Our resident Medicare guru Rick is an admitted “termite” – if he’s got to sell life insurance policy, he reaches for a term application. They’re simple, straightforward, and his clients love ‘em.
Some agents complain that this isn’t the way to do things. They say that permanent coverage should be presented first if at all possible, taking advantage of the client’s relative youth (they’re only getting older after all) to lock in lower rates now. Term expires, they say, and permanent coverage may be too expensive or even unobtainable later. Why leave your client high and dry in their golden years?
They’ve got a point, but there’s something missing from this argument – and it’s something that many new agents miss, too. Term insurance is often looked at as a “commodity” sale since there’s no real policy management after the paperwork is signed. That leads agents to mistakenly thinking that their job is done once the application is approved. Wrong! Term insurance isn’t just a commodity – for you as an agent, it’s also inventory that you can tap into down the line.
The vast majority of term insurance policies are convertible, meaning they can be “exchanged” for permanent coverage with the same issuing carrier. Most are also “guaranteed convertible,” which means that this exchange doesn’t have to include any medical underwriting. Imagine a client with a 20-year term policy purchased sixteen years ago. Now imagine they have a stroke but don’t pass away. They’d be uninsurable with most carriers for ages, but with a guaranteed convertible term policy they could convert into permanent coverage and be taken care of for life.
Even in the absence of medical concerns, when your clients’ term policies are coming close to expiring they’ll need to do something. Going without coverage is risky. They could either buy another term policy, or convert their existing coverage to permanent coverage. Fortunately, their agent (you!) stayed in touch over the years and the process is a breeze. They get permanent coverage with a company they trust (and likely without the hassle of underwriting), and you get a second commission for their conversion policy. Win-win!
So when you sell a term policy, don’t just pat yourself on the back and call it a job well done. Stay in touch with your term clients and recognize the fact that their policies represent future inventory for you. Make sure to call the policy beneficiaries as well! They need to know they’ve been made the beneficiary of a policy and how to file a claim. They’ll appreciate the thought, and since you’re already doing business with someone they know there’s some built-in trust there as well. And hey, while you’re already talking with them about life insurance …