The Sale

[Winter_123]

More then likely a person in their late 30's or early 40's will generally need less insurance in 10 years and very little in 20 years.

Not on this planet. Spouses in their 50 and 60's who lie awake at night worrying about what their lifestyle would look like if their income producing spouse die (of which many do) are one of major reasons why life insurance is sold in this world. Ideally, the 60 year old does not just get around to trying to buy it at 60. I see it everyday though. You talk about the mortgage probably being paid off so the need for life insurance is less. All of that is good in theory. In reality, since the original mortgage, there have been two home equity loans to pay for the three kids in college.


2. Life insurance today is cheap, likely to be more so as time goes on if the general trends keep going they way they are.

People are likely to get older with the passage of time. When these guaranteed renewable 5 year term contracts are renewed are you saying that they are renewed at original issue age or current attained age?


Now also understand that the need of Life Insurance is basically secondary to other needs such as DI, person of the age I'm discussing that seeks LI will by odds face the need of a good DI policy far more then that of a Life Policy.

We can agree that disability is important. Whether it is secondary or not depends on whether you are the surviving spouse or one of the kids if death occurs. But adding additional coverage of real value such as a disability policy is a good thing and a real service to the client.


Once again, I don't believe anyone can sit down in one or two meets and plot out a succesful Insurance Plan that encompasses all the needs. Unless you know of a good idea on how to sell, Life-DI-LTC all in one sit and have a succesful sale asking for that check please share it.

Why are we talking about selling it all in "one sit". I thought we were talking about building a relationship with the client and staying with them over the years. If they have no life insurance and have young kids and a spouse and want to look at life insurance options then probably I will sell them some life insurance. If in a simple fact finding discussion the interest or need is greater for disability then I will be showing them options there. This does not close the door to filling in the other pieces over time. It in fact opens it. You talk to them about buying a 5 year plan because they can't afford XYZ and then want to show them LI, DI, FE, and LTC as a bundle. It doesnt work that way, exceptions encountered now and then. The idea is to build the relationship with the client and then leave them better off each time you do business with them.

I think that underneath this whole strategy to sell 5 year term is either a belief on the part of the agent that insurance is not truly going to be needed as much down the road or that it is easier to sell something to the client by poo-pooing the need for insurance later in life. I just don't agree with either of those positions. If you go down to the local diner and see three men having coffee- one of them has or will have prostate cancer. If you see three women- one has or will have breast cancer. If a couple is married at age 30, there is only a 50% chance that they will both survive to age 65. I don't know how old you are but a 30 year old selling to 30 year olds does not know this either factually or in his gut so he sells with the belief life insurance is a crock past a certain age. The time to get that policy is when age and health are on the clients side. If affordability is an issue then that is reality. The agent however often controls what they see as being needed and therefore affordable though.

Winter

 

[djs]

This is an interesting thread. As a property and casualty guy, I write a fair amount of life. I can offer a discount on their home and auto, which will frequently cover a 10 year term $150K policy. This gets me 'in the door' for the life discussion. $150K is never enough, especially in the bay area, where the average home is about $800K, but it's a start, better than nothing.

I also am a big believer in the buy term today because the need is real today, but chances are, they don't have the cash flow for a perm policy (cost is actually usually less when you look at a good universal life), and then I talk to them about the conversion over 10 years to a perm policy, for the portion they will need for their lifetime.

I never sell 5 year policies if I can avoid it, the price for most 10 years is almost the same, and it gives me longer to work with them on a conversion.

I never, ever replace an existing true life policy. In fact, just the opposite, I explain to them why they should keep it (assuming they have had it for any length of time). Chances are, they got that policy when they were significantly younger, and are paying less than I can sell them a similar policy for now. In fact, I point this out to them, so they understand they don't want to replace my policy.

The other advantage I have, if I'm writing their home and autos, and they see the need for life insurance, but they don't have the cash, is I'll talk about the big mistakes in life (leaving your family without a way to stay in the home you've been providing) vs the little mistakes (paying for life insurance and not dying), and then I'll suggest we change their deductible on the auto from $250 to $500 (little mistake if you have an accident) and use the premium savings on the life policy. This obviously only works if they want the life, but it's a way to find money.

