When you sit down and talk to a life insurance advisor these days, you may hear complaints about the available product offerings, but those complaints don’t typically focus on a lack of variety.
The product development teams at the carriers sometimes seem bent on providing the widest array of products with an almost endless selection of bells and whistles. For some of today’s younger advisors, I’m sure that it’s hard to even imagine a time when they weren’t able to offer their clients such a wealth of product options to fit their needs.
Although it may seem like ancient history, some of us can remember the days when there were essentially two options for life insurance – term and whole life. And for others of us, it may seem somewhat amazing that there are still some very productive and effective advisors who focus a lot of their time and attention on selling whole life. Even in light of all the “conventional wisdom” that says that whole life products are much more difficult to sell, more expensive to buy, and more time-consuming to adequately explain, there are still advisors who focus on whole life sales and who continue to succeed at doing so.
In this report, I will share the thoughts and some very practical ideas from two such advisors, Brian H. Ashe, CLU, (shown at right) of Brian Ashe and Associates, Ltd., and Adelia C. Chung, CLU, ChFC, of Spectrum Wealth Management, LLC. Both are not only past presidents of the Million Dollar Round Table, but both are also big believers in the value and importance of whole life.
Why the focus on whole life?
Many of the really top-notch whole life advisors I know have an interesting story in their background that is a kind of spark for them to continue doing such a good job in selling whole life. I was curious about whether there was some kind of motivating factor for Mr. Ashe and Ms. Chung that got them selling whole life, and why whole life continues to be such an important part of their businesses.
For Mr. Ashe, whole life provides consumers with an important and valuable option. “Whole life insurance is another arrow in the quiver. My sense is that American consumers like choice, and a product that provides guaranteed death benefits, guaranteed cash value, and a guaranteed premium is desirable for many buyers. A now 73-year-old neurosurgeon client, who bought whole life I recommended to him more than 38 years ago, told me recently, ‘It was tough at the time, when I was just starting out my practice, but now I'm really glad I paid those premiums. Dividends now pay all of my premiums, so I don't have to reach into my retirement income. My cash value and death benefits continue to grow, and my family will always get more than I paid, free of income tax. Who doesn't like that?’”
Ms. Chung has a long history with whole life, dating back to when she was a young girl. “I grew up in a life insurance family. At a very young age, I heard stories about the benefit of life insurance and the impact it can make for a family and organization. My parents purchased life insurance policies for us as young children. The down payment of my first condo purchase came from my whole life cash values. So, when I entered the life insurance business, educating prospects about the benefits of a whole life policy was something I believed deeply.
“As a 30-plus year veteran of the business, I have seen whole life products perform as expected. Life is unpredictable, but whole life is not. A whole life policy does what it was designed to do. It provides a foundation if one were to live too long, die prematurely, or become disabled. A whole life policy does not expire. It has a guaranteed value, and premiums don’t increase as one gets older. It provides a benefit one can count on,” Ms. Chung said.
Whole life model hard to improve
With the years of experience these two have had, no doubt they’ve seen the product evolve, as well as its strengths and weaknesses. In light of that experience, I asked what they’d advise an insurance carrier on how to improve on today’s whole life model, if they had that opportunity.
Ms. Chung indicated she was quite satisfied with today’s whole life. “I think the products today are good,” she said. “I can’t think of anything I would improve on.”
Mr. Ashe, though, took did have some thoughts on improvement. “I really don't know how much more companies can do to improve whole life policies. They already have cash value enhancement riders, guaranteed insurability riders, accelerated death benefits, