What to know about selling life insurance to succeed in 2014
By Lew Nason
Insurance Pro Shop
As you are reading the following information from the Life Insurance Marketing Research Association, you might want to think about the exceptional opportunities you have to be helping middle-income families today, while earning an extraordinary living in this great insurance profession.
The opportunity for the "average" life insurance agent to earn in excess of $250,000 per year is incredible. However, without the correct mindset and the proper approach to selling life insurance, most agents will continue to struggle with incomes that will fall far short of their potential. The opportunity comes from the fact that U.S. families are underinsured. As LIMRA stated in "Facts About Life 2013," "With disposable income at an all-time low, American families have to make difficult decisions on what financial priorities take precedence. Unfortunately, life insurance is not at the top of the list."
Life insurance ownership/coverage remains low
- Thirty percent of U.S. households have no life insurance at all; only 44 percent have individual life insurance.
- Fifty percent of U.S. households (58 million) say they need more life insurance.
- The average amount of coverage for U.S. adults has declined to (167,000), down $30,000 from the average coverage in 2004.
- 4 in 10 households with children under 18 now include a mother who is either the sole or primary earner for her family; yet among women who have life insurance, their coverage is only 69 percent of the average coverage on men.
- “Everyday expenses” such as energy costs, food, clothing and transportation, were cited by more than half of consumers surveyed as limits on ability to save for financial goals.
- When surveyed on financial issues, “money for a comfortable retirement” was the top pick of 67 percent of consumers. By contrast, concerns that life insurance coverage traditionally addresses (such as premature death, funeral expenses and leaving an inheritance) registered as a top priority for less than 40 percent of consumers surveyed.
- Among consumers who believe they need life insurance, 86 percent haven’t bought it because they think it is too expensive.
- Middle-income consumers are more concerned with reducing debt and having more money for retirement than other income groups
Americans purchased $2.9 trillion of new life insurance coverage in 2012, a 1 percent decrease from 2011. By the end of 2012, total life insurance coverage in the United States was $19.3 trillion, an increase of 0.5 percent from 2011. Individual life insurance protection in the United States totaled $11.2 trillion at the end of 2012 and has grown at an average annual rate of 2 percent since 2002, when $9.3 trillion was in force. The average size of new individual life policies purchased has decreased since its peak in 2008 to $163,000 in 2012. The number of individual policies purchased totaled 10.3 million in 2012.
A 2003 "report card" published by LIMRA International indicates that life insurance agents must call an average of 15 prospects, to make six presentations, to close one sale. Is it any wonder that we have an 86 percent agent four-year failure rate, when one sale out of 15 prospects equates to a 93 percent failure rate, a figure that frustrates and discourages most agents from continuing in this business?
LIMRA’s 15-6-1 ratio speaks volumes about the poor marketing and sales training agents are receiving from the life insurance companies, marketing organizations and the entire industry. Let's face it, if, as LIMRA states, over half of the 203.8 million baby boomers, Generation X and Generation Y in the U.S. either have no life insurance or are drastically underinsured, and 48 million U.S. households actually recognize they "don’t have enough life insurance," and agents are calling on 15 prospects just to make one sale, then it's clear that the vast majority of the marketing and sales training being provided by our industry isn't working.
What's missing? Why are 95 percent of the agents in our industry struggling just to make a mediocre living?
See also: Can this industry survive its own Ice Age?
People don't want to be sold to, but they want to buy. Unfortunately, most of the training being offered today revolves around promoting the newest revolutionary products, the lowest prices, the highest investment returns, the latest hot sales ideas and making the quickest sale. Very little of the training is about actually helping people to identify and fix their current financial problems. Is it any wonder that your prospects run the other way when you tell them you are an insurance agent, financial advisor or financial planner, if all you are trying to do is get them to spend more money and make a quick sale?
When was the last time you asked probing questions, got your prospect talking about their problems and aspirations, and actually listened to what they were telling you? When was the last time you did a complete review of your prospect's situation, helped them to recognize and establish their financial priorities and then helped them to find the money to fund a solution that was right for them?
Clients and prospects want your help and guidance in determining the best solution for their unique situation. If you want to earn the income you are truly capable of, $250,000 or more per year, then learn how to ask more and better questions to get your prospects to talk about their problems and dreams.