Insurance sales: The importance of selling and teaching
January 17, 2013 by Ryan Parker
When it comes to selling — whether it’s something as complex as life insurance or annuities, something as common as cars, or something as simple as lemonade — there is one underlying secret to success: People won’t buy something that they don’t understand. No matter how great your sales technique, how phenomenal the quality of your product, or how highly rated the insurance company you work for, if people don’t understand what you’re selling, they won’t be buying.
This notion is evident in the financial industry. A recent survey by the Insured Retirement Institute (IRI) and Cogent Research, revealed that only 5 percent of people were very knowledgeable about annuities. That means 95 percent of the people surveyed don’t completely understand what an annuity is or how it can work for them.
An even more telling statistic from that survey showed that nearly half of the non-annuity owners weren’t confident that the insurance companies providing the annuities could fulfill their guarantees. This concern is, again, based on a lack of understanding.
So, considering those statistics revealing the mindset of potential clients, the job description of insurance agents and others selling annuities is shifting from selling to teaching. The success of annuity sales depends on the discussion and techniques that are used. There are a few ways that you can break down the barriers and educate clients on what annuity options offer.
- Don’t rely on fear. One of the most common arguments made for annuities is that they can protect the retiree from running out of money. Fear-based selling has its time and place, but reminding people about the danger of outliving their investments can turn them off from the ideas you are trying to get across. Instead, focus on the advantages of annuities and keep the conversation positive.
- Reframe the product appearance. It’s been shown that the image of the annuity has a drastic effect on the purchasing decisions of the consumers. When an annuity was presented as a product, consumers were three times more likely to purchase than in situations when it was presented as an investment. The idea of guaranteed income and its advantages is often viewed as insurance, rather than an investment. As financial professionals, it’s easy to see annuities for what they are, but your clients can make very different decisions based on a simple perspective shift.
- Counteract the media. With the fiscal cliff and debt ceiling continuing to show up everywhere we look, the future of taxes is on the mind of nearly all investors. As the focus of lawmakers shifts toward reducing budgets, the tax advantages of annuities are a popular option on the chopping block. It’s important for advisors to use their voice to counteract the media’s effect. Of those people surveyed who did not own annuities, almost one-third of them said that their perspective on annuities was negatively affected by the media. It’s important that your clients are getting their information from the right source: you.
- Create educational materials. It’s easy to lecture your clients on the intricacies of annuities and discuss all the ins and outs of the investment strategies, but your voice isn’t enough. It’s important that you have materials, whether they are booklets, pamphlets, diagrams, or even a simple cartoon, that can help you get your point across and help your client walk away with a clear understanding of what you have discussed. These materials can be from outside sources, from an IMO, or produced by you personally. No matter the specifics, it’s critical that you have the tools to help aid your presentation and your clients’ knowledge of the decisions in front of them.
With economic trends and investment strategies continuing to shift, the insurance sales opportunities are almost endless. The success of those opportunities is, in large part, based on the ability to help people understand the advantages of such a choice.
With the market’s future essentially up in the air, people are looking for insurance, in the most basic sense of the word. It’s critical that they know just how annuities can give them that insurance.
