Monday, July 23, 2007

Rebuttal to…

“Stop Selling Life Insurance!”

After my last newsletter article, “Stop Selling Life Insurance…” I got the following response from one of our readers. He’s brought up many of the traditional arguments against cash value life insurance that are constantly being used by many of the ‘term life insurance’ advocates. What follows is his entire response, word for word.

After his response I have given a ‘point by point’ rebuttal to his arguments. I hope these rebuttals will help you and your prospects to put those common arguments into their proper perspective!

Response from one of our readers…
“I do have a disagreement with Lew about one thing.  People do NOT rent term insurance, no more than they OWN c.v. insurance.  They PAY for them both.  They don't even own a dividend paying policy, as the industry claims!  If they truly own it I really would like to see the stock certificate!   A dividend is a return of an overcharge, period.   A death benefit is a death benefit regardless of the wrapper it's in.  I would rather cover my clients with $500,000 of term instead of $50,000 of c.v. insurance for the same money.”

“The first thing I will do with the 'found money concept' is show families how to fully fund their Death Benefit first.  And that's done with TERM insurance.  Immediately covering the family against catastrophic loss of income is more important than saving for retirement or "tax" advantages.  "Investing the Difference", in whatever form, is secondary.  Most families are way under covered with life insurance.  Let's do the best for them and sell them the right product.”

“Do people need life insurance for "life"?  Yes, they do.  That's why I will ask them to buy a c.v. policy in an amount of $25,000 now with $500,000 of term.  When they have the money they can increase the c.v. policy.”

Argument… “People do NOT rent term insurance, no more than they OWN c.v. insurance. They PAY for them both.”

Rebuttal: Let’s keep this simple and put it terms that almost everyone can relate to.

When you rent an item such as a car, furniture, apartment, a house, or term insurance you’re paying money to be able to use those things for a specific period of time. When you stop paying money for the use of those things, the only thing you have left after renting them is a bunch of receipts!

When, you buy and own an item such as a car, furniture, stock, house or cash value life insurance, you’re paying for ability to use those things for the rest of your life. When you’ve paid the full purchase price for those things, you have something of value, worth money.

Here is an example of what I talk about with prospects, to help them see the value of owning Cash Value Life Insurance.

Buying and owning Cash Value Life Insurance closely resembles buying and owning a house.

1. Like buying a house you can either pay for it all up front, or you can make payments for a specific period of time.

2. There is an up front cost for buying a house and Cash Value Life Insurance. If you decide to sell either of them in the first few years, it is very unlikely that you will get all of your money back.
3. They both build up cash values (equity), income tax deferred.
4. If you keep them for ten or fifteen years, you’ll generally get all your money back, plus earn a bank type return.
5. The only way you can access the cash value (equity) in either of them is by selling them, or by taking a loan out against them.
6. If you take a loan against them, you can use that money tax-free.
7. You don’t pay income taxes on the value of the house, or the Cash Value Life Insurance until you sell them. 

Argument… “A dividend is a return of an overcharge, period.”  

Rebuttal:  The dividends in a life insurance policy are the profits from a participating insurance policy that are paid to policy holders after all expenses, commissions and death claims etc. have been paid. The insurance industry lobbied long and hard to have dividends called a ‘return of premiums’, so the insurance dividends would not be subject to income taxes like stock dividends!  

Argument… “I would rather cover my clients with $500,000 of term instead of $50,000 of c.v. insurance for the same money.”

Rebuttal:  I would rather cover my clients with the full $500,000 using C.V. Life Insurance, instead of them renting $500,000 of Term Insurance.

One of the main points of the original article is that if you help your prospect to ‘find the money’ that they are spending unnecessarily, or in the wrong places, then they can afford to purchase the right amount death benefit they need using C.V. Life insurance. Long-term ‘cash value life insurance’ is the best buy!

Argument… “The first thing I will do with the 'found money concept' is show families how to fully fund their Death Benefit first.  And that's done with TERM insurance.  Immediately covering the family against catastrophic loss of income is more important than saving for retirement or "tax" advantages.” 

Rebuttal:  The first thing I do with the 'Found Money Management Concept' is a complete, thorough fact-find with prospects. We have a very serious problem in the United States. Middle Income families are not saving money for their future. They have the wrong priorities. Isn’t our job as financial advisors is to “help average people to learn how to spend, save, invest, insure and plan wisely for the future, to achieve financial independence.”

Argument… “Do people need life insurance for "life"?  Yes, they do.  That's why I will ask them to buy a c.v. policy in an amount of $25,000 now with $500,000 of term.  When they have the money they can increase the c.v. policy.”

Rebuttal:  We appear to be in agreement that people need C.V. Life Insurance for ‘life’.

We also appear to agree that our job, first and foremost, is to make sure the prospect has the right amount of protection for their family. If after doing a complete, thorough fact-find, the prospect decides that all they can afford is term insurance, then term insurance is what we will help them buy. And yes, when the prospect has the money, we will convert the term insurance to cash value Life Insurance. (Note: It’s very important to sell them a term policy from a company that has a good C.V. Policy to convert to.)

Term insurance definitely has its place, when it’s only needed for a short period of time, or when it is all that the prospect can afford!

The problem is that most agents are going for, and settling for, the term sale too quickly!

By Lew Nason
‘The Nine Out Of Ten Guy’

 © 2007 Lew Nason, RFC, FMM, LUTC Graduate - All rights reserved
Lew Nason, with his sons Jeremy Nason, RFC, FMM and Will Nason, RFA, FMM are the founders of the Insurance Pro Shop ^® and the creators of the… Found Money Management™ Advanced Life Insurance Sales System… The most endorsed and successful Life Insurance prospecting and sales system available for today’s insurance professional! Lew has been helping agents and advisors to achieve long-term success in financial services industry for over two decades. His unique perspective, on how to truly help clients, has enabled scores of agents and advisors reach the top levels of their profession. Visit his web site at www.insuranceproshop.com or call him toll free @ 877-297-4608.