Welcome to the "Nonrenewable", "Nonconvertible" Cheap Term Era

Is the golden age of "cheap term insurance" over?  Sure looks like it's terminally ill.

Thanks to sustained low interest rates and onerous reserving requirements carriers are reeling. 

"But wait", you say, "rates have not gone up"...and to a certain extent you are right.  The actual term rates have not shot up, but there are big time "gotchas" that are in play with more and more carriers.

First, let's look at the phenomena of the inferior conversion products.  This is not new.  For the past few years, carriers have been slowly limiting the products a client can convert to...often the schnazzy new business product is verboten.  Rather, a more expensive product with less features is what is offered. Often is much more expensive...to the point of not being viable for a long duration insurance need. 

Second, while the level term period rates have been relatively stable, the price once the product goes through the level term period - the annually increasing rates ARE THROUGH THE ROOF.  It's not unusual nowadays for the rates to increase to a most unaffordable premium rate. 

Term insurance has become just that.  Insurance for a term of a client's life only.  Where once is might have been a "starter insurance plan", that is not the case now with many carriers - and I fear the trend will continue. 

Now more than ever, I think a client must consider some element of permanent insurance as part of their insurance plan.  One thing is for certain - term insurance is not as flexible as it once was.  Careful observation of a client's position and needs are of utmost importance lest he be painted into a corner and cannot afford the insurance when he, his family or his business need it most.

The Death of Receptionists...and Toll-Free numbers.

This is written to Betty at the Switchboard - Betty, ask not for who the bell tolls.  It tolls for thee. 

Two basic staples of the business world are on the verge of extinction, or should be for anyone who's forward thinking.  The receptionist and the toll free phone number. 

There was a time when that human voice greeting the caller was a mandate for any service oriented firm.  There was a time that an "800 number" was a must for any organization with a footprint beyond their area-code.  But these relics are so "1990s".  Anymore, very often, that human voice is an impediment to efficient business communication and that toll-free number is obsolete. 

In this helter-skelter world, this always-on world, this techno-viral-to-the-max world, a receptionist - once a valuable part of the chess game of business life - is a confusion point.  Given that the "phone-sentinel" is most often not privy to the inner-workings of a business, their position impedes the process, not enhances it.

Case in point, some variation of this conversation happens to me weekly:  I've got an important message to impart to a business associate or broker and their receptionist answers:

Receptionist - "Hello, Gumtree Financial, this is Kayla, how can I direct your call?"
Me:  "Hi Kayla, this is Ray Phillips from Brokers Source - is Dirk Konyo in?"
Receptionist:  "Where did you say you were from?"
Me:   "Brokers Source"
Receptionist: "Brokerage Resources??  uh...can I tell him what this is regarding?"
Me:  "I need to speak to him about the changing GUL rates on a client we quoted"
Receptionist: "What was that?  I TUL??" 
Me:  "GUL. And, it's Brokers Source."
Receptionist:  "Is Mr. Konyo expecting your call?"

At this point with my stack of calls and work and life to address, the last thing I want is to stay in this verbal Ping-Pong match with Dirk's receptionist.  And, I GET IT!!  Dirk is screening his calls.  No problem dude.  You're not hurting my feelings.  But I've got to get this info in your ear and get on with my life!!

Consider this scenario.  I get Dirk's auto-attendant; or better yet, I have his direct dial.  He sees the caller ID, knows it's me and cannot pickup because he's in the middle of another project:

Dirk's VoiceMail Greeting:  "Hi this is Dirk Konyo, your call is very important to me.  Please leave a message and I will return your call at my earliest convenience". 
Me:  "Dirk this is Ray Phillips.  I just got notice that United Fidelity Union Life is changing their GUL Rates effective Monday the 5th.  We've got to get that case I quoted for you in soon!  let me know what you need me to do to help!"

I'm a busy guy.  He's a busy guy.  He's got the message.  I'm on with other productive things. 

And, don't get me started about toll free numbers.  Everyone had a one size fits all plan.  At home, on the cellphone.  It's the same price to call Alaska as it is to call across the street.  Why have a toll free number?  I switched to IP phones now, the ol' internet, phone bundle all in one.   Guess what?  The only additional charges I get on my monthly phone bill are our long tenured constituents who have the toll free number programmed into their phones!  And, often they are in my area code anyway!

Don't get me wrong, I'm an old enough war-horse to long for those days of receptionists, and business letters and toll-free numbers carrying some marketing franchise - but I've adapted.  The market waits for no man, and it sure won't wait for me.  I make my coffee in little plastic pods now too. 

So, Betty, it's been good knowing you.  I've redirected my resources to someone other than you.  Toll free number?  You're still there.  But I sure won't be spreading the word about your existence. 

Your Future is Guaranteed

John Prine wrote, "Oh baby, it's a big old goofy world" in his song of the same name.  Boy did he get it right.  Look around:  ebola virus, a fragile and shaky stock market, interest rates that are dropping like rocks, cyber hackers abound.  Can somebody hand me a guarantee?

Well, yes, someone can.  Certain annuity carriers will hand you a guarantee of income in the future.  That's not an if.  Not a maybe.  An iron clad guarantee that's out there for the taking. It's called a Longevity Annuity. 

The concept is simple.  Put a hunk of money away today to fund a future income stream.  Want $500 a month for life starting at age 65?  The carrier will calculate what you need to put away today.  Think of it as a deferred comp plan...for yourself. 

In this crazy, mixed-up world, it's just what many clients want.  Guarantees. 

