Determining If A Sales Lead Can Qualify For Life InsuranceWhat’s
So Difficult About Selling Life Insurance?
Part
3 of 7 articles
By
John Lensi, CLU, ChFC, RHU, REBC, CMFC, LLIF
Vice President,
Sales,
Impact Technologies Group.
Why a misdiagnoses can occur?  Determining
if a sales lead can qualify for life insurance for the
most part is a
given (passing criteria #1- see our previous article). Examining
typical underwriting statistics,
we would find that close to 96% of all proposed insured’s are able to
receive a life insurance policy. Granted, this encompasses table rated and/or flat extra issues, but the decline rate is in the area of 4% for most life insurance companies. So unless a producer focuses prospecting efforts on nursing home patients, this first criterion should not pose much of a prospecting problem. Determining if a prospect can afford a recommendation for life insurance, for the most part, again falls into the category of a “given”. Meaning, producers tend to see this criterion as an obvious and easy one to screen for. The afford ability criterion is directly related to the producer’s source of lead generation and is a reflection of the market segment targeted. Most producers are able to avoid generating sales leads where there is a low social economic profile to a market segment. It should be kept in mind most carriers’ life product portfolios range from low cost term insurance through various forms of permanent equity based products. Therefore, meeting the ‘affordability’ criterion can usually be met without much difficulty. The bigger challenge is “raising the bar” in prospecting for more affluent clients which generally results in better retention and larger size cases. Moving to criteria three We find – at least to me – an
interesting phenomenon occurring quite often in the life insurance
business, particularly with inexperienced producers. The phenomenon I’m
referring to is the ineffective
producer having a strong tendency to
prospect only on the basis of locating people in the general public who
have what I call an “obvious identifiable need” for life insurance
(criterion three). These are people who have had a readily identifiable
change in their life. These “life-events” are generally associated with
a dependent status change, a financial change, or a martial status
change.Examples include engagements, marriages, childbirth, adoptions, buying or selling a home, promotions, starting a new business, etc. These are real life events that take place daily in the marketplace. An insurance sales person can easily link a need to life insurance protection to any of these occurrences. Knowing most people in these situations probably don’t have sufficient life insurance coverage and most likely can qualify for insurance, a light goes on with the ineffective producer, they have found their prime prospects. Consumer research indicates the vast majority of the general public is grossly under insured (life insurance). Although each person’s financial protection needs are different, roughly 90% of the adult age population in this country has less than $150,000 of total life insurance coverage from all sources – including employer provided group term. Making sure prospects pass the criterion for having a need for life insurance is again, pretty much a “given”. We
haven’t
cleared the hurdle for criteria four.
Examining criteria four is critical to understanding if a producer is marketing to qualified prospects. Keep in mind what I stated earlier, if a prospective lead passes the first three criteria and fails the fourth, the prospect is not a qualified sales lead and as a result the producer is working less efficiently then they should. Here’s
a
quick example to make this point clearer.
President and Mrs. Obama – at least from our distance – would qualify for criteria one, two, and three. Looking at prospect ‘Obama’, he gets regular check-ups and exercise and is in good health. Therefore he would most likely have the insurability to qualify for life insurance (criteria one satisfied). He has the “ability to pay” with his $400,000+ government salary (criteria two satisfied). He has an apparent planning need – two young daughters and a nonworking spouse (criteria three satisfied). Looks like a viable prospect so far… Moving
to criteria four
Being able to be seen on a favorable basis as a result of third party influence (TPI). I’ll let you answer if he’s a qualified prospect or not. Unless you know Barack personally, you’re not going to secure a favorable face to face appointment. Trust me, when I was a young producer right out of college, I called the White House and tried [unsuccessfully] to get an appointment with the President. I was lucky the FBI didn’t try to revoke my Registered Rep status at the time. Criteria four is the key to what makes a qualified sales lead. Prospecting effectiveness is measured by examining efficiency ratios in this area. This is accomplished through careful record keeping. We all know successful business people keep good records so they can effectively measure their personal business efficiency. Of all the measurements a good sales person tracks, the prospect contact to sales appointment obtained ratio is perhaps the most important. Understanding criteria four and its link to scheduling a favorable sales interview with a prospect requires taking a close look at how a salesperson makes contact with their inventory. Because life insurance is most effectively sold face-to-face, it requires a sales person sitting down with a prospect to conduct an interview. Thus, the need for a favorable appointment. Coming next
week, John will discuss:
"What makes arranging face-to-face meetings easier?"
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