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How To Classify Your Life Insurance Prospect BEFORE The Sale

Editor’s note: This post was originally published on 5/31/16 and has been updated for accuracy and comprehension.

As a life insurance producer, you know how fierce the competition is. 

You do everything you can to try and figure out how to increase sales in a highly-competitive environment.

At the end of the day, prospecting is, hands down, the most difficult part of your job. 

In fact, a majority of insurance producers named prospecting as their biggest challenge, even more than:

  • Lack of education about the need for life insurance.
  • A negative outlook on insurance in general.
  • The belief that life insurance is too expensive.

Classify your life insurance prospect before the sale

Bottom line: There are a lot of people out there that need life insurance and you’re pretty good at getting in front of them.

But what’s the best way to ensure you ultimately place the case?

A lot of it has to do with classifying your life insurance prospect well before the application is ever submitted.

Let's talk about what NOT to do first, and then we'll dive into some strategies that work.

What NOT To Do

Here's the approach many agents take after the prospect indicates an interest in possibly buying life insurance:

The agent wants to provide the prospect with an illustration for the amount of coverage in which they’re interested, so he asks the client a few general questions about her health, medications, age, and factors like tobacco use. The prospect’s responses seem good.

The agent, and the client, are hopeful that she'll get classified at the best rate, or the lowest premium. The agent can't wait to turn in the application.

Four weeks later the case is approved at a Standard rate class. The premium is 25% higher than what the agent quoted.

Cases like this end up having to be resold, and it's not easy.

Of course, factors like smoking, cancer, and diabetes can negatively affect the rate class. People in the worst of health will pay higher premiums or be declined.

The moral of the story

If you don’t ask the right questions prior to providing a life insurance quote, you’ll be unpleasantly surprised down the line – and so will your prospect.

In fact, providing your prospect with an initial quote (assuming the best rate class) only to find out he won't qualify for that class only leads to disappointment and dissatisfaction with your services, not to mention you won't get paid for your efforts.

If this same prospect survived cancer five years ago, that factor will affect her rate classification. If the prospect has high cholesterol, and doesn’t know it yet, that will surely affect her classification.

But if her doctor said she was in "good health," and you didn't ask the right questions, none of it will come out until you're in damage control. And that's not fun nor does it pay the bills.

What you SHOULD do

You’ve got to dig deep when interviewing prospects about their health.

We call it good “field underwriting.”

If you ask the right questions beforehand, you’ll prepare the prospect for a more realistic quote – and be less likely to have to resell the case later when the approved premium doesn't match the original quote you provided.

Your biggest challenge when classifying your life insurance prospect involves hitting landmines. But if you can see these landmines in advance of the sale, you can better manage expectations.

You’ll avoid an unhappy, disappointed prospect who is reticent to purchase the policy. He’ll simply move onto the next agent, who will likely get the sale because the prospect will get a similar quote. But in this case, his expectations will be in line with the dollar amount.

So that’s what it’s all about: Getting the best history you can from the prospect so you can deliver a reasonable quote.

You may not be able to anticipate everything, but you can get as close as possible.

Field underwriting 101

Here’s what you need to do:

1. Get the help of your trusted life insurance General Agency.

Talk to a sales associate at a life insurance General Agency and discuss the merits of the case.

The agency should give you a comprehensive checklist of questions to ask the prospect. Then, talk to the prospect and go through questions such as the medications he’s on, his complete medical history, height, weight, build, family history and so on.

2. Put tools to work for you.

Use a handy website tool, like XRAE.

Insurance producers can use the software to input client information and get a pretty accurate picture of where he stands in terms of rate classification.

3. Run a quote with all the information.

Once you've gathered the prospect’s health history and other factors to better manage his  expectations and gauge his tolerance for the anticipated premium, then run a quote.

Set realistic expectations

Anticipate problems by asking questions about the prospect’s background and medical history.

Do your due diligence in terms of field underwriting to obtain the most accurate quote you can. If you ask the right questions in the field, you’ll avoid speed bumps and determine if the client is insurable or not, and at what level.

Don’t make the mistake of thinking that you just need to illustrate the best rate class possible in order to entice the prospect and eliminate any concerns about your competition. A generalized and over-enthusiastic approach only leads to disappointment.

When you assume that you can run the best class to hook your prospect, the prospect may ultimately be dissatisfied with your services and you’ll lose him to the next life insurance producer who uses a more reliable field underwriting approach.

Remember, slow and steady generally wins the race!

Writing a Large Life Insurance Policy

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