Sure - get wild and crazy with some money.  Play the market - if you think buy-and-hold is still valid - but have those future guarantees!  Maybe even allow a client or yourself to get a little wilder and crazier.  Rest assured, the income will be there, even if our future world is goofier than it is today.

It's not just about needs...it's about wants

For many years now, the pundits have all suggested the life insurance is becoming commoditized.  Purchasers are being driven to the internet to buy their life insurance and even develop the need. 


I guess that makes sense, developing their own need.  This isn't some calculus equation.  It can be quantified and....commoditized. 


Why then do the industry show that we're a grossly underinsured society?  In 2013, LIMRA reported that only 44% of Americans own individual life insurance.  The same report suggested only 16% of people would prefer to purchase insurance online.  So, maybe people are not really doing a good job of tending to their own life insurance planning after all.  And, maybe they just don't want to buy it on their own. 


Here's a good experiment.  Ask a friend or family member when's the last time someone asked them about life insurance (assuming you're not in the business and haven't asked them yourself).  I'll bet nobody has asked them.


Somewhere along the line the magic of life insurance has left the industry.  Somewhere along the line the power of life insurance has left the planner.  Somewhere along the line the fact that life insurance can address a person's "wants" in case of a premature death as much as their "needs". 


Take the two income family.  Husband is an sales rep; Wife is an accountant.  Maybe they aren't even the typical family - maybe they are prudent enough to have kept debt down and lived within their means.  They've got two kids; and SUV and a Minivan. 


I think you could argue they do not "need" much life insurance.


But let's say the husband sees how rough the wife's professional life is.  She hates her boss.  Works long hours.  They don't need much life insurance, but he "wants" her to work less if something should happen to him. 


He wants her to spend more time with the kids if he's gone.  He doesn't want her stressed and scared that if she loses her job - it happens, you know - she doesn't have to fret about not having a safety net.


Or that they can easily send the kids to a private college.


or they can travel together.


or he can impact a charity. 


Life insurance is not just a need.  It's a want. It's what has made it magical historically.  And, to a great extent it's what we've lost as an industry and as consumers. 

The 2,000 Pound Pen

Heard a great story from a good friend and a great insurance broker today. 

When a client declines to purchase from him, he will go out - one last time - to meet with the client.  He has a series of "Declination of Coverage" forms for various product lines pre-written.  He wants the client to sign off that he declined his coverage.

As he pulls out the form he discusses with the client the reasons that he thinks it is a mistake to not secure the coverage, he sets the form out in front of the client and pulls out his own pen and sets it off to the side - as he gives one last ditch effort to secure the sale.  The sheer act of having that writing instrument sit on the table is the power move here, "I want him to physically have to pick up that pen.  I want him to think that pen is 2,000 pounds". 

Guess what?  Not all the time, but very often, the client does pause.  The client reconsiders.  A sale is saved.  Think about it.  If he saves but one sale out of ten, isn't it worth it?  Isn't it worth it to the client's family? 

Little things can mean so much in a sale.  It might be worth trying...don't cost nuthin'. 

How Does Seth Godin do it?

I'm a big fan of Seth Godin.  I subscribe to his daily email blast of his Blog.  Yes.  I said DAILY blast.  He blogs daily and, honestly, it's consistently fresh, insightful and thought-provoking.  I look at my haphazard efforts on this blog, and I feel so unworthy to be in the same blogiverse as him. It can be found at this address:  http://sethgodin.typepad.com/     His views on marketing, leadership and entrepreneurship are spot on for me.  None of the smarmy, often repeated dreck of so many of the "gurus" out there.  Check it out.  Make it a regular read.  And, apply it to your business...and life.  Plus I'm a big fan of his hairline! (but not his yellow glasses).

Holiday Gifts of Love

I bought something very special for my family for Christmas:  a Critical Illness plan from Assurity Life.  As we close out the year, don't forget about the most important client you have...YOU. 

Life Insurance:  do you have 5 to 10x income?  That's what all the experts say you need, but also assess how much you WANT.   We've conditioned ourselves to "sell the need" while often ignoring the "want".  You need the Life Insurance to replace income - what do you want it to do?  Send kids to college?  Help your church or a charity?  Allow your surviving spouse to not have to work so hard? 
Disability Insurance:   I'm astounded at how many insurance professionals I've spoken with who don't have DI!  Sure it protects a paycheck, but it protects that nice car you have in the driveway; the nice home you have; the tuition bills at the private college.  BUY IT!  And, buy enough to protect your lifestyle.
Critical Illness:  I love this concept.  Pays for heart attacks, cancers, etc.  Do you think that in the age of National Healthcare everything will be covered lock, stock and barrel?  Do you think there's a correlation between countries that have had existing National Healthcare and them having great CI sales?  Face it.  Any health plan has holes that you can't see until a claim comes in - do you think a healthcare plan run by the government will be different?   No elimination periods, cash on the barrelhead.
Long Term Care Insurance:  I think linked benefits are a worth consideration nowadays - or one of the accelerated DB riders on a life insurance plan.  See above - do you WANT your Life Insurance to cover a two for one proposition?  Death and a long term care claim?  If not, buy LTCI.  Take the burden of potential care off your family's back.

If you don't have any one of these coverages - buy them.  It'll help you market them to your clients as well as providing you protection. 


Here's to a prosperous and Healthy 2014.  May all your policies be issued preferred and may you not have a claim of your own (but just in case, make sure you have the coverage).