Editor’s note: This post was originally published on 1/19/17 and has been updated for accuracy and comprehension.
What is key person life insurance?
Key person life insurance protects the business owner if the death of a key employee would result in lost revenue by providing them with a benefit.
Life insurance producers like you can turn key person life insurance sales into a benefit for the business owner AND the key person.
Get two sales from one when the business owner offers a benefit to the key person, too.
The key person has to do all the work (sort of).
They have to go through the insurance exam, get stuck by a needle and divulge personal information.
But this solution allows BOTH parties to benefit.
Watch the video to learn how key person life insurance sales can benefit you and your key person.
Keep reading below for the full video transcript.
Key Person Life Insurance Sales
Quid pro quo.
You hear it said all the time and maybe you’ve used it yourself. It basically means something for something.
But, when you look at the traditional key person sale, I don't think you would generally apply because there's not usually something in it for the key person.
Think about the traditional key person life insurance sale. A business owner wants to insure a key employee because if that person were to die, their death would have a financial impact on the business like lost customers and sales, reduced revenue and the expensive cost of hiring or training a replacement.
You probably agree that key person life insurance is only a benefit to the business owner in this scenario, but it's the key person who's doing all the heavy lifting in the process. They're the one that has to go through the insurance exam, get poked with a needle and provide access to their highly-confidential medical background. And for what? When they die, the business owner gets the money.
Here's an idea to double your sale: If this employee really is a key person, then why not suggest to the business owner to offer them a meaningful benefit in the process?
You could suggest a death-benefit-only salary continuation plan, an agreement that states that if the key employee should die while working for the company, an amount of income would be payable to their family for a specified period of time.
The key person is going through the underwriting process anyway, so why not double up on an additional application sale? The business owner still gets to insure his or her key employee, offers them a fairly inexpensive benefit, and the key employee receives something tangible for agreeing to be underwritten.
And again, you get an additional sale in the process. Next time you speak to a business owner, present this to them and make it part of your routine. This way you can really make it a quid pro quo scenario.