Establishing the Need
If somebody doesn't know why they should listen to you...they probably won't! In my not so humble opinion, I believe that this section of the FE presentation is the most important. Here is where you get emotional. Here is where you get logical. And here is where the sale is made or lost. If you do not establish WITH your prospect the need for a burial/cremation plan, then you will not make the sale.
The first step in the selling system is to find out what the prospect currently has for their FE needs. Using this information you need to find some way to provide additional financial help because FUNERALS ARE EXPENSIVE, AND THEY AREN'T FUN! Here is where you need to be realistic and Lovingly Bold™. There are really only a few ways to do this.
Here they are:
Let's talk about each one separately so we can come to a full understanding on HOW to approach each situation.
1. Start a plan if they don't already have one.
In the first step of the 5-Step System we talk about finding out what they have. If a prospect has nothing, then we simply talk about final expenses in general and why it's important to get them taken care of. There are two questions that you will want to ask in this section.
The first question you should ask if they don't have any plan at all is:
"What's kept you from getting a plan set up for yourself?"
The answer to this question will help know what the main objection, or stall, of your prospect is. For example, if your prospect responds with, "we just haven't had the money to plan for FE" then you know your biggest objection will be money. If a prospect tells you, "we had a plan, but we didn't like the company the coverage was with," then you know to find out what it was they didn't like. The information you gather here will help you plan your presentation to deal with any objection they may have.
The second question you should ask if they don't have any plan at all is:
"What was it about that card that made you want to send it in?"
The answer to that question, if answered in its entirety, will give you everything you need to establish the need. The information that you gather here will also help you cater the presentation. For example, if they respond by saying, "Well, we are getting to the age that we need to start thinking about this," you can pretty much assume a sale. If they respond, "We were just looking for a little extra to give the kids when we go," then you know to leave out all the 'leaving behind a burden' crap and focus on 'leaving behind a nice little cash gift for the kids.'
Sometimes I get the question, "What's the most important need we should focus on?" I answer that with this statement:
The most important need of a prospect is the need they divulge to you.
2. Add additional coverage to what they already have.
If a prospect already has a policy in place, the best way to do business is to add coverage to what they already have. It can sometimes be difficult to show that a prospect needs more coverage if they have several/large life insurance policies in place. For example, it will be more difficult to convince a prospect they need more insurance if they have a $25,000 FE insurance plan that they have had for 10 years and pay little to nothing for. A more ideal situation for increasing coverage would be somebody who only has a $3,000 policy that they purchased two years ago.
To help them see the need for more coverage, you will need to show them the reality of final expense. Most people don't realize how expensive it is to die. Here are a couple of things that, if necessary, you can share with your prospects.
10 Points of interest you can share to help your
prospects see the need to increase coverage.
1. Increasing final expenses
Final expenses increase by about 3% per year. That means FE will likely double in the next 25 years or so. If somebody only has a $10,000 policy and they are 65 years old, then chances are they will NOT have enough money by the time they reach their life expectancy at age 85. Why not recommend adding an additional $10,000 plan so they will have enough to cover their final expenses? Also, if they start a plan sooner than later, they can lock in the lower premium rate.
2. Bill paying
Some people have the misfortune of leaving behind unpaid bills. These bills can cause unnecessary burden to loved ones. Be careful spending too much time on this subject because some people take pride in not having unpaid bills. If you harp too much on this, they may take offense to it and close up. Unless they bring it up, only mention this as an additional need to plan for. Here are a few bills that may or may not be there:
Medical Bills
Utility Bills
Credit Card Bills
Housing Payments
Car Payments
In-home Healthcare
Nursing Home
Other Bills You Don't Know About
Why not recommend adding a little extra to help just in case there are a few unexpected expenses here and there?
3. Cleanup funds
A cleanup fund is something that would be used to help pay for the removal of the deceased's personal property from their residence. For example, if a person dies and they have a 1200 sq/ft apartment with furniture and personal belongings, somebody is going to have to come into the home and remove/organize everything. All those personal belongings will have to be dealt with as well. The expense comes from the moving truck, professional help, and their children taking time off work to do this. Why not have an extra $3,000 plan to help with any unexpected cleanup costs?
4. Income replacement
If you have a couple who depends on social security for income and one of them dies, the household income will decrease. The survivor will get to keep the larger of the two social security checks, and the other check goes away. For example, Tom gets $1200 a month and Helen gets $800 a month. If Tom dies, Helen will only get $1200 a month to live off. The other check will stop coming to the house. That is $800 less per month, and Helen's expenses pretty much stay the same. Utilities, housing, insurance, taxes, etc. all cost the same as before Tom died, but now Helen has less income to pay it all with. Why not recommend adding a little $10,000 plan to help Helen adjust to the income difference?
