Was too excited to sleep last night, so I watched YouTube videos on how new insurance agents can get started quickly. Passing the license exam is just a small step. Frankly, you can do well by having a good memory and pay attention to tiny details. Even people bad with math can do well, as there is little or no calculation involved in the exam. I was never strong with “mechanical memories,” only “organic memories”. Like this question from yesterday: “How many weeks a female worker can have unpaid leave in a year for giving birth (with the options of 2, 4, 8, 12).” I gave up on that as I did not have memory of any of the answers.
The Good & The Bad About Insurance
Being completely new to the field, I have so much to learn! Just last night alone I heard (and watched) good things and bad things about insurance. Starting from the good ones. The financial return is amazing. The YouTube videos are full of exciting stories like people starting just one or two weeks and issued policies worth $20k in a month or a lady with zero sales experience going from full-time mom to full time agent (aka a “producer” for a strange name) with $400k a month. Frankly, when you heard the numbers for the first time you are like “WOW!” But when you hear more, the numbers are, well, just numbers and no longer exciting in and of themselves. Money alone cannot excite me, stories behind money do.
Speaking of stories, we are all passengers of the universe. We live our lives to tell ourselves and others our best stories possible. This 14 year old black girl who broke the Spelling Bee’s history in 100 years, Zaila Avant-garde, had an exciting story to tell at such a young age, who is also a skilled basketball player and holds three Guinness World Records including one for the most number of bounce juggles in one minute.
So, what are the stories in the insurance industry? The good news is that you can and will help people make the right financial decisions. I wish the videos showed more real life stories how an agent has made a difference in someone’s life, someone who appreciates the agent enough to call and thank for convincing him/her to stay with the policy five years ago, otherwise he/she would have a hard time to find the money to cover the final expenses for his/her deceased father.
There are bad stories that I was totally unaware of before but learned last night. The first thing is a stinky reputation. This article says it well: “you’ll be hard-pressed to find an insurance company with a positive reputation. From an economic standpoint, insurance companies pump a lot of money into society through taxes and jobs, but the cold and calculating dynamic of risk assessment has made many people angry. There is no doubt that insurance companies have made the lives of tens of millions of people better and smoother. Unfortunately, it didn’t take long for distrust and suspicion to become rooted in the psyche of both parties.” The author then mentioned many misbehaviors like scandals, mis-selling, lack of transparency, and PR disasters.
Agents Shoulder Some Responsibilities
The truth is the insurance agents have at least partly themselves to blame. Today I watched a (kind like a demo) video showing an apparently star agent with Family First Life talking to the potential client at the kitchen table. Eight minutes into the conversation the agent asked a seemingly deep and realistic question related to life insurance policies: “What happened if you had a stroke or heart attack and you dialed your life insurance agent asking for money?” The agent’s own answer was this: Your agent representing any type of life insurance would ask you back why you are calling, since you are not dead yet. The agent was making a flashy point against life insurance and pushing for mortgage protection policy, but his presentation was false and misleading, and I wish he did not say that because he may get himself into trouble.
The truth is that permanent (i.e., whole) life insurance do offer living benefits for emergencies like the agent was talking about. The reason is simple: Whole life policyowners’ premium payments will earn cash value, which can be used as policy loan for medical and other emergencies or whatever purpose. In fact, loans against life insurance policy do not need anyone’s approval, have a very low interest rate, and no tax will be paid to IRS. Furthermore, you can decide when to pay it back, even not paying back if you so desire. These are all because the money is yours — unlike the money in a bank loan that belongs to the bank. You are borrowing your own money strictly speaking. Of course, in the event of death, the unpaid loans and interests would be deducted from your death benefit. Another error the agent’s presentation was that he never bothered to point out that mortgage protection policy is itself a type of term life insurance. It made little sense to pit life insurance, which include both whole and term life policies, against mortgage protection insurance.
Risk Avoidance Vs. Risk Reduction
The fact that this agent made such a low mistake in presentation and the CEO of the insurance agency firm did not pick it up but rather used him as a model agent is depressing. But what we do? One option is to quit entering insurance business altogether, which would be an approach called “risk avoidance.” It’s like driving is risky so you never drive. It works but comes at a high, perhaps unbearable, cost for most people. A more realistic option is risk reduction or risk transfer. You still enter the industry but protect yourself with professional liability insurance. Better yet, you follow the laws and rules, especially the ethic rules, and do not mislead the client just because you want to sell a particular type of policy. Our job is to find what the clients need and want, and how much they can afford and go from there. It’s called “sell to the need.”
Tricks & Tips of Insurance Marketing
I watched this YouTube video on the phone scripts and in-home tips for making sales of insurance policies. This single mom interviewed by the Family First Life (FFL), who was able to book 17 appointments on a single day and was paid over $20,000 for two weeks, told us that the keys to be successful were (1) to switch from a mentality of “We need them” to “They need us”, so much so that they must fit into our schedule rather than the other way around; (2) there is no need to talk too much on the phone to the “leads,” just go straight to book a meeting rather than pretend to be their best friend. You can talk them out of willing to meeting, so talking less gives you more; (3) we should never sound desperate on booking the appointment but rather to stay in control over the phone and in their home; (4) in the end of home visit, do not say “Thank You!” to them and (5) do not tell them right away whether the policy has been approved because we need to have a sense of suspension and have them feel they earned the policy; (6) once the application is completed we can then put up a friendly face to have a brief conversation and leave them with smile and positive feelings. That is, make a friend in the end, after making them a client first. This includes taking a picture of them so that in the future when they call, we can quickly identify the face.
