An insurance sale is considered to be very difficult in financial services as compared to the other available instruments of financial services. That is why insurance companies pay higher commission on the insurance policies to agents and advisors. In this article we would like to share five most tried and tested strategies for insurance placement, if implemented properly then these strategies will certainly give you an easy pathway towards closing of the sales. Insurance is a subject matter of solicitation; however it has been observed that direct pitching of insurance policies would create a repulsive effect on prospective buyers. The strategies mentioned in the article may give you an indirect approach for pitching insurance as a concept and make it easy to close the sale.
Before learning these strategies, let’s first identify the meaning of the basic terminologies used in defining the concept of Insurance.
- What is an Asset? An asset is a resource which has two values, 1.Economic 2.emotional value.
For Example: House, Car, Life. The life span of an asset is limited during which it is expected to perform
- What is Risk? Risk is the chance of damage or loss. An accident or an unfortunate event may destroy it or make it non functional. So an asset is exposed to various risks.Risk is doubt concerning the outcome of a situation. Risk is something or someone considered to be a potential hazard.
Level of risk:
- Probability (or frequency) of a certain event happening, and the
- Extent (or severity) of the event if it does happen.
- What is financial loss? Financial loss is Loss of financial value of the asset or loss of income or loss of money.
- What is Insurance? Insurance is related to the economic values of asset.Every asset has a value. The life span of any asset is limited, during which it is expected to perform.However the asset may be lost earlier. An accident or some other unfortunate event (peril) may destroy it or will make it non functional. The owner and those who depend on it will be deprived of benefits and may suffer financial losses. Insurance is a mechanism that helps to reduce the effect of such adverse situations.
Insurance provides compensation for losses and provides protection and security.
Although insurance cannot prevent or control the losses, it can definitely provide guaranteed compensation for losses and thus protect against financial losses.
The primary function of insurance is to transfer the risk from an individual to an insurance company
- What are the principles of Valid Insurance Contract? Insurance is considered to be a specialised contract. These two principles make this contract valid.
Insurable interest: Circumstances in which insurable interest exists.
Example: Own Life, Spouse, Asset, Creditor, Employer – Employee, Partners, Key man.
Utmost Good Faith: A positive duty voluntarily to disclose, accurately and fully, all facts material to the risk being proposed, whether requested or not.
The principle applies equally to both the proposer and the insurer throughout the contract
Indemnity- Financial compensation sufficient to place the insured in the same financial position after a loss as they enjoyed immediately before the loss occurred. General insurance policies and health insurance policies are contracts of indemnity
- Human Life Value– Human life is priceless and no amount of money can compensate for the value of a human being
However, to arrive at the amount of insurance cover that a person should take out, Insurance companies need to assign a monetary value to human life
Through human life value (HLV) the insurance company tries to measure the economic value of a person or how much the person is worth in monetary terms
In life insurance, HLV is used as a yardstick to determine how much life insurance cover a person should have.
There are five tried and tested strategies to promote the concept of insurance and close the insurance sales. These strategies will help you to give an easy push to promote the insurance concept and close insurance sales with confidence.
- Four “C” s of Insurance
- Vaccine for 3 Deadly D’s
- What is your Risk Exposure Score?
- Four Ways of Risk Management
- Story Telling for handling objections and decision making
- First Strategy- Four “C” s of Insurance- This strategy of four “C”s of life insurance , this strategy gives you an amazing opening tool for discussion which eventually leads for closing. These four C’s are mentioned below.
- Creation, 2. Consumption, 3. Conservation, 4. Continuation (Contingencies)
- Second Strategy- Vaccine for 4 Deadly D’s – This strategy of sharing four reasons for financial losses will help you to open a discussion which will lead towards closing. These four D’s are mentioned below.
- Death: Complete Financial losses.
- Disease: Partial loss of income and financial losses on treatments.
- Disability: Living Death.
- Disaster- Property Damage
- Third Strategy- What is your Risk Exposure Score? This strategy will help you to find gaps in their insurance needs and requirements by conducting a diagnostic test by using a tracker called Risk Exposure Tracker. With this tracker, you could be able to find out, below mentioned gaps for helping your prospective client to take buying decisions.
- Risk Exposure Status, 2. HLV, 3. Life Insurance Gap, 4. Med claim Gap
- Fourth Strategy- Four Ways of Risk Management: This strategy will help you to give solutions for managing future financial risk and help your prospective client to decide thereby facilitating him for closing the sale. These four risk management ways are mentioned below.
- Avoid, 2. Retain, 3. Share, 4. Transfer
- Fifth Strategy- Storytelling for handling objections and decision making.: Storytelling plays a vital role in decision making. This provides click factor for prospective client to decide. Some of these innovative story titles and their purposes are mentioned below.
Story 1: Camel – Why to buy Insurance policy.
Story 2 : Life Jacket- When to buy an insurance policy.
Story 3: Air hostess and oxygen mask: Why to create provision of insurance.
Story 4: My Story- What is the purpose of doing this business?
About us: Sparrow’s Sprout is a training institute for business development. We work extensively in the area of financial services. We help Financial Advisors, Planners and Wealth management firms to build their business.
