Rated Policy – A Problem or An Opportunity?
By
Heidi Chong
AIA Premier Academy
via email Tuesday, April 03, 2012
If it has not already happened , sometime in the future you are going to receive a policy from your home office that is not issued on the same basis as applied for because the applicant did not meet the standard underwriting requirements. When this happened, you may feel that you have a problem and almost afraid to face the client.
Recently a survey was made to secure from the leading producers in one large community their suggestions for delivering the rated policy.
1. Build The Right Attitude
It was found that in almost every case the first suggestion dealt with the problem of attitude of the agent. Apparently, success in the delivery of extra risk policies begins with the attitude of an agent.
The attitude of the agent far outweighs the sales ideas used to place the policy.
There were three specific suggestions for creating and maintaining a positive mental attitude toward delivering a rated policy.
The first suggestion was “Expect a few rated policies”.
- We too often forget that approximately 1 out of every 19 polices issued is on an extra risk basis. The law of averages on extra risk business applies to every agent. The unfortunate part of the problem is that so often the issuance of extra risk policies runs in cycles. Months will pass when you are not presented with this particular problem, then all of a sudden it seems as though every policy you get from the home office is rated. This is just the law of averages catching up.
A second suggestion for improving the agent’s attitude in the handling of an extra risk case is to maintain confidence in your company.
- It is well to keep in mind that companies want to approve every case that they possibility can, but only on a basis that assures the future well-being of the company. Life insurance companies, in general are as eager for new business and additional sales as is in the agent.
A third suggestion to follow is to be thoroughly sold on the applicant’s need for the insurance.
- Remember, the need for protection is all the greater as a result of being placed in a special class. Acceptance of the policy transfers the extra risk from the prospect’s family to your company.
2. Forewarn the Applicant
Prepare the applicant when completing the application. A number of techniques were recommended for affecting this principle.
One suggestion was to enlist the cooperation of your examiner. He or she will often recommend that the applicant should get this additional coverage in force as soon as possible.
However, in most cases, until we have “educated” the examiner , he or she tends to minimize any physical impairment noted in the examination.
Your client will often make the statement that “My family doctor assured me recently that I am in perfect health.”
Explain to your client that he or she pays the doctor to keep him or her well today. Your ompany pays the doctor to look for any negative signs that could develop 5, 10 or 15 years from now. Insurance medicine cannot take the favorable view point of just looking at the situation as it appears today because they are going to be on the risk for many years.
3. Sales Idea for Delivering A Rated Policy
There are a number of specific ideas for use in the interview.
The first suggestion by the majority of the underwriters contacted was to make a special point to resell the need as the first step in placing an extra risk policy.
This is the principle of persuasion that must be followed in the sale and delivery of any policy. Your prospect is willing to part with his or her hard-earned cash in exchange for a life insurance policy only when he or she is made to feel that what the policy agrees to do is more desirable than the cash it costs. Recognising this, the intelligent agent explains life insurance primarily in terms of how effectively the policy provides those benefits that the applicant desires for his or her family
Remember – The need, the problem is the key issue. Don’t be sidetracked. Because of this, most agents do not make the mistake of going into details on the amount of rating and other similar points no directly related to the primary mission of the policy.
For example, one agent was having difficulty in placing an extra risk policy until presenting the key issue to the applicant in the following manner: “I don’t know whether “home” means the same thing to you as it does to me. But if it means the familiar chairs and books, the fireplace, the pictures on the wall, and if this mortgage retirement contact would keep them intact, I certainly would buy the policy now while I would get it, regardless of what the premium might be.”
A few dollars more than the approximate premium quoted in the sales interview meant nothing to the client, who was interested in maintaining a home.
Another suggestion of the agents questioned was to be sure that you establish the fact that your applicant was to be sure that you establish the fact that your applicant has impairment.
They said that it is helpful to impress upon the applicant the idea that this may be a last chance to get insurance, by perhaps pointing out that he or she was fortunate that the application wasn’t declined. Never apologize to an applicant because the company has issued a special risk policy.
Speak only fortunate aspects of the case not the unfortunate. Avoid the expressions, “Rated policy”, “Extra Premium and Substandard”
All of these term have a definite negative connotation. Some agents refer to this type of policy as a special job of underwriting a select group whose mortality is difference from the standard table used by the company/ Other agents use the term” Special class” or tell the prospects that they are “Standard in Class A “or Standard in Class B” These terms do not convey the idea of a penalty of defect upon the applicants’ physical or moral standing
One of the most effective sales ideas for the delivery of extra risk policies is the “Line of uninsurability “idea.
It is certainly not a new idea but it almost never fails to motivate the applicant to put the policy in force immediately. After reselling the need, take a blank sheet of paper and draw a line through the middle of it as shown in the illustration. You then proceed as follows:
“That line I have just drawn represents what life insurance companies call the line of unisurability. This “ X” over here on the left side of the page is an individual starting out in life” ( As you say this, draw dashes crossing the page through the line of uninsurability, as shown in the diagram)
“Generally speaking, everyone is insurable at birth. However, at some time or other he crosses this line of uninsurability and becomes uninsurable. He can no longer buy insurance at any price. Now we find that some people cross this line at a very early age, say around 10 0r 12 some around your age 35 or 40 then there are others who don’t cross the line till they are 60 0r 70. But everyone definitely crosses this line of insurability at some point.
“Now my company has discovered that you happen to be right here (Place an “ X” right in front of the black line) “ They don’t know, you don’t know and I don’t know that tomorrow you may be over here ( Put an “ X” on the other side of the line of uninsurability) “on this side of the line, and never be able to buy life insurance again.
For this reason, they have found it necessary to charge you a few extra dollars per thousand dollars on this contract I have here. If I were you, I wouldn’t question their offer. I would take this policy.
If you sometimes meet some extreme cases, perhaps it might be advisable to have the company issue an alternate policy providing a reduced amount of insurance but calling for the same premium that was agreed upon in the sales interview.
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