Over the past 12 years talking with high-producing final expense agents, I estimate somewhere between 25% to 50% of their annual closed policies originates from replacing inferior policies with better coverage.
And while replacing coverage is certainly not always a good idea or the right thing to do, there are plenty of opportunities where replacing legitimately helps the client, as well as enhance your overall sales volume.
Below I review six of the most common replacement opportunities and how to uncover them in your final expense presentations:
1. Smoker Listed As A Non-Smoker.
When you review the policy, thumb to the back to find a copy.of the original application. Many times, dishonest agents will answer the smoking question “no,” even when the client told the client yes. If the policy is in contestability, it may be a good opportunity to replace it with coverage that reflects smoking usage.
I had a bad agent once submit an app on a lady and listed her at 5’8” 230 pounds. Once medical records were pulled, her actual weight was 5 ‘2” 270 pounds. Like listing the client’s tobacco usage, height/weight statements are opportunities for bad agents to lie, so make sure you carry your competitor’s underwriting guides around to ensure the client’s height and weight are accurately recorded in the application.
3. Incorrectly Answered Health Questions.
I can’t tell you how many times I’ve seen agents answer “No” to the COPD/supplemental oxygen question that are hooked up to 24/7 oxygen. Make sure you review ALL the existing policy’s health questions word for word, taking special care to ensure that the existing policy has no misrepresentations.
4. Double-Indemnity Scam.
This is a common tactic scumbag agents use to make their coverage sound better than it is. The agent will claim the client has X amount of coverage, when in fact the natural coverage portion is only half of that, as the high number given only pays out on accidental death. You can find out if this is the case in the summary of benefits page near the front of the policy, where the plan will describe in table format how much is paid to the beneficiary according to manner of death.
5. Coverage Misrepresentation.
We see this with junk mail term and guarantee issue companies. Clients think they have full protection when in reality the policy cancels at a future date, or doesn’t cover for two full years. These are the easiest replacements to initiate for most agents. Simply review the summary of benefits and show the client when the policy cancels or that no coverage exists for two years. The sale is almost guaranteed =).
6. Sometimes, The Clients Lie.
Sorry, our clients are not pure as the driven snow. They are human like us and subject to follies and bad decisions. If you uncover that your clients were in on the misrepresentation with the agent, kindly inform them of the consequences of their decision if the policy is still contestable. And, if you have a better option than the client’s defacto two-year waiting period program, offer them absolution via taking out a better, more comprehensive policy with you.