5. Estate planning
I'm not a lawyer so I will keep this short and simple. If a person dies and they have assets, those assets create an estate that is used to pay creditors. Anything left over goes to the survivors. This process is lengthy and expensive, so if a prospect is planning on using existing assets (i.e. house, land, property) to pay for FE, the money may not be available as soon as they think it will. Why not recommend getting a little $10,000 plan to help with the estate planning expenses? That way, more of their life insurance benefits can go to their family?
6. Expenses to family members (time off work, travel, etc.)
When your mother or father passes away, typically you would want to take a week or so to mourn and attend the funeral. Your prospects are the same way. Their children will take time off work and that will cost their family money. Don't forget the travel expenses, lodging, and meals. Why not add an additional $5,000 plan to help with any expenses their children might have?
7. Expenses not covered by their mortuary/cemetery plan
Many people have pre-paid mortuary/cemetery plans. To learn the truth about these plans, check out the 'Doubt Resolution' section where it talks about pre-paid plans. Anyway, pre-paid plans RARELY cover all the necessary expenses for funerals, and the family will typically have to come up with additional funds. For example, if Tom has a pre-paid cemetery plot, he probably doesn't have the opening and closing, the headstone, setting of the stone, or vault pre-paid. Those expenses typically run 100% or more the price of the plot. The same goes with the mortuary services. Why not recommend adding an additional $5,000 plan to help pay for the things that aren't prepaid like flowers, death certificates, headstones, opening and closing, setting of the stone, or perpetual maintenance fees?
8. Leaving a little behind to kids or grandchildren
Sometimes people want to leave a little behind for no other reason than to give their posterity a little help. This is not as typical as you would imagine, but it is a subject worth addressing if you are stretching to establish a need. Typically if this is your prospects main concern, they will tell you as you ask questions and discover why they mailed in the lead card. Why not recommend leaving a little behind for the kids just to give them a little extra for a new beginning?
9. Leaving something for a church or charitable organization
Prospects frequently have deep appreciations for churches or charitable organizations that have helped them throughout their lives. Prospects can, in a small way, give back to the group that has given them so much, and in the meantime help themselves feel good and help you support your family. Why not recommend leaving a little behind to XYZ to help give back for all they have done for your prospect?
10. The reason they give you for sending in the card
30% of the time you sit down with a prospect that mails in a card, you will get to the point where you don't know where else to turn to establish a need. They may tell you they have a prepaid cemetery and mortuary plan, $25,000 in the bank, and an extra $50,000 in life insurance. You may be saying to yourself, "Then WHY in the heck did you mail the card in?" When you say this to yourself, I want you take the last step and ask them the same question. Ask, "With all the planning you have done, WHAT WAS IT ABOUT THE CARD THAT MADE YOU WANT TO MAIL IT IN?" At that point listen to their response. You can expect 2 types of answers. 1) They didn't know what it was, or 2) They mailed it in because they were looking to fulfill some need. The need they divulge to you is the ONLY need you NEED to address in your presentation.
*CAUTION: Avoid vomiting information all over your prospect. Just because you know something, doesn't mean your prospect needs to know it. Avoid talking yourself out of a sale by overselling, and ONLY share the necessary information they need to make an educated decision.
If, after addressing all of the above 'needs', you still don't see eye to eye with your prospect, chances are you won't get the sale. Practice and experience will help you discern when it is best to use each of the points listed above. Practice, practice, practice and you will be pro in no time.
3. If appropriate, replace what they currently have.
In a world of cutthroat, scummy salesmen you really need to be careful you don't do anything to tie yourself to this group. It is your moral obligation to ALWAYS do the right thing for your customers, and sometimes the right thing is to replace the garbage policy they have sitting in the file cabinet.
I know many FE agents who claim they never replace existing policies. This is foolish. If your product, service, or price is better than what they already have, and it is in their best interest, why wouldn't you help them? However, just because your policy is cheaper doesn't necessarily mean a replacement is appropriate. For example, my favorite company has a policy that is about 25%more expensive than the average FE policy, but it is about 50% better than any other policy on the market. It is paid up in 10 years and they are guaranteed to NEVER lose money on it. Every now and again I will get a replacement form from a competing company and they always say the same thing...'our DUPLICATE policy is cheaper.' That is 100% false! Their policy is NOT a duplicate policy, and it is not cheaper for the benefits my customer is receiving. Every time I return to my customer's home to save the sale, I do. Once I remind them of the differences between the two policies they ALWAYS come back to the fold.
