ILLUSTRATIONS: TO SHOW OR NOT TO SHOW
Life insurance illustrations are a two-edged sword. They allow you to talk about how a contract works, but many prospects will look at an illustration and think that since their name is on it and it’s in print, it must be a “quote”. Technically, a person can’t be “quoted” until a formal “offer of insurance” is made at the end of the underwriting period. The offer of insurance is really the medical rate classification. Once we have that, we can then “quote” the price of the coverage as an annual, semi-annual, quarterly, or monthly bank draft premium.
Many agents have dropped showing illustrations up front in the sales cycle. Rather, they run the illustration at various medical rate classes and have it in their mind what the range of cost might be. All consumers want to know “how much is this going to cost me?” However, if you manage the prospects expectations realistically, you won’t likely have to sell the insurance twice or have to “take back” a pre-underwriting illustration.
Indicate that the premium might be between $X and $Y dollars and explain why it is impossible to say what the premium will be before full underwriting. Tell the prospect that an application and medical exam for insurance will cost him or her nothing and that the results of the exam – administered by a medical professional at no cost – can be obtained from the carrier after underwriting for their personal medical file.
Remember, we’re not selling illustrations. We’re selling a remarkable product that will provide an income-tax-free lump sum of money if the insured dies. There’s no other financial product like it. Stay focused on that message.
If the prospect has a competing illustration and you have already shown him your illustration, you can be stuck with trying to explain why the premiums are so different. Getting into “illustration wars” is pointless and takes you off message. In order to avoid this, listen for phrases like “shopping around”, “my friend’s agent told me….”, etc, and resist showing the prospect an illustration early on in the discussion.
On the other hand, don’t overdo it. Don’t be so negative or resistent that the prospect thinks you are trying to hide something. Stay on message. Talk up benefits, special features, the carrier’s financial strength and claims paying ability. Under-promise so that you might be able to over-perform.
Of course, in some situations, a signed illustration is required at the time of application. In this case, you have no choice but to show the illustration. But, make it abundantly clear that this is part of the application process and that it in no way guarantees a policy will be issued as illustrated.
Managing client expectations is one of the most difficult tasks we have as financial professionals. Illustrations don’t always have to precede taking an application. A wise agent will weigh the benefits and limitations of doing so.
