Starting with life insurance

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Dec 26, 2006 6:53 pm

What do you guys think about using life insurance as a cold call product just to get people in and build trust.  I would guess that most prospects are probably sh*tty but eventually you would come across good ones.  You could buy leads for cheep for a somewhat warm call.  The commission is pretty good, but you might get stuck being labeled as a life insurance salesman instead of a financial advisor? 

Dec 26, 2006 7:07 pm
futureadvisor:

What
do you guys think about using life insurance as a cold call product
just to get people in and build trust.  I would guess that most
prospects are probably sh*tty but eventually you would come across good
ones.  You could buy leads for cheep for a somewhat warm
call.  The commission is pretty good, but you might get stuck
being labeled as a life insurance salesman instead of a financial
advisor? 





No one buys life insurance over the phone.

Dec 27, 2006 5:17 pm

Right but with life insurance (in their mind) they are not risking their life savings with you because its with a big insurance company.  I suppose you could call for an insurance review, but what I am getting at is that it seems like it would be about as hard as selling sombody a CD and the comission is better? 


And then you work on geting them to give you the rest of their money.

Dec 27, 2006 6:24 pm

Life insurance sales are much hard than selling a CD or an investment.  When someone buys an investment or a CD, all that they have done is taken money from their left pocket and put it in their right pocket.  When someone buys insurance, they are taking their money from their left pocket and giving it to the insurance company.


If you do get "stuck" with the label of life insurance salesman, you will probably make more money than all of your friends with the "financial advisor" label.


If you are going to cold call product specific, I think that life insurance is the wrong way to do it.   Have you considered cold calling to set appointments instead of selling a specific product?  You should have lots of products in your arsenal.  This way, you can be the financial advisor that you want to be.


If you are going to sell insurance, make sure to work for a B/D that does not make you put fixed business through them because you will get absolutely hosed on the commissions.

Dec 27, 2006 6:30 pm

LIFO insurance is tedious and difficult to sell as a lead product.  Half the time the prospect will lie to you about their health and the deal will fall through. They get angry and embarrassed at getting caught out and you will have wasted a lot of your time.


Offering to review existing insurance policies is a good idea.  The original agent has probably moved on to greener pastures.  Even if you don't sell a new policy, you will have moved into an advisory roll.


Selling life insurance to existing clients is great. Estate planning, equalizing inheritances and business succession planning all use life insurance.  Throw in some LTC and disability insurance and health insurance and you are now a valuable asset and advisor to your clients.


I second the motion to put the fixed business in an outside business activity format. Your broker dealer will be no help in doing insurance and will take an override.

Dec 27, 2006 6:31 pm

Life not LIFO   last in first out.   Hmmm Freudian slip???

Dec 27, 2006 6:46 pm
babbling looney:

LIFO insurance is tedious and difficult to sell as a lead product.  Half the time the prospect will lie to you about their health and the deal will fall through. They get angry and embarrassed at getting caught out and you will have wasted a lot of your time.


Offering to review existing insurance policies is a good idea.  The original agent has probably moved on to greener pastures.  Even if you don't sell a new policy, you will have moved into an advisory roll.


Selling life insurance to existing clients is great. Estate planning, equalizing inheritances and business succession planning all use life insurance.  Throw in some LTC and disability insurance and health insurance and you are now a valuable asset and advisor to your clients.


I second the motion to put the fixed business in an outside business activity format. Your broker dealer will be no help in doing insurance and will take an override.



Advisory roll?  Are those made with semolina?

Dec 27, 2006 7:08 pm

LOL .....and stuffed with sweetened cream cheese.  Yum.


Dec 28, 2006 4:40 pm

what would be the pay out at a wire on an average term life policy? 

Dec 28, 2006 5:03 pm
futureadvisor:

What do you guys think about using life insurance as a cold call product just to get people in and build trust.  I would guess that most prospects are probably sh*tty but eventually you would come across good ones.  You could buy leads for cheep for a somewhat warm call.  The commission is pretty good, but you might get stuck being labeled as a life insurance salesman instead of a financial advisor? 



Write the script for that call and post it here.


We'll give an honest evaluation.


My personal feel is that it has to many moving parts to make a good lead product. yet, life insurance guys do it all the time and make a good income doing it.