So, what are some situations you should watch for that would make a replacement appropriate? Here is a list of things to watch for. And if the policy you are providing doesn't have one or all of the following, discuss the possibility of replacement.
7 reasons you may consider replacing a policy
1. Waiting periods: A 2-3 year period during the policy life that prevents it from paying the full face amount if the insured passes away. This is also referred to as a 'modification' or 'gradation.' This feature is usually seen with mail order policies or policies written on less-healthy insureds.
2. Decreasing death benefits: Pretty self-explanatory, as an insured gets older...the death benefit (face amount) decreases.
3. Increasing premium payments: As an insured gets older, the monthly premiums they pay increase. This typically happens every 5, 10, 15, or 20 year period. This is a typical feature of term life policies.
4. Policies that cancel: This policy cancels once an insured reaches the cancellation age stated in the policy. The cancellation ages vary between policies, but typically they cancel around age 75-80. This feature is common among term life policies.
5. Accidental policies: You will typically see these policies underwritten by banks and credit unions. These policies ONLY pay in the event of an accidental death. They are super cheap both in monthly premiums and quality. In fact, I've yet to see an accidental policy pay out.
6. Company stability: This is a stretch, but I guess it could technically be used as a reason to replace. If you have inside information that a company is struggling financially, and you represent a company that isn't...this could be a case builder.
7. Poor service: This is one of my favorite reasons to replace a policy. There is HUGE turnover in the insurance business, and frequently, your prospect's previous agent isn't in the business anymore. Even if they are in the business, chances are they haven't seen their customer in 2-3 years to do a coverage review. Some prospects want closer relationships with their agents than they are currently getting and this is a problem. If this is a problem for them... it's a selling point for you.
If you noticed, I didn't put 'Cost' as a reason to replace. Although it technically could be used as a reason to replace, it should only be used if the existing policy has one or several of these other features.
*Just as a reminder, PLEASE be ethical when considering a replacement. You should NEVER replace for the sole purpose of making a commission. You should only replace when it benefits the prospect.
If somebody doesn't know why they should listen to you...they probably won't! In my not so humble opinion, I believe that this section of the FE presentation is the most important. Here is where you get emotional. Here is where you get logical. And here is where the sale is made or lost. If you do not establish WITH your prospect the need for a burial/cremation plan, then you will not make the sale.
The first step in the selling system is to find out what the prospect currently has for their FE needs. Using this information you need to find some way to provide additional financial help because FUNERALS ARE EXPENSIVE, AND THEY AREN'T FUN! Here is where you need to be realistic and Lovingly Bold™. There are really only a few ways to do this.
Here they are:
- Start a plan if they don't have one.
- Add additional coverage to what they already have, or
- If appropriate, replace what they already have.
Let's talk about each one separately so we can come to a full understanding on HOW to approach each situation.
1. Start a plan if they don't already have one.
In the first step of the 5-Step System we talk about finding out what they have. If a prospect has nothing, then we simply talk about final expenses in general and why it's important to get them taken care of. There are two questions that you will want to ask in this section.
The first question you should ask if they don't have any plan at all is:
"What's kept you from getting a plan set up for yourself?"
The answer to this question will help know what the main objection, or stall, of your prospect is. For example, if your prospect responds with, "we just haven't had the money to plan for FE" then you know your biggest objection will be money. If a prospect tells you, "we had a plan, but we didn't like the company the coverage was with," then you know to find out what it was they didn't like. The information you gather here will help you plan your presentation to deal with any objection they may have.
The second question you should ask if they don't have any plan at all is:
"What was it about that card that made you want to send it in?"
The answer to that question, if answered in its entirety, will give you everything you need to establish the need. The information that you gather here will also help you cater the presentation. For example, if they respond by saying, "Well, we are getting to the age that we need to start thinking about this," you can pretty much assume a sale. If they respond, "We were just looking for a little extra to give the kids when we go," then you know to leave out all the 'leaving behind a burden' crap and focus on 'leaving behind a nice little cash gift for the kids.'
Sometimes I get the question, "What's the most important need we should focus on?" I answer that with this statement:
The most important need of a prospect is the need they divulge to you.