She ended her interview with some good advice: Do not be afraid of mistakes, make mistakes but stay coachable, meaning to learn from mistakes.
Commenting On The Tips
I have learned a lot from the above conversation, but also want to make some comments. The first is that the current system has over-emphasized the tangible, material achievements like the number of sales and the number of appointments. Nobody mentioned that we are supposed to sell to the need, the number one principle of the ethics for the agent. Some agents were saying that every time they walked away from the potential client without signing the application, they felt they did something wrong. But that is not necessarily true. People may only have a vague sense of need and after talking to the agent the truth came out that they cannot afford the policy. In those cases, we should not force them to enter the transaction, because that is against the ethics. Of course, this does not mean we should not try out best to help them find a policy that fits their needs. My sense is that the insurance firms have come out with an impressive array of policies that almost anyone could afford to some policies although not others. For example, some term life insurance policy only demands $11 premium per month, and in return you get $100,000 upon death during the term. Still, in some rare scenarios not making the sale is better than having the sale. We can leave the words and let them know that anytime when the situation changes be sure to call because we want to help.
Equally important, we should keep in mind that agents and clients need each other, even though it may help to think that they need us more — if that makes you more confident in home or over the phone. The truth remains that the needs are mutual, which help us to treat the client with respect, and deal with them on a level playing field.
I completely understand why we should not appear desperate or too eager. The truth is they know agents want to make a sale and to make money out of it. Being too nice to them only makes them nervous or suspicious, thinking that the agent had something to hide, something that may put them in a disadvantage position or to lose from the transaction. The agent should do everything to let their guard down as soon as the conversation begins. Not talking too much over the phone, not sounding too friendly work toward that direction.
On the other hand, this does not mean we cannot play nicely. after all we want to be friendly not obnoxious, we want to create a good, not bad, impression throughout the process.
It’s All Psychology, Stupid
Phone calls and home visits are all important parts of business transactions. This is obvious. What is not so obvious is that selling and marketing are all about psychology. Given that, agents can do a better job by knowing and leveraging psychological tricks without coming off as somebody rude and arrogant. I want to discuss a few psychological tricks that should prove useful in the field.
One of the tricks is what I call “pre-warning.” Before you say something that is kind of out of line, wrap it up in a warning to the audience. A few quick examples are that you can say “I know this is asking too much, but…” Or “I know this may make you uncomfortable, but …” Or “I know this is ridiculous, but …” The funny thing is that as soon as you finished your prewarning, people will not feel you were asking too much, or not making them uncomfortable, or saying nothing ridiculous. Simply put, pre-warning has a magic power, because it says to the client that you are considerate, that you have them in mind, which will draw you closer to them.
The other psychological trick is to address their potential concerns explicitly and early on. We all know that up until one day ago (or ten minutes ago, depending on the situations), you and your client were total strangers. It makes sense to address that concern or discomfort head on, by spelling it out loudly. I will show how to do it later.
We should also make ourselves as unique as possible because uniqueness sells. At the end of the day all clients want to make transactions with the right human being, with the person they like. The more you make yourself standing out from the crowd, the more likely they will be doing business with you, if not immediately, will in the future, and if not themselves, they may refer or recommend you to someone they know.
I believe two things make a person interesting and unique: your curiosity and your (stated or revealed) strong preferences (for girls, the reality is that look, height and hair color still matter a lot). Curiosity will give the right amount of attention to the client, making them feel being noticed without sounding pretentious. For example, instead of silently walking to the kitchen table to start the formal conversation, you may comment on the interior look of the house or the apartment and compare it to your own place. The key is to make your comments believable and sincere, with no strings attached — by pointing out facts that everyone can see. Instead of saying “I like your house!” you may say “I like the color of your carpet.” Little chat like this can suddenly draw you closer to them and enhance your likability in their minds.
Finally, do not be afraid of making explicit comparison with others, or with the general industry. This will increase your uniqueness. This may turn the bad reputation of insurance industry into your personal advantage — as long as you don’t mention any particular names of your peers. In a sense, you are attacking a strawman to get your point across.
A Hypothetical Scenario
I now show the above points in a hypothetic scenario when you are visiting someone’s home for filling out an application (or a zoom meeting, my favorite mode of operation that is getting more popular in the post-pandemic world). After sitting down at the kitchen table, you want to say something like the following: “Lily & James, I want to start out by saying that I am here for one reason, and that is to help you make one of the most important financial decisions of your life. Technically speaking, I am an agent of the insurance carrier, but I do want to let you know that I care about your interests, your needs and wants, and your preferences. I know this may sound strange to you because we were complete strangers just one day ago, but the way I look at it, we can enter a long-term relationship from today on — if your application is proven by the carrier. I also know some insurance agents act like used car salesmen, and all they care is how much money they can get out of the transaction. But I am different, I feel good only when my client feels good. As a Chinese, I care about families, about all generations — just like you guys. Ultimately, this is the reason I enter the insurance business. Now, we will go through a process that may sound uncomfortable to you at some point. Bear in mind that it is just my job to ask background questions that you may not have shared with anyone for a long time. Here is my state issued license for you to take a photo with if you like, and my business card for you to keep because it is highly likely that we will see each other for a long time in the future if your application is proved by the carriers. Now, to be able to help you, you must help me first — by telling me the financial and health information to the best of your knowledge. Now, any questions so far?”