwriting.


The worst thing you can do is skip prequalification, and just put your client through formal underwriting on the hope and prayer they will be approved at a rate they will accept. In all likelihood, that will not result in a sale, and will have wasted everybody’s time.



3. Now let’s suppose that you have prequalified them, and they are interested enough to go through underwriting. Then, you get them approved at the rate quoted. Before issuing the policy, revisit the sale with a number of choices for face amount, guarantee period, and modal premium payment. This way, if they are still a little unsure about how much coverage they need and how much they want to spend, you should have an option for them.



4. Nonetheless, things can still happen. Maybe they had a change in their personal or financial situation. Some factor that was not in play at the time of application, could now be influencing their decision. This can be a sticky situation because if they really do have a need for coverage, and don’t take out a policy, then their family or business may suffer a disadvantage if they unfortunately die soon.



Your job here becomes one of CYA – both yours and theirs. Be sure to do the following. (Always speak professionally, but remember that it is your job as a life insurance broker to remind your client of what’s in their interest. Sometimes people forget.)



Remind them of the financial exposure that exists in case they do pass away.

Point out that their eligibility for coverage in the future can certainly not be guaranteed.

Refresh their mind of all the options you have presented, and make sure you have provided a written record of this.

Finally, confirm when in the future you can check back with them to see if their situation has changed, and they are ready to move forward

10 reasons why people buy permanent life insurance

Many times, brokers will tell me that they sell way too much term insurance. How can they sell more permanent products? Obviously, you can’t go into a sales situation with a bias towards a certain product. But there are certain scenarios in which people do buy a permanent policy. Here are ten:


1. They want a “guaranteed bang for the buck.”


They want to make sure they realize a significant return for their “investment” in premiums. They appreciate that if they hold on to a policy for their entire life, there is no doubt a benefit will be paid, since everybody dies. And since each dollar of benefit literally costs pennies in premium, they are guaranteed to get that huge return.


2. They want to make single or limited payments on their policy.


They would like to pay up a policy now with cash in hand, or pay premiums for only a set amount of years. So they buy a permanent policy since it can accommodate a specific payment schedule.


3. They believe in long-term cost savings.


They understand that buying term insurance now will save money in the short-term, but will cost them much more money later, when they buy a new policy at an older age. In most cases, it is much cheaper to lock into a long-term rate right now.


4. They are concerned about their insurability.


They have a medical condition that may be under control now, but which has a strong possibility of unfortunately getting worse. They understand they will probably pay much more in the future, or not qualify for coverage at all.


5. They want to use life insurance as a cash accumulation vehicle.


They appreciate the guarantees, tax advantages, and potential cash accumulation of the product. They also qualify for good underwriting, so the cash values can be attractive.


6. They have permanent financial dependents.


They may have a special needs child, or a parent or other family member who cannot become financially self-sufficient.  They will need to provide a life insurance benefit for these dependents when they pass away.


7. They are maximizing a pension distribution.


When they retired, they opted to take the maximum monthly distribution and spread it out over their lifetime only. They now should purchase life insurance so that when they die and the distribution ends, the insurance benefit can replace the lost income and take care of their spouse.


8. They are committed to charitable giving.


They have religious, spiritual, communal, or political organizations close to their heart. When they die, they want to leave a legacy of support  for the charity’s good work.


9. They have plans to protect their estate.


They have accumulated significant assets, and want to protect these from the government and other creditors. A permanent policy is used to cover these bills when their estate is settled, so the assets don’t have to be liquidated.


10. They want to equalize estate distributions among family members.


They have one child who has become involved in the family business, but other children who have not become involved. They purchase permanent life insurance to provide benefits to those children, equal to the value of the business the active child will inherit.

How prequalification helps agency managers

In prior articles, we have described how making sure your prospect is a Ready Buyer is the key to prequalification. If the potential applicant has a need for life insurance; the means to pay for it; and a desire to buy now, then it is worthwhile prequalifying him or her. If any one of these factors are not in place, then the case is not worth developing at this time.



To review: it is important to emphasize that you will lose leverage with underwriters if you are not positioned to submit an application. Asking your general agent and their underwriters to commit to a rate, but to then not deliver a client, burns good will. They have to take you seriously if you want them to be aggressive and accommodating.



From the agent’s point of view, it is important to run your practice efficiently. Why chase a prospect who is really not ready, willing, or able to do business? It’s a waste of time, energy, and business resources.



