Use risk reversal to close more insurance quotes
By Daniel Steenerson
Disability Insurance Services
This risk reversal strategy is a smart way to protect yourself from errors and omissions claims. But it also causes clients to take a second look at their “no” decisions. And in many cases, those second looks result in new "yes" decisions, helping you close more disability insurance and LTCI quotes.
In sales, risk reversal is a concept routinely used to remove the fear of buying. Common risk reversal tactics include the money-back guarantee, three-year warranty and satisfaction-guaranteed promises. The idea is that if prospects are wavering on the buying decision, risk reversal will push them into action.
It’s a theory that has been proven to work with direct mail and in retail environments. And as online shoe retailer Zappos discovered, it’s particularly effective in online selling. By implementing an easy “return under any circumstance” policy and even paying the shipping for the return, Zappos overcame potential objections to buying shoes online, quickly achieving rapid growth and success.
That being said, I know you’re thinking there’s no way this concept applies to insurance sales. When selling insurance, we can’t throw around return policies and satisfaction guarantees. If you don’t actually use your disability insurance (DI) policy or your long-term care insurance (LTCI), you don’t get your money back. So, it’s pretty obvious that risk reversal does not work in insurance … right?
Actually, I’m here to tell you that risk reversal works very well in LTCI and DI sales. However, with insurance selling, risk reversal is about demonstrating the risk of not buying, rather than eliminating the risk of buying. See the twist? Here’s an example of how risk reversal works in DI selling.
First, explain that in financial planning, disability insurance is one of the essential protection pillars. You protect your assets with property/casualty insurance, your health with health insurance, your life with life insurance and your ability to earn a living with disability insurance (also known as paycheck protection or income protection). Of these protection pillars, income protection is arguably the most important. Think about it — if you don’t have any income, you can’t afford any assets, health insurance or life insurance. The paycheck is the source of many good things.
Next, let clients know that you have a professional obligation to tell them about the need for paycheck protection. If you didn’t share this information, you wouldn’t be doing your job. In fact, you’d be placing clients at financial risk.
If clients refuse coverage, ask them to sign a waiver of liability. The conversation goes something like this:
“Mr. Smith, I certainly understand if you want to forgo paycheck protection at this time. However, I do need to protect myself by having you sign this waiver of liability. This waiver confirms that I informed you of the risk and that you are deciding to proceed against my advice. I like to document my files because in some cases, when clients become disabled and financially desperate, they sue their financial advisors, claiming they were never told about the need for paycheck protection. Of course I know you would never do that, but I’m sure you can understand why I like to document my files.”
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