Do you offer clients a summary of the policy after a sale?
But is it enough?
In today’s times, it’s more important than ever to do all you can in order to avoid a lawsuit.
In the life insurance business, it’s become all too apparent that with the complexity and flexibility of our products (i.e. universal life, indexed universal life and variable life), you should avoid client misunderstandings at all costs.
Many life insurance producers already take the simple step of presenting a summary of the sale, in writing, to the policy owner so that there are no misunderstandings. Sometimes, even that is limited by product type and regulations.
Unfortunately, this kind of summary usually only covers what was included in the sale but not what was NOT included in the sale.
This can have a disastrous outcome for you as the sales representative.
Here’s what happens
Let’s look at a situation that I learned about over 15 years ago.
A prominent career life insurance producer sold his client a life insurance policy.
During the sales process, the producer offered the client most, if not all, of the features in the policy.
This included things like waiver of premium, accidental death and a children’s rider.
Each time the producer talked about the benefits of the additional features, the client showed little interest and ultimately decided not to include any of them in his policy in order to keep the cost down.
After the policy was put in force, the insured subsequently became disabled and had trouble paying the insurance premiums.
Someone told the insured that many policies contain a feature where the premiums are waived upon disability.
The insured contacted the producer and inquired as to how they could execute this feature.
Obviously, since the insured elected not to take the waiver of premium benefit at the time of sale, there was no waiver of premium available to them.
As is often the case, the insured had selective memory and suggested that the feature was never presented at the time of the sale.
Unfortunately, the producer had no record that, indeed, he had presented it as an option and the client elected not to purchase it.
The producer’s defense was that the application spoke for itself and, when signed by the insured, it only included those features that the insured was interested in.
The client, on the other hand, used the age-old defense of, “I depended on the producer to properly fill out the application and trusted that he did so when I signed it.”
Frankly, the outcome of the case is not what’s most important for the purpose of this blog.
The fact is, it was the producer’s word against the insured’s that additional features, other than the death benefit, were ever discussed at point-of-sale.
Avoid life insurance producer lawsuits
The good news is that the solution to this problem is an easy one and the producer immediately employed it.
You can defend yourself after the sale.
Present your client with a form at the close of sale, listing each and every optional feature that the policy offered.
Next to each feature, there are two boxes.
One indicates that the client wants to include the feature within their policy and the other indicates she does not.
At the bottom of the form, the verbiage should indicate that each of the above-mentioned features has been presented to and discussed with the client during the sales process.
There is also a signature line where the client would attest to the information on the form.
This is an easy solution every insurance producer can use to avoid misunderstandings and potentially false accusation regarding cost-saving decisions by the client at the time of sale.
Is it perfect? No, but it’s a step in the right direction.
Take steps to protect yourself
A simple form like this can save you time, money and a whole lot of unnecessary hassle.
Even if you’ve never faced this situation in the past, consider utilizing something similar to protect against unwarranted accusations.