Dan

 

[James]

Spouses in their 50 and 60's who lie awake at night worrying about what their lifestyle would look like if their income producing spouse die (of which many do) are one of major reasons why life insurance is sold in this world. Ideally, the 60 year old does not just get around to trying to buy it at 60. I see it everyday though. You talk about the mortgage probably being paid off so the need for life insurance is less. All of that is good in theory. In reality, since the original mortgage, there have been two home equity loans to pay for the three kids in college.

I simply don't run into many Single Producer Households lately, yet if I do I will agree they have to be handle differently. Yet most households I visit have two income producers making you scenario of "Worries" a tad different. While some people will have a desire to pay for their children College cost I think your theory all of them 60 year olds having three kids actively in college and bills is simply not reality, fact is most people don't even have three kids today. Plus the households that do have three children I find all do not go to college yet I suppose one has to come up with something to sell long term contracts to everyone.

Why are we talking about selling it all in "one sit".

That is basically what is happening today esp in the MP arena, or do you want to suggest that the majority of agents today practice good technique in service and multiple visits?

If a couple is married at age 30, there is only a 50% chance that they will both survive to age 65.

Now where is this number coming from?

I think that underneath this whole strategy to sell 5 year term is either a belief on the part of the agent that insurance is not truly going to be needed as much down the road or that it is easier to sell something to the client by poo-pooing the need for insurance later in life.

While I will suggest that the need for Insurance is less in future years but in no way do I suggest that life insurance is not needed, just less so in the out years. Now of course this can vary by people but I'm talking in general and specifically towards the DB, I will not come up with strange numbers or fictoiuses stories to defend my position. Fact is Americans in general are not doing as bad in planning for the Senior years as some would suggest.

 

[Winter_123]

Now where is this number coming from?


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"If both spouses are age 30 there is a 48.5 chance that one of the spouses will die before age 65."

Source: Mutual of Omaha's website citing the Commissioners Standard Ordinary Mortality Tables.

Nevermind though. As you mentioned, this type of concern is not part of what you address with clients and I am okay with that.

Winter

 

[James]

Now where is this number coming from?


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"If both spouses are age 30 there is a 48.5 chance that one of the spouses will die before age 65."

Source: Mutual of Omaha's website citing the Commissioners Standard Ordinary Mortality Tables.

Nevermind though. As you mentioned, this type of concern is not part of what you address with clients and I am okay with that.

Winter

Okay, I see what you are doing. Go here, the 2001 tables by age https://aldoi.gov/PDF/Consumers/MortalityTable2001.pdf

 

[Winter_123]

Okay, I see what you are doing. Go here, the 2001 tables by age https://aldoi.gov/PDF/Consumers/MortalityTable2001.pdf

What I am doing is showing you the data that shows the odds for *both spouses* to reach age 65 which is a different calculation than individual life expectancies.

Maybe we can ljust let it go. You have established that you have, in your mind, good and sufficient reason to see a diminished need for life insurance later in life (50's and 60's) and that just flies in the face of facts, life as I know it, and what I have learned from delivering (and not being able to deliver) death benefit checks to clients. Hopefully, your views will serve your clients well over time- because they will age and that 1 year and 5 year term strategy will get get costly or else they will fall out.

Winter

 

[James]

What I am doing is showing you the data that shows the odds for *both spouses* to reach age 65 which is a different calculation than individual life expectancies.

Maybe we can ljust let it go. You have established that you have, in your mind, good and sufficient reason to see a diminished need for life insurance later in life (50's and 60's) and that just flies in the face of facts, life as I know it, and what I have learned from delivering (and not being able to deliver) death benefit checks to clients. Hopefully, your views will serve your clients well over time- because they will age and that 1 year and 5 year term strategy will get get costly or else they will fall out.