From the agency manager’s point of view, making sure your agents request quotes only for Ready Buyers helps you confirm they are staying on a productive track. All too often, we sales people get desperate and hungry for business. We might get a little bit too focused on potential commissions, or wanting to court favors from a center of influence. We get too eager to get our foot in the door by throwing some numbers at a prospect. But we also realize that this all boils down to putting the cart before the horse when it comes to delivering competitive and reliable rates. It is the job of the agency manager to make sure agents place a priority on quality business first.



When agency managers can help their agents realize this, they know that only good, solid business will be quoted.

Five principles for life insurance selling success

I was recently asked by a broker on a social media site how she could distinguish herself as a life insurance sales person. I identified five principles that serve as the foundation for my own practice. They are described below.



I’ve also included explanations as to how my strategic partnership with the Hardersen Group/Crump helps me apply these principles and build my practice for maximum success.



1. First of all, selling life insurance is a business. You have to maximize your profit. This means running your business as efficiently as possible. It also means maximizing your personal time invested. You have to do what you do best, and delegate the rest.



Strategic partner insight: this is why I utilize the Underwriting Team. They will complete my paperwork for me, so I can move on to the next client.



2. Second of all, specialize. Too many financial representatives are a jack of all trades and master of none. Sell only life insurance and make sure you know the product, the underwriting, and the marketplace better than anybody else.



Strategic partner insight: this is why I like the Consulting Team. Their professionals will cross-sell other products to my clients for me, while I stay true to my core product.



3. Third of all, design your operation to maximize the potential to help the most people. Get yourself access to every carrier and product in the brokerage marketplace. Become an expert at field underwriting so you can help virtually anybody get a policy – even the higher-risk candidates. Set up a service model in which every potential applicant gets prequalified for coverage, so you can assure them of an approval at the rate quoted.



Strategic partner insight: the brokerage gives me access to virtually every company and product in the brokerage marketplace. They also know how to prequalify candidates to give me both competitive and reliable quotes.



4. Four, personalize yourself. Show your clients, prospects, and referral centers what kind of person you are. I use a personal blog for this. It distinguishes me from all the millions of other people selling life insurance out there.



Strategic partner insight: I take full advantage of the Concierge Services. I rely on the expertise of the advanced underwriters, financial planners, and attorneys that are available at no charge. This way I am free to simply engage my clients and advocate on their behalf.



5. Lastly, don’t be afraid to grow, but do it with your feet on the ground. Adapt to the times, but stay true to your path. I grew up in this business learning the kitchen table sale in which you met with mom and dad in their kitchen, with illustrations and an application. To a large extent, those days are over. Now I conduct business remotely with people all over the country. I’m still a life insurance guy; I just have to find new ways to connect with people.



Strategic partner insight: it was a big change for me to become part of a national organization. Like many life insurance sales people, I have been part of a family business. But the fact of the matter is that the mom-and-pop model is really only good for running a local business and promoting your personal production. To survive, your business has to continue past you. It has to grow larger than yourself. Affiliating with a national operation can help you do that.

Three must-haves for financial firms who want to sell life insurance

Now more than ever, financial firms want their representatives to sell life insurance. Wealth managers, stock brokerages, accountants, senior product brokerages, banks, employee benefit firms, and others realize the tremendous potential of entering this marketplace. Their clients need the product, and the commissions are great. Why not do it?



As with anything else, there’s a good way, a bad way, and an ugly way to get it done. Here are three essential factors that need to be in place in order for your firm to be successful selling life insurance. Without all three, the odds of failure – or at best mediocre service – loom large.



Expertise in the product.



Your clients have become accustomed to superior service from you in your core area of proficiency, be that investments, accounting, or whatever. Don’t disappoint them by settling for second-best when it comes to life insurance consulting. Make sure you have an expert on staff, or form a strategic partnership with an expert. Otherwise, you stand a chance of not only losing the life insurance sale, but jeopardizing their patronage for your primary services.



Make sure all your representatives have a pro-life insurance attitude.



You have to believe in a product to sell it effectively. People are persuaded by the conviction a salesperson has. There’s a lot of misconceptions and ignorance about life insurance out there. Your clients will need your advice and counsel to fully appreciate the value of this product. You will have to show them the key role it should play in their financial portfolio, and in the future of their family, business, and favorite charity.



