Needs-based Insurance Sales - Problematic?

Sep 12, 2008

  1. InsuranceGuru
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    I'd like to test the waters so to speak on what I've heard a lot of people in the industry refer to as the "needs-based" approach to insurance sales. I sort of went off on a tangent in another thread and thought it could make for some decent discussion. I think the needs-based approach to selling insurance is problematic, but before I condemn it altogether I'd like to get some insight from others here.

    Here's the problem as I see it. Unless the individual, family, or business has an established insurance background, they don't know exactly what they need from their insurance. I speak of health and life in this sense. Sure, they may have some idea of what they want to spend and what they are concerned about covering, but there's a vicious little paradox that comes with this. By the time someone realizes they "need" something covered, it's often too late to cover it. Why try to sell on a needs-based approach when there's no way for anyone to know what an individual, family, or business will actually "need."

    We don't have time travel and we can't predict the future. The very idea that an insurance "need" can be met is fundamentally screwed up. In the realm of health insurance sales, I was told that identifying the concern, the very "need" of the client, was essentially how the client tells you "how to sell them." The whole needs-based approach, to me, is FUBAR.

    Take a typical family of four. Both parents are 35 years old with two kids aged 7 and 9 respectively. What exactly is it that this family "needs"? Let's say they need health insurance. They have a reasonable budget, and they want the best coverage for that budget. If approaching this from a needs approach, you'll ask if they need doctors visits, prescription coverage, a low or high deductible, etc... but they probably don't even know what they need. They just want health insurance. They just want to be covered for everything possible.

    From where I stand, it seems to me that people need to be covered with something that protects them from the five and six-figure medical bills that are bound to happen today. People need something that protects them if they become disabled, contract cancer or other dread diseases. They need something that protects them if they have an accident. They need something that pays their deductible and co-insurance if their assets are tied up in a business. They need life insurance with an accelerated benefits rider that pays if they're diagnosed with a terminal illness.

    I can't really see anyone "needing" anything more or less than this, let alone anyone getting a real value out of paying for more than what this covers. And if people can't afford this, then they at least need some of it. I can't understand this approach to selling on a "needs" basis with people who have no background in health insurance, who don't even know what's out there or what they need.

    Would someone care to comment on this, maybe shed some light on this "needs-based" approach to insurance? I'm really interested in the experienced health agents' thoughts on it, because I know there are probably some very good reasons for why some of them sell on this "needs" approach. I'd love to discuss it, debate it, or otherwise come to a better understanding.

    Thanks!

    -Shaun
     
  2. bobson
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    I don't get what you are asking? Are you condemning people that sell life insurance via a "needs based" formula? In that sense the need is actually a "want." Do you want to cover your mortgage? Do you want to leave your kids' future caregiver with money? Do you want to give your wife an income she count outlive?

    I caa tell you how much liability insurance you need after the lawsuit is settled. I can tell you how large of a lifetime benefit you need on your health insurance after you get all your doctor bills for that transplant.

    I am a licensed agent in P&C and L&D. I have an insurance designation. I've taken 500 hours or more of continuing education classes. I have no idea how much life insurance my family will need when I'm dead. I know how much I want to leave them but I have no idea if that is how much they need. I tend to err on the side of too much rather than not enough.

    Like Ron White said, "I don't know how many bouncers it would have taken to throw me out of that bar, but I do know how many they were going to use..."
     
    bobson, Sep 12, 2008
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  3. moonlightandmargaritas
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    Over the years, I've found that "needs based" selling has no sizzle. It's all logic. Logic doesn't sell.

    A true professional will take those needs, and turn them into wants.

    Wants are emotion based, and emotion is what sells.
     
  4. Guest
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    If the interest is there, find out why, then provide the solution.

    Simple, basic, true and misunderstood.

    :spinny:
     
    Guest, Sep 12, 2008
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  5. moonlightandmargaritas
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    "Why" is without doubt the best and most powerful question that can be asked. Bravo.

    I was training a noobie once, and was trying to coach him to ask this question. He wasn't gettin' it, saying, "because he needs it, that's why."

    Surprise, surprise. He didn't last.
     
  6. Guest
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    Thank you sir, and without a doubt, some get it, some don't. It happens.
     
    Guest, Sep 12, 2008
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  7. fostever
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    They need coverage and they want value for their $$$.
     
    fostever, Sep 12, 2008
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  8. Delta76
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    I think you can theorize all day long about the proper sales technique, but in the real world most people have financial constraints and you need to find out what their biggest concerns are and help them solve those concerns.
     
    Delta76, Sep 12, 2008
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  9. InsuranceGuru
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    Sure, I agree that some people have some pretty significant financial constraints, and for those people, a catastrophic plan or less might be all they can afford. But there are so many who seem to think some magic, "Golden Egg" health plan is out there that will cover everything health-related. Nothing like that exists as far as I know, and even if it does, I can't see it being worth the extraordinary premium amount it probably costs.

    A combination of plans (Maj. Med/Catastrophic, Cancer, Crit. Ill, HSA/MMGap, Disability, etc) would do the same for less. The premium would be more stable (MM/Catastrophic and Disability - Attained Age premium; Cancer, Crit. Ill, Gap Plan, LTC, etc - Issue Age; HSA - Determined by Client), so people could potentially keep their plans in place longer. And, for plans that start getting too high over time, people can make changes to them without completely starting over on their coverage.

    Is this just a bad way to look at it, bundling different coverages together and just telling people why you include X, Y, and Z? I mean, it covers your ass, and if someone says, "Well, I can see I need this, but I'm not sure I want that," you can simply have them sign a release form that they omitted recommended coverage on their plan.

    I don't really know what to call this... I just know it's not "needs-based" in the general sense that you aren't trying to build a plan based on what someone tells you they need. I'd call it budgeted insurance I guess. I'm not trying to "theorize" about it, I'm just interested in how other seasoned agents do it and what they think about the approach I propose here.
     
  10. jimsthename
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    Agree with many of the saged opinions here (esp. buying on emotion, find problem and solve), and would add that the number one product you are selling is yourself. Personally I work hard to instill trust and confidence so that my client's are completely comfortable with my recommendations.
     
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