Winter

Got it, now tell me exactly how many will stay with the 20 or 30 year plan? Or in several years how many will lapse the policy due to non payment? I'm not sure exactly but if my memory serves me industry standards would be higher then 90% not sure of exact number, could be wrong but it is high!

 

[Winter_123]

Got it, now tell me exactly how many will stay with the 20 or 30 year plan? Or in several years how many will lapse the policy due to non payment? I'm not sure exactly but if my memory serves me industry standards would be higher then 90% not sure of exact number, could be wrong but it is high!

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Quite so. The discussion though was about whether there is a need for life insurance in late middle age or beyond. Whether people meet that need or maintain the payments is an important but separate issue. Many who buy an personal (non-group) health care policy will eventually drop it. That does not mean that it does not provide value to those who maintain it. Many who invest in a retirement plan will eventually cash it out if they leave their job or want a new snowmobile. That does not mean that planning for retirement is a questionable practice, only that it is difficult for people to maintain good financial protections and plans over time. I have a client who qualified for super-preferred several years ago and took out a large policy. Now he has ALS (lou gehrig's disease) and he is steadily losing ground. He won't be cancelling his policy and whether anyone else does or not is of no concern to him whatsoever. He and his family have the value of what they planned and paid for.

Winter

 

[James]

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Quite so. The discussion though was about whether there is a need for life insurance in late middle age or beyond.

Winter

Yet though a 35 yr old that buys a 20 or 30 year plan isn't planning for insurance past middle age now are they? The ones who do keep it will be out of insurance at age 55 or 65, exactly this is where WL or a good UL comes into play. Exactly what I'm saying, long term "Term" insurance gives people false illusion of being covered. Now the only dispute we may have is amounts, what they can afford today or tomorrow. Your the one that question the cost of a 35 yr old seeking insurance at age 40 but what of that 35 year old seeking insurance at the age of 55 or 65? Generally speaking the 20 or 30 year term is not a solid plan at all if left there which is what I'm finding, agents sell these policies and never again follow up. Yes, more then likely I would suggest that if any agent today made 100 visits they would find the same thing.

Service over time is not cheap, it takes energy and capital, yet though it should be expected and yes cost is going to be higher, that is a no brainer.

 

[Winter_123]

Yet though a 35 yr old that buys a 20 or 30 year plan isn't planning for insurance past middle age now are they? The ones who do keep it will be out of insurance at age 55 or 65, exactly this is where WL or a good UL comes into play. Exactly what I'm saying, long term "Term" insurance gives people false illusion of being covered. Now the only dispute we may have is amounts, what they can afford today or tomorrow. Your the one that question the cost of a 35 yr old seeking insurance at age 40 but what of that 35 year old seeking insurance at the age of 55 or 65?
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Quite so. A 20 or 30 year policy only gets you err...ahhhh 20 or 30 years and while that has tremendous value it is not the same as whole life or universal life and has to be understood as such. However, a good term policy will provide for conversion in the event that option is needed/wanted. I emphasized the value of the longer term products only to counter your statement that the need for insurance is less after 10 years and that the need is "very little" after 20. I wasn't making a case that term versus whole life was ideal or that there could be no need after 30 years. Now, you seem to have drifted into making a case for whole life, all while arguing that the need for insurance is "very little" after 20 years. Maybe the way those fit together is that you are saying that their need for insurance is very little after 20 years but your need for them to have whole life is very great. Don't know. Your strategy is sort of all over the place.

Also, a term policy does not give the "false illusion that they are covered." If they have a policy then they *are* covered and the data says that there is a 50% chance that one of the spouses will die before age 65 so there is real value there. If they feel that they are covered for 40 years or life if they only have 30 year term then we can agree they need to have a financial person in their life to keep them straight so that they can either understand and be satisfied with what they have or choose something else. That does not make a term policy is bad though simply because they cant remember what they have. I am not sure selling them a 1 or 5 year term helps them with that. It's nice to think that everyone who starts selling 1 year term policies is starting down the road to lifelong contact with the client. In reality a lot, if not most, agents will be off doing something else in a year or two and the client will be nowhere when no one comes around to hold up cue cards for them.

Winter