You want to help people.
Your goal is to guide people to understand their need for life insurance and assist them in getting what they need.
When the result is that you end up with more business and ramping up revenue – it’s icing on the cake.
But sometimes roadblocks come.
I usually try to cover positive topics in my blogs.
But today’s blog isn’t positive.
It’s definitely something that everyone selling life insurance should know about.
The 60 Minutes segment
On April 17th, 2016, 60 Minutes aired a segment entitled “Not Paid.”
This “expose” put a spotlight on several life insurers that systematically failed to pay beneficiaries unless an actual claim was made.
The piece stated that even if these specific insurance carriers were aware that the insured had died, they did not pay out death benefits unless a claim was submitted.
Unfortunately for our industry, the incidents cited by 60 Minutes are not isolated ones.
Over 60 carriers (many of which are common household names) were investigated and found to be guilty of this practice.
According to Jeff Atwater, the former chief financial officer of Florida (2011-2017) in charge of regulating the state’s insurance industry, there are millions of policies whose death benefits have not been paid out.
In Florida alone, there are hundreds of thousands of policies.
Atwater goes on to explain that most of these policies are relatively small, but there are some with more than $1 million in death benefit.
According to Atwater, by not paying out these benefits, insurance companies are making billions of dollars – rather than returning the money to the policy beneficiaries.
You want your clients to place their trust in you and stories like these can do a lot of damage to the relationship-building process you’re working on.
The good news
If there is any good news here, it would be that in a little-known series of settlements, 25 of the nation’s biggest life insurance companies have agreed to pay more than 7.5 billion in back death benefits.
Unfortunately, on the other side of the coin, about 35 insurance companies have not settled and remain under investigation for not paying when the beneficiary is unaware that there was a policy.
Life insurance realities
Of course, there are two sides to every story.
The segment mentions that insurance industry lobbyists argue that the burden should fall on the beneficiaries. They should know what’s in the policy holder’s contract and be obligated to file a claim.
These lobbyists may have oversimplified the issue.
- First, the contract entered into is between the owner of the insurance policy (who is oftentimes not the beneficiary) and the insurance company.
- Second, sometimes the beneficiary doesn’t even know they’re the beneficiary of a life insurance policy.
The argument put up by these lobbyists is weak at best.
Why should you care?
Viewers of the 60 Minutes segment who are about to buy life insurance may question whether or not they will actually get their death benefit in light of the investigation’s findings.
To circumvent this possible objection to buying the life insurance, producers should make sure that the policy owner, and the beneficiary, understand exactly how to notify and get a claim filed with the insurance carrier.
Be crystal clear when you talk to clients about their two options:
- They can leave behind written instructions after the sale.
- They can have the seller of the policy notify the beneficiary.
Ultimately, the unwritten understanding that it’s up to the beneficiary to find out about the policy no longer holds water.
Integrity – and know-how – in life insurance sales
Winning your clients’ trust is a key component to getting their business – and keeping it for a long time to come.
Selling life insurance requires addressing challenging issues, like the one the 60 Minutes segment brought up.
People need a qualified, trustworthy insurance producer to provide them with the best advice for their unique needs.
In what ways has your business been affected by a lack of trust in the life insurance industry in general?