If you don’t see this for yourself, you will never be able to educate your clients about it.



Management should be fully committed to life insurance sales.



If you want your clients and prospects to view your firm as their primary resource for their life insurance, you need to make a full-time commitment to the life insurance business. Sure, it will take time to develop an in-house capability or strategic partnership with an outside firm; nonetheless, every step along the way you need to send out the message that your firm is as much about selling life insurance as it is about providing your core service.


If you simply treat the product as an add-on, then your smart clients will go to other firms who specialize in the product. After all – wouldn’t you if you were them? Why settle for less with something so important?

The “Four Career Majors” in life insurance selling

In my experience over the last 26 years selling life insurance, I have found four basic ways people can make money in this business. The strategic partnerships I help set up are designed to help you make it big in the venue of your choice. Of course, you could get active in the other areas as well, to supplement your production in your main focus. It’s kind of like college, where you have a major concentration, but could also have a minor.



Here’s what I see as the “Four Career Majors” in life insurance selling :)



1. Impaired risk specialization

This major is for life insurance brokers who want to become an expert at placing the tough life insurance cases. In doing so, you widen your prospect pool of potential clients to virtually everybody because you can place almost any risk, from super-preferred to heavily impaired. This also makes you an extremely valuable resource to accountants, advisors, and other centers of influence who want to refer all their clients to one firm for life insurance.



2. Improved business profitability

This major is for producers in the life insurance, disability insurance, long-term care insurance, and/or fixed annuity marketplaces, who want to run their businesses more efficiently and make more money per sale. You can take advantage of the top commissions that are offered; the concierge services that will complete all your paperwork for you; and the availability of advanced underwriters, financial planners, and attorneys who can help you design large cases at no charge.



3. Outsourcing for cross-selling

This major is for wealth managers, P&C brokers, bankers, group benefit consultants, and other financial advisors who have clients who need insurance and annuities, but who don’t sell these products themselves. You can refer the client to our consulting team to take care of everything for you, and split the commission with you simply for the referral.



4. Passive income from business contacts

This major is for business consultants, retired insurance brokers, and others who are life insurance licensed and have extensive business contacts, but who really don’t want to get involved in any personal production. You can simply set up individual brokers, agencies, and other financial firms you know to use our platform of services; then, you can enjoy override compensation on all their production simply for making the referral.

Prequalification is the key to delegating the task of completing your client’s life insurance application

We financial advisors utilize a number of resources in building our business. Time and money are always key. However, I know that many of us feel our clients are our greatest asset. They are the ones who buy our products, and who refer us to their friends and associates – not to mention the centers of influence who could bring us a multitude of clients.




I think it’s because we place such a high value on our relationships with our clients, that we sometimes go overboard. Sometimes we can do too much – stuff that is not smart from a business point of view, and which could actually impair the relationship. One such example could be in, in many cases, completing our client’s life insurance application.




At first glance you might say, “what exactly is wrong – even counterproductive – by completing the paperwork? My client trusts and respects me. Who else should handle such personal information?” You might add, “and if it’s not to be me, it must be my trusted assistant. I could never let an outside party interact with my client on such an important matter.” Of course, you would be referring to the third-party application-completion process that is available through our strategic partnership.




Here are three reasons for why you could and should feel comfortable delegating the task of completing the application to a professional third-party unit.




1. You have already delivered personal, high-end service through prequalification.




If you have effectively prequalified your client for coverage, you have already covered all the personal bases. Otherwise, you could never have delivered a quote that is both competitive and reliable. Once you have collected thorough and accurate quote information; identified all the underwriting challenges; and determined a rate about which you’re confident your client will be approved, the rest of the process is rudimentary.




2. No client of high value expects his professional advisor to do the rudimentary work.




Consumers expect their professional advisors to handle the important stuff. This is where your skills and expertise are best put to use. With the purchase of life insurance, your professional capability comes into play in the prequalification process. All the work after that calls for lower skills and capabilities. You run the risk of diminishing your professional esteem in your client’s eyes, if you handle the lower-level work yourself.




3. Third-party service people are already in charge of the underwriting process anyway.




Remember that the underwriting process covers many bases. Each one of these steps is handled by a specialist that is employed by a third-party – not by you. The examiner works for an independent exam agency. The caller for the phone verification works for a third-party administrator. The people who handle the credit check; motor vehicle record check; Medical Information Bureau inquiry; and canvas of prescription history, all work for specialist firms.




