Discussing the life insurance sales process 
and the various components of selling

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What’s So Difficult About Selling Life Insurance?

What’s So Difficult About Selling Life Insurance?

Article # 6
Written By John Lensi, CLU, ChFC, RHU, REBC, CMFC, LLIF

The biggest problems for life insurance agents is overselling your product.

Discussing the life insurance sales process 

People often buy as a result of the confidence displayed by the sales person in making their recommendations. How effectively this advise is presented provides strong evidence the sales person has conviction in their product recommendation as the right solution to the clients financial problems.

The life insurance sales process can sometimes be a little foggy for new and existing agents.

Probably the biggest problems for insurance agents and the most common mistake made in this area occurs when sales people “over sell” the product offering. This occurs when the salesperson inundates the consumer about the product ‘structure’ to the point they become confused – who wouldn’t be. As a result, the prospect is unable to make a decision to act on the recommendation because “they need time to think it over” (you are creating an objection) or understand why the product is the right solution to solving their risk protection needs.

With the advent of computer generated product illustrations about 30 years ago, the problem with the life insurance sales process has compounded. The inexperienced sales person often loses the sale at the time of recommendation when they feel the apparent need to review all ‘twenty pages’ in great detail – line by line, column by column - of a typical life insurance product illustration with a layperson.

The successful salesperson explains pertinent product features and benefits and links these to the financial need to be fulfilled by the product. And of course, all compliant required product explanations are fulfilled. The point here is to not become overly involved in the mechanics of the product at the expense of linking the product as the solution to the client’s problems the product is solving.

The Advice Model

When we get into discussing the life insurance sales process there are thousands of “financial professionals” in the market selling insurance and financial services products today. The successful ones have mastered the ability to distinguish themselves from the “ordinary agent” by demonstrating to clients what they can do to help solve their client’s financial problems.

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Most prospects aren’t overly concerned about what product you have to sell. What they care about is what you can do for them to solve a financial problem they have. This is key to the life insurance sales process. Regardless of how “good” a life insurance product is, when a salesperson is involved in the sales process, the product offering is judged in part by who personally presents it. In essence the salesperson becomes part of the product offering. Said another way, you are the product in the mind of the consumer.

When customers make a life insurance buying decision, they base their decision on two primary reasons - to meet a financial need and/or to eliminate a fear. In order to arrive at their decision they base their decision on logic and emotion.

As a general rule, the lower social-economic segment of the market relies more on emotion to arrive at a buying decision, while the high-end market segment relies more on logic or facts.

Taking this a step further, the upscale market places a heavier weight on the value or quality of the advice presented by a financial professional. This supports the basis of fee-based financial planning where clients are willing to pay for the value added – competent advice.

In both cases the clients are concerned about follow up client service.

Whether a fee-based planner or a commission based financial professional, it’s their advice that becomes their competitive distinction. Consumers do not want products per se; they want what the product will do for them.

The point here is few sales are lost because a sales person didn’t have sufficient product knowledge to explain to a client why a particular life insurance product is the correct solution to their financial protection needs.

Actually, the financial professional’s business knowledge, often confused with having product knowledge, is of paramount importance to the sales success.

I attribute a 10% weight of a financial professional’s success to product knowledge.

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Technology Proficient.

Here I’m referring to the skill set to efficiently use software and related technology to grow and maintain a clientele. Some examples include contact management systems, financial analysis software, illustration software, client sales proposals, etc.

I won’t spend a lot of time addressing this skill set, other than to say it can easily become a distracter for the inexperienced producer who spends more time keeping busy with his/her computer, than devoting this disproportionate time on the more key competencies needed to become successful in our business.

On the flip side, the proper use of technology can increase productivity greatly. The successful producer learns how to leverage technology.
A weight of 7.5% is assigned to this competency.

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Client Retention Management.

Here, we’re principally dealing with the ability to successfully retain and cross-sell a book of business. Much could be said to address this area, but for the sake of staying focused on the more critical skill sets, I’ll defer additional comment. A weight of 7.5% is assigned to this competency.

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Advanced Marketing.

This is having the technical and overall skill set capability to move into and work in the “advanced” markets – estate planning, business insurance, pension and wealth transfer markets, and the like. Again, for the sake of focus on other more key areas, I’m simply identifying the need for this skill set. A 5% weight is assigned to this competency.

(Advance Marketing Comment from Ted: One of the things that software selling programs helped me with is the vast array of knowledge embedded in all these programs. Going to home office school training programs are good. But the actual hands on experience viewing of the charts and graphs made things much easier and clearer for me to understand.)

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Administrative.

Despite the vision otherwise, this is still an administrative intense business. Here, we’re taking about everything that can fall into the back-office section of running a business. Application processing, expediting issue, client follow-up, and hiring and managing assistants are some of the items that make up much of this category.

One must get an efficient handle on conducting their business like an entrepreneur without having the business run them. Valuable time can be wasted otherwise. If anymore than 5% of a producer’s overall time is being spent in this area, then some adjustments need to be made to increase efficiency.

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What do periodic studies show?

Insurance companies have studied for years - and continue to do so - the reasons leading to failure by their sales force. What’s interesting about these studies is the leading reason for failure in sales almost never changes – prospecting and appointment scheduling. Plain and simple, these are the two dominant reasons why producers fail in this business.

What’s further of interest, or at least to me, is that most insurance companies spend most of their internal resources on overall sales support for everything except these two leading causes of producer failure.

If you solve a producer’s problem of getting them in front of ten qualified prospects a week (or whatever “magic” number they need to exceed production standards), you will drive sales through the roof.

The increase in sales would be so great, companies would be faced with the issue of additional staffing to handle the increased flow of business.

I hope by discussing the life insurance sales process in detail provides you a better insight on the entire process.

See article #7 -  The real problem for the producer is what is referred to as a “fix and control” issue.  Prospecting issues.

Learn and Earn

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