2. Add additional coverage to what they already have.
If a prospect already has a policy in place, the best way to do business is to add coverage to what they already have. It can sometimes be difficult to show that a prospect needs more coverage if they have several/large life insurance policies in place. For example, it will be more difficult to convince a prospect they need more insurance if they have a $25,000 FE insurance plan that they have had for 10 years and pay little to nothing for. A more ideal situation for increasing coverage would be somebody who only has a $3,000 policy that they purchased two years ago.
To help them see the need for more coverage, you will need to show them the reality of final expense. Most people don't realize how expensive it is to die. Here are a couple of things that, if necessary, you can share with your prospects.
10 Points of interest you can share to help your
prospects see the need to increase coverage.
1. Increasing final expenses
Final expenses increase by about 3% per year. That means FE will likely double in the next 25 years or so. If somebody only has a $10,000 policy and they are 65 years old, then chances are they will NOT have enough money by the time they reach their life expectancy at age 85. Why not recommend adding an additional $10,000 plan so they will have enough to cover their final expenses? Also, if they start a plan sooner than later, they can lock in the lower premium rate.
2. Bill paying
Some people have the misfortune of leaving behind unpaid bills. These bills can cause unnecessary burden to loved ones. Be careful spending too much time on this subject because some people take pride in not having unpaid bills. If you harp too much on this, they may take offense to it and close up. Unless they bring it up, only mention this as an additional need to plan for. Here are a few bills that may or may not be there:
Medical Bills
Utility Bills
Credit Card Bills
Housing Payments
Car Payments
In-home Healthcare
Nursing Home
Other Bills You Don't Know About
Why not recommend adding a little extra to help just in case there are a few unexpected expenses here and there?
3. Cleanup funds
A cleanup fund is something that would be used to help pay for the removal of the deceased's personal property from their residence. For example, if a person dies and they have a 1200 sq/ft apartment with furniture and personal belongings, somebody is going to have to come into the home and remove/organize everything. All those personal belongings will have to be dealt with as well. The expense comes from the moving truck, professional help, and their children taking time off work to do this. Why not have an extra $3,000 plan to help with any unexpected cleanup costs?
4. Income replacement
If you have a couple who depends on social security for income and one of them dies, the household income will decrease. The survivor will get to keep the larger of the two social security checks, and the other check goes away. For example, Tom gets $1200 a month and Helen gets $800 a month. If Tom dies, Helen will only get $1200 a month to live off. The other check will stop coming to the house. That is $800 less per month, and Helen's expenses pretty much stay the same. Utilities, housing, insurance, taxes, etc. all cost the same as before Tom died, but now Helen has less income to pay it all with. Why not recommend adding a little $10,000 plan to help Helen adjust to the income difference?
5. Estate planning
I'm not a lawyer so I will keep this short and simple. If a person dies and they have assets, those assets create an estate that is used to pay creditors. Anything left over goes to the survivors. This process is lengthy and expensive, so if a prospect is planning on using existing assets (i.e. house, land, property) to pay for FE, the money may not be available as soon as they think it will. Why not recommend getting a little $10,000 plan to help with the estate planning expenses? That way, more of their life insurance benefits can go to their family?
6. Expenses to family members (time off work, travel, etc.)
When your mother or father passes away, typically you would want to take a week or so to mourn and attend the funeral. Your prospects are the same way. Their children will take time off work and that will cost their family money. Don't forget the travel expenses, lodging, and meals. Why not add an additional $5,000 plan to help with any expenses their children might have?
7. Expenses not covered by their mortuary/cemetery plan
Many people have pre-paid mortuary/cemetery plans. To learn the truth about these plans, check out the 'Doubt Resolution' section where it talks about pre-paid plans. Anyway, pre-paid plans RARELY cover all the necessary expenses for funerals, and the family will typically have to come up with additional funds. For example, if Tom has a pre-paid cemetery plot, he probably doesn't have the opening and closing, the headstone, setting of the stone, or vault pre-paid. Those expenses typically run 100% or more the price of the plot. The same goes with the mortuary services. Why not recommend adding an additional $5,000 plan to help pay for the things that aren't prepaid like flowers, death certificates, headstones, opening and closing, setting of the stone, or perpetual maintenance fees?
8. Leaving a little behind to kids or grandchildren
Sometimes people want to leave a little behind for no other reason than to give their posterity a little help. This is not as typical as you would imagine, but it is a subject worth addressing if you are stretching to establish a need. Typically if this is your prospects main concern, they will tell you as you ask questions and discover why they mailed in the lead card. Why not recommend leaving a little behind for the kids just to give them a little extra for a new beginning?