I lead with tax free bonds or fixed income in general. We keep the calls short and to the point looking to set up a second more expansive call by offering to send info. This is known as call/mail/call. If done consistantly it will keep you busy and make you some money.


Let's see your pitch.

Dec 28, 2006 5:05 pm
futureadvisor:

what would be the pay out at a wire on an average term life policy? 



Somewhere shy of the cost of any single serving baked good in a Starbucks.  

Dec 28, 2006 6:12 pm
mikebutler222:
futureadvisor:

what would be the pay out at a wire on an average term life policy? 



Somewhere shy of the cost of any single serving baked good in a Starbucks.  




good one mike!

Dec 28, 2006 6:37 pm

I really have no idea what the pitch would be, I don't really know the produts, but am just thinking out loud.  Is the pay for life insurance really that bad?

Dec 28, 2006 6:39 pm
futureadvisor:

I really have no idea what the pitch would be, I don't really know the produts, but am just thinking out loud.  Is the pay for life insurance really that bad?


It's a complicated product and the payout is low. There are plenty of other alternatives. Best of luck.

Dec 28, 2006 7:36 pm

Insurance commission example.



XYZ insurance company pays a first year commission of 50%.   The company pays a 30% override. 


The premium for Mr. Smith's life insurance is $1500/year.


If the business does not have to go through a B/D grid, the rep would get $750 + .3 x $750 for a total of $975.


If someone works at a wirehouse and is forced to put it through the grid and they are at a 35% payout level, they would make $750 x .35 =$262.50.


Unfortunately, wirehouse reps often must ignore this (insurance) important part of the financial advising equation due to the lack of compensation.

Dec 28, 2006 8:03 pm
mikebutler222:
futureadvisor:

I really have no idea what the pitch would be, I don't really know the produts, but am just thinking out loud.  Is the pay for life insurance really that bad?


It's a complicated product and the payout is low. There are plenty of other alternatives. Best of luck.



The payout is low for you.....

Dec 28, 2006 9:17 pm

the most important part in financial planning is the insurance and I bet many of you don't even include it!

Dec 29, 2006 7:30 am
futureadvisor:

What do you guys think about using life insurance as a cold call product just to get people in and build trust.  I would guess that most prospects are probably sh*tty but eventually you would come across good ones.  You could buy leads for cheep for a somewhat warm call.  The commission is pretty good, but you might get stuck being labeled as a life insurance salesman instead of a financial advisor? 




It could be a great move if you position it properly.


Right now in the life insurance world there is a revolution touting SPWL (single premium whole life) as a viable alternative to CDs and annuities for retirees.


Simply put, if you can articulate and demonstrate how the cash accumulation in a single premium whole life product produces a higher spendable yield than CDs or annuities, with lower tax consequences than CDs or annuities, AND with greater liquidity than CDs and annuities then you could come out big in moving "dead assets".


A reasonable method of showing this concept would involve showing a SPWL at 4%, non-qualified annuity dollars at 4.5%, and CDs at 5%.  We all know that in a 28% combined state and federal tax bracket that the CDs would yield less than 3.75% to the consumer.  Additionally, the annuities do have tax deferred advantages but don't you still have to pay taxes on the growth?  This effectively reduces the yield to less than 4% too.  How about liquidity?  Both CDs and annuities have nasty surrender penalties.  However, if they earn 4% in a life insurance contract can't they make "tax free" loans and/or withdrawals at anytime?  So at a lower interest rate they have a 4% effective yield.  Hey...it ain't what you make...it's what you keep.  Additionally...as an added benefit the client would have a tax free death benefit that is higher than their initial premium too.  Not a bad deal if they don't plan on spending these assets but would like to have access to them and lower their taxes.


Oops...wrong forum.  I am supposed to wax poetic about modern portfolio theory and exchange traded funds and trash anything that is not variable in nature.


Carry on.

Dec 29, 2006 8:01 am

Nice to see you're finally starting to catch up, meno.

Dec 29, 2006 8:21 am

I love life insurance, but SPWL is not a viable alternative for CDs and annuities.


SPWL contracts are MECs and all money that comes out are subject to income tax.  They can be good for the death benefit, but don't make sense for anyone who wants to access cash.