The bottom line is that specialists whom we life insurance salespeople have never met, have been in charge of the underwriting process for decades. The whole process has been boiled down to its fundamentals, and runs on automatic. Once you prequalify your client and have reached the point where all you need is for paperwork to be completed, it makes good business sense to let this particular function also get handled by the right third-party specialist.

Who should complete your client’s application for life insurance?

Here’s the scene: you have just closed a sale for life insurance. Now the underwriting process begins. Of course, the first step is the submission of a formal application. These documents can run to more than 50 pages, with additional inserts for replacement information, riders, and other features. The paperwork must be completed thoroughly and accurately, and consistent with preliminary disclosures. The application must be submitted in a timely fashion so that the medical exam can be scheduled, and other requirements ordered.


Who will complete this application? As I see it, you have three options.


1. You could complete it.


You can certainly meet with your client, or confer over the phone. You would get all the details that are required for underwriting, but which were not required for prequalification. These include the full names of the owner and beneficiary, the client’s social security number, and on and on. Of course, this is time away from meeting new prospects and existing clients to set up new sales.


2. Your employee could do it.


You could delegate this task to your assistant, to another person in your office, or to someone you hire that is dedicated to application processing. This would, of course, keep you free to do the sales and consulting that you do best. But at the same time, it increases your overhead for a function that generates no revenue. Your profit margin per sale is reduced.


3. Your distributor could do it.


A new development in the industry is for some general agents and master general agents to provide concierge services. They will have their people complete the application for you. This underwriting unit will contact your client directly and obtain the information needed to complete the paperwork. They will then send the document to the client for signature, via email or US mail, depending on the preference of the carrier. Then the underwriting process begins. This is all done at no charge to you or reduction in premium.


In this scenario, you don’t have to burden yourself with paperwork that keeps you away from building your practice. You also don’t have to spend money on hiring people who don’t bring in income. From a business point of view, I think option #3 is a clear winner, and that’s why I use it.

The challenges faced by wealth managers who sell life insurance

In today’s financial services industry, there is a trend for representatives to sell everything – especially life insurance. Investment advisors, wealth managers, financial planners, and even group benefits brokers try to sell all kinds of policies, from term insurance, to IUL, to whole life. Why not take advantage of your client’s need for the product, and generate an additional source of income?

The thing is, becoming a jack of all trades and master of none can often backfire. Here are three traps that wealth managers and other advisers often fall into, when they expand their practice beyond their core competency into life insurance.

Incomplete prequalification

Clients must go through full disclosure when getting prequalified for coverage. The information provided to underwriters on a preliminary basis must be thorough and accurate, if the rate quoted is to be both competitive and reliable. This means that the client must be comfortable talking with the wealth manager about all the personal and private matters that are addressed in life insurance underwriting. However, most wealth managers don’t have the skills and expertise needed to guide the client in discussing such sensitive matters as a weight problem; depression from a bad divorce; treatment for anxiety due to business pressures; prior bankruptcies or DWI convictions; etc.

The net result is that premiums quoted will be based on incomplete information, and therefore unreliable. The client’s application has not been set up for an approval at the rate quoted. This is service without integrity, and no professional wants to provide that.

Inefficient business practice

People who sell life insurance need more than field underwriting skills and expertise. A complete sales operation is required. The application has to be completed. This paperwork sometimes runs into 50+ pages. The entire case management function has to be supervised, from scheduling the exam to ordering physician records. Follow-up requirements need to be expedited. Throughout the entire process, vigilance needs to be maintained to make sure the client’s interests are protected.

The offices of most wealth managers simply are not organized to efficiently manage the entire life insurance purchase for clients. All too often, the purchase becomes a bad experience. This can adversely affect their desire to do business in other areas – such as investing assets.

The core problem is the “do it yourself” syndrome

I think the heart of the matter is ego. Many wealth managers are accomplished in their field. They have a good relationship with their clients, and sincerely want to take care of them. However, every professional must know their limits. Once you exceed your true competency, you end up doing a bad job. That does your client no favors, and makes you look bad.

The solution here is for wealth managers to delegate the life insurance sale to a true specialist. It could be another broker, or someone on your staff. You can still be responsible for overall client care, and the specialist would certainly be accountable to you. But the task of delivering superior client service should be assumed by the person that can do it best.