Why a life insurance policy appraisal should be part of your toolkit

At the midpoint of the year, it's always helpful for agents and advisors to perform a broad assessment of their annual goals and modify their sales and marketing strategies accordingly. Based on conversations with producers, agents, advisors and clients, here are three mid-year resolutions for better client relationships in our current bear market.

Cut costs and gain income

Changes in financial markets are driving the need for some midyear course corrections. Although we may have started the year with optimism, the economy has taken some major turns. Inflation and rising costs are hitting our older clients hard.

We are receiving many calls from agents whose senior clients are telling them they are worried about rising prices. Many seniors are trying to figure out how to continue to maintain their lifestyle as they age during retirement. They desperately want to feel more financially secure.

Seniors are looking at their life insurance policies and wondering whether they still need the coverage. Their children are grown or perhaps the reason they bought the coverage has changed. Some clients have lost their spouses, have been divorced or decided they no longer need the coverage. As living costs go up and portfolios shrink, older clients start to feel the pinch. And because seniors have been through recessions before, they likely know it might be a few years before things turn around – so they start to question why they have their current coverage.

In situations like this, it’s a missed opportunity, and potentially a disservice to the client, to fail to inform them about their options. The secondary market for life insurance policies is strong right now, and no clients should let their policy lapse without first securing a policy appraisal. It can be “found money” and an opportunity for agents to earn some extra cash. Freeing up funds from an underperforming policy can create a windfall of new investment opportunities – putting money in motion.

Work smarter, not harder

We strive for maximum productivity from our relationships and from our plans with clients. One way to accomplish this is to be on the lookout for ways to sell multiple products to clients and therefore earn more fees by working smarter and not harder.

My advice to agents and advisors is to add a life insurance policy appraisal into their overall toolkit. A policy appraisal is a simple way to work smarter. It’s easy to get started. All that you need are some basic client information and an in-force illustration that can be analyzed quickly to determine the value of an existing policy and whether the case will qualify on the secondary market – without getting your clients involved with the traditional “life settlement storm” of paperwork.

A policy appraisal can help clients identify a new income stream to assist with retirement planning. And it is important to note that even if the client is not ready to sell their policy, the agent or advisor has brought them an option that they can revisit in the future.

A policy appraisal offers an easy way to keep conversations advancing with clients, and a way to earn additional fees by working smarter. Clients often don't realize that their life insurance is an asset. They view that life insurance policy as a liability and they don't think that they can get any additional value from it. They assume that the only option is to let a policy lapse and that they will walk away with nothing. The secondary market is incredibly active right now, and many opportunities exist to work smarter, not harder.

Systematic approach

Another popular conversation I have with agents and advisors revolves around the goal of creating a reason and a way to reach out to clients systematically and regularly. My suggestion is to use a policy appraisal as a “door opener.”

Agents and advisors can approach clients with a financial option that many clients are unaware of. It gives them a reason to call a client who they may have not heard from in a while or who is tough to pin down. A policy appraisal brings forth an opportunity for a client that might trigger a phone conference, Zoom call or face-to-face meeting. Agents can bring something to the table and do it in a systematic way that can be repeated for senior clients across their book of business.

For clients who do not know about the secondary market for life insurance, the policy appraisal offers an opportunity to educate them and bring forward a previously unknown option. Just as a client would want an appraisal on an asset such as a house, car or expensive piece of jewelry, a policy appraisal sets the value so that the expectations are properly set for a potential sale.

As the year moves on, it will be critical for agents and advisors to remain nimble and react quickly to the financial challenges that clients are facing. Agents and advisors can truly help clients in need by adding policy appraisals to their sales process.

William Scott Page is CEO of policyappraisal.com and LifeGuide Partners. He may be contacted at [email protected].

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