9. Leaving something for a church or charitable organization
Prospects frequently have deep appreciations for churches or charitable organizations that have helped them throughout their lives. Prospects can, in a small way, give back to the group that has given them so much, and in the meantime help themselves feel good and help you support your family. Why not recommend leaving a little behind to XYZ to help give back for all they have done for your prospect?
10. The reason they give you for sending in the card
30% of the time you sit down with a prospect that mails in a card, you will get to the point where you don't know where else to turn to establish a need. They may tell you they have a prepaid cemetery and mortuary plan, $25,000 in the bank, and an extra $50,000 in life insurance. You may be saying to yourself, "Then WHY in the heck did you mail the card in?" When you say this to yourself, I want you take the last step and ask them the same question. Ask, "With all the planning you have done, WHAT WAS IT ABOUT THE CARD THAT MADE YOU WANT TO MAIL IT IN?" At that point listen to their response. You can expect 2 types of answers. 1) They didn't know what it was, or 2) They mailed it in because they were looking to fulfill some need. The need they divulge to you is the ONLY need you NEED to address in your presentation.
*CAUTION: Avoid vomiting information all over your prospect. Just because you know something, doesn't mean your prospect needs to know it. Avoid talking yourself out of a sale by overselling, and ONLY share the necessary information they need to make an educated decision.
If, after addressing all of the above 'needs', you still don't see eye to eye with your prospect, chances are you won't get the sale. Practice and experience will help you discern when it is best to use each of the points listed above. Practice, practice, practice and you will be pro in no time.
3. If appropriate, replace what they currently have.
In a world of cutthroat, scummy salesmen you really need to be careful you don't do anything to tie yourself to this group. It is your moral obligation to ALWAYS do the right thing for your customers, and sometimes the right thing is to replace the garbage policy they have sitting in the file cabinet.
I know many FE agents who claim they never replace existing policies. This is foolish. If your product, service, or price is better than what they already have, and it is in their best interest, why wouldn't you help them? However, just because your policy is cheaper doesn't necessarily mean a replacement is appropriate. For example, my favorite company has a policy that is about 25%more expensive than the average FE policy, but it is about 50% better than any other policy on the market. It is paid up in 10 years and they are guaranteed to NEVER lose money on it. Every now and again I will get a replacement form from a competing company and they always say the same thing...'our DUPLICATE policy is cheaper.' That is 100% false! Their policy is NOT a duplicate policy, and it is not cheaper for the benefits my customer is receiving. Every time I return to my customer's home to save the sale, I do. Once I remind them of the differences between the two policies they ALWAYS come back to the fold.
So, what are some situations you should watch for that would make a replacement appropriate? Here is a list of things to watch for. And if the policy you are providing doesn't have one or all of the following, discuss the possibility of replacement.
7 reasons you may consider replacing a policy
1. Waiting periods: A 2-3 year period during the policy life that prevents it from paying the full face amount if the insured passes away. This is also referred to as a 'modification' or 'gradation.' This feature is usually seen with mail order policies or policies written on less-healthy insureds.
2. Decreasing death benefits: Pretty self-explanatory, as an insured gets older...the death benefit (face amount) decreases.
3. Increasing premium payments: As an insured gets older, the monthly premiums they pay increase. This typically happens every 5, 10, 15, or 20 year period. This is a typical feature of term life policies.
4. Policies that cancel: This policy cancels once an insured reaches the cancellation age stated in the policy. The cancellation ages vary between policies, but typically they cancel around age 75-80. This feature is common among term life policies.
5. Accidental policies: You will typically see these policies underwritten by banks and credit unions. These policies ONLY pay in the event of an accidental death. They are super cheap both in monthly premiums and quality. In fact, I've yet to see an accidental policy pay out.
6. Company stability: This is a stretch, but I guess it could technically be used as a reason to replace. If you have inside information that a company is struggling financially, and you represent a company that isn't...this could be a case builder.
7. Poor service: This is one of my favorite reasons to replace a policy. There is HUGE turnover in the insurance business, and frequently, your prospect's previous agent isn't in the business anymore. Even if they are in the business, chances are they haven't seen their customer in 2-3 years to do a coverage review. Some prospects want closer relationships with their agents than they are currently getting and this is a problem. If this is a problem for them... it's a selling point for you.
If you noticed, I didn't put 'Cost' as a reason to replace. Although it technically could be used as a reason to replace, it should only be used if the existing policy has one or several of these other features.
*Just as a reminder, PLEASE be ethical when considering a replacement. You should NEVER replace for the sole purpose of making a commission. You should only replace when it benefits the prospect.
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