Simple but critical concepts, like the cost of delaying a term conversion, must be done annually with a needs review.
A policyholder with a $75,000 term policy called in to change his address. Let’s call him Jack. During the conversation, the agent learnt that Jack had had bought a second home and so now moved between Wisconsin and Utah, spending much of his time golfing. The agent congratulated Jack on his successful retirement and spent much time discussing their shared interest in golf. Their relationship was as rock solid as any between agent and policyholder.
The agent, Sam, eventually got to business and instinctively probed for the rationale between Jack’s apparent net worth and his having only $75,000 of coverage. He asked whether Jack had any insurance elsewhere. Jack said he did not. Sam then asked why Jack bought the policy he did. Jack said it was because “I had a 10 year before, and it ran out, so I had to get another 10 year”. He was 76 when he bought his last “10 year” and it had been 3 years.
Had Sam had a needs review pulled up, there could have been some pointed questions added around why he got that amount of coverage, how long it would last for his wife should something happen to him, whether his wife would have to sell one or both houses to keep up with the bills, and whether he felt he should adjust it for inflation since it was also $75,000 two terms ago (13 years ago). That ‘decision tree’ is critical to getting Jack thinking about his coverage, but the unique thing about technology is it’s ability to provide the tree and questions in the context of the policy it is looking at.
Sam proceeded to take the opportunity to remind Jack about his options. He told him about a valuable rider that they had put in place which would cover his premiums should he obtain a terminal illness. And he told him about his ability to convert his policy at anytime before he turned 81 and, rather than having the policy cancel at age 81, have it last forever. That option was appealing to Jack immediately. “And how much would that cost?” was a great buying signal.
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