Life Insurance is Sold 7 Times

Life Insurance is Sold 7 Times, but You Only Sell it Once

BY CAMERON JACOX 2 COMMENTS

Today, most life insurance agencies run sales organizations, not service organizations. After reading this blog, you’ll see why you must hire a Director of Old Business, not just a Director of New Business.

On average, Americans buy life insurance 7 times over their lifetime, from 6 different agents. Imagine if someone bought a hamburger from a different place every time? We wouldn’t have McDonald’s or other great brands, because they would have no predictable revenue.

Consider that McDonald’s often gives away coupons for a free meal in order to gain a customer. It’s the cost of acquiring that customer’s future business. Call it Customer Lifetime Value. The first commission you make from the sale of life insurance is the cost of acquiring that customer. The real value must come later.

The Life Insurance industry is that way today – with the exception of agencies with AUM, the only entity in the life insurance value chain with predictable revenue is the carrier. But if the agency and advisor really own the relationship, then they can count on each policyholder to buy 7 times over their lifetime. That changes the customer lifetime value by 700%.

So how do we prevent policyholders from buying from 6 different agents? We provide service. Yet today, 69% of policies have not been reviewed in the past 5 years because nearly all agencies are run as sales organizations, not service organizations.

Policy review used to be cumbersome, but now it’s automated with InforcePRO. Yet still, many firms that have instituted policy review think of it as a way to get the next sale from the other agent who isn’t paying attention – in effect, still focusing on sales by hunting for new clients to service. But service isn’t about hunting for new clients. Service means proactively managing policies as well as coverage needs for your existing clients.

Institutionalizing the review and service of existing insurance is hard without technology, but with technology one can know proactively when an address change shows a wealthier zip code, when a conversion option duration is coming to an end, when a policy is underfunded, and so on. These are the touch points with clients that allow you to have a conversation. And a series of conversations is all it takes to be the one who captures all 7 sales, not just the first.

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