How to keep your life insurance lapse rate under 5 percent

By Lew Nason

Insurance Pro Shop


Almost 30 years ago, one of my first life insurance sales trainers told me that if you have a zero lapse rate, then you are not doing your job. His point was that if you're not having a life insurance policy lapse every now and then, you are probably missing a lot of sales, because you're not pushing hard enough to close the sale.

He was right … and he was wrong. Mostly wrong.

Yes, you'll close many more life insurance sales if you are more aggressive and use the 101 sales closing techniques taught by most sales trainers. However, you'll also have a much higher lapse rate when buyer's remorse sets in.

Buyer's remorse is the feeling of regret after making a purchase. It may stem from a sense of not wishing to be wrong, of guilt over extravagance or from feeling that one has been persuaded by a salesman.

The truth is that people don't like to be sold, but they love to buy.

If you want to increase your sales and still keep your life insurance lapse rate under 5 percent, then stop selling life insurance using the 101 “old fashioned” sales and closing techniques. Instead help people to buy the protection they need for their family, business, etc.

Helping people to buy means asking questions and getting people to talk about the problems they face. Then they will see and understand the problems so well that they want to solve those problems.

Remember, people don't buy life insurance for themselves — they buy it for the people they love. Ask questions to get them to talk about the security life insurance will provide for their spouse and children, and the peace of mind they'll feel. Urge them to talk about how life insurance helps them to meet the commitments and keep the promises they have made to their family.

Life insurance will now become a priority to them. They'll practically sell themselves. And, you'll close more and larger life insurance sales.

Remember that these buyers are still people just like you, and people don't buy from just anyone. People buy from people and businesses they feel they can trust. Furthermore, they'll keep their policies if they believe you helped them to make the right decision for their family.

"To sell in today's environment, you must become a partner with the customer, seeing their situation from their perspective and helping them develop options."

It's this simple: Telling is not selling.

If you just tell people why you want them to do something — like why you want them to buy life insurance — then they'll see you as just another pushy salesperson. However, if you ask questions to help people understand the problems they face now and in the future, and then help them to understand how life insurance will provide them with money, protection, comfort, security, pride and love, those same people will value your perspective. When people value your perspective, they will trust you, buy from you and keep their policies in-force forever.