Tuesday, February 10, 2009

Having Customers versus Clients for Life

We all know that selling an annuity or life insurance product should be based entirely on a client’s needs, not the insurance agent’s available product portfolio or desire for commission. Yet, so many insurance agents paint themselves into a corner by focusing on a limited product portfolio or insurance product type.

How many more clients could they help by broadening what they have to offer?

There is an array of insurance products that meet many needs for many people and many situations. Still, we encounter many agents that focus on one product type. The product they offer could be fixed index annuities, fixed annuities, or indexed universal life insurance to name a few. Why does this happen?

Most of the time we can say this narrow focus is due to a lack of product training made available to the agent, or even a dismal understanding of the benefits of cross-selling. As insurance marketers we should take the time to develop programs for our agent base to help them grow their business by expanding their horizons. Why? Because if their business grows so will yours.

As an example, in the presentation “Surviving a 151A World” Insurance Insight Group created with Insurance News Net we highlight how index universal life insurance can create a tax-free cash flow in retirement. The death benefit is key to providing that benefit. Now, if neither the death benefit nor the tax-free cash flow in retirement is desired, the indexed universal life product is probably unsuitable.

Keep in mind that the use of life insurance as a cash accumulation vehicle is not new. Even prior to the somewhat recent introduction of index universal life insurance, traditional fixed universal life insurance has always been used in sales where tax-advantaged growth and use of the cash value is an important objective. In fact, to limit sales of universal life insurance where there seemed to be little regard for the death benefit at all, Congress added section 7702 to the Internal Revenue Code back in 1984.

Here’s the point. A client always has more than one need. Help them meet one need and they are a customer but if you help them meet more than one, then they could be a client for life. What about you? Do you have customers or clients for life?

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