As with nearly everything insurance-wise, there is a short answer and a long one. The short answer is this: any life insurance quote for someone who is not properly qualified – both financially and medically is simply a guess.
Now for the long answer
You’ve heard the saying “it takes a village”, well in the case of life insurance, it takes an insurance agent. However this invokes yet another issue because most insurance agents are trained to sell insurance. If this seems like a DUH moment, bear with me. First, allow me to clarify a bit. I am not at all suggesting insurance agents are not interested nor trained to qualify a prospective insured (aka prospect). Of course, they are. They have to be. That said, insurance agents typically follow a pattern. Engage, qualify, qualify, present, close. Let’s take a quick look at each step.
Engage – you could call this “meet, greet and break the ice”. Different agents will approach this in different ways but the goal is for each party to get more comfortable with one another. This step is common to many sales situations, not just life insurance sales.
Qualify – an agent determines where a prospect is financially. Most of the time this is to determine how much the prospect should ideally be carrying as well as the prospect’s goals and other needs.
Qualify – in addition to financial qualification, an agent needs to determine what medical issues may be involved. A prospect’s health is an important factor as to what policy they may be able to get or even IF they can obtain life insurance at all through the desired carrier.
Present – this is where an agent decides on the best product, an illustration and premium to meet those needs s/he’s uncovered.
Close – should the prospect fail to “snap up the policy” (something that only occurs 99/100 times), the agent must then convince the prospect this is the best option available and the best time to decide is right now.
My first objection with the above process is the agent focuses only on the prospect. Why object? Because I maintain one’s entire family should be insured from the start. Any agent who does not pursue a solution to include every family member is not serving the prospect to my satisfaction. My reasoning is because nobody can tell just who in any one family might become difficult to insure, if not uninsurable, or die unexpectedly. Let’s face it, most deaths are unexpected. Those who reasonably expect to die are already uninsurable.
My second objection is it appears this prospect hasn’t done the necessary homework. Granted, the process would likely be the same either way, but it is a rare prospect indeed that really only needs a dollar figure. In such a case, I’d expect the above pattern to be disrupted.
My third and final objection is, there is no budget discussion in the above process. Now I have seen presentations that focus on a prospect’s budget. I’ve used them myself. That said, most agents do not use this approach and it is generally ignored. Even with those presentations modified to include a budget discussion, said conversation is typically limited only to the prospect. See objection number one.
So When Is a Quote NOT Useless?
For a quote to be useful, it must be based on accurate information concerning the prospective insured. For the most part this information relates to the insurability of the prospective insured. Most of this information is medical. In short, if an insurance company is going to issue a policy, they want have reason to believe the insured is going to be around for a while. The longer the insured lives the better it is for the insurance company.
The other primary factor for a useful quote is it needs to be for the most suitable product and for a benefit amount that is acceptable to the prospect. As far as I’m concerned, a prospect should have some idea concerning these two factors before ever coming in contact with an agent. Why? This approach simplifies the buying process. For most people, the best policy is straightforward, with few “bells and whistles”. The death benefit is fixed, premium is paid, cash value grows. Too many moving parts will make a good policy overly complicated and cumbersome, not to mention far more expensive. What about the benefit amount?
If a prospect decides on a budget amount first, the benefit amount is more or less automatic. Keep in mind I always advocate setting a budget amount to cover the entire family. There are two reasons for this. The first is obvious. No member of any family is immune to illness and/or death so every member needs to be covered. Second, if the coverage is to remain in place, it needs to be affordable. It is always far better to have a little bit of insurance the family can afford than to have a lot that breaks the family budget.
Quotes are mostly useless because prospects seeking a quote are beginning the process of buying insurance from exactly the wrong end. The first consideration should be about the budget. And that budget amount should be for the whole family. The next decision should be about the desired carriers and then the desired policy each carrier offers. Again, these decisions should be easy because each choice narrows down the options to a very few. From there the process is simplified. As the question of how much is available to spend is settled and the policies meeting the parameter set by the prospective insured(s) are identified, the prospect is now ready to meet with the appropriate agents and obtain a quote. I suggest securing the children’s policies first. If money is tight then opt for a minimum for them. The balance can be split between the wage earners.
This method of asking for a quote works because it focuses on obtaining protection for the entire family while staying within budget constraints. This balance isn’t always easy to find but it should always be a goal. The alternative is trying to guess who needs to be covered. Missing the mark here protects no one. One the other hand, should everyone in the family lives long, healthy lives – it’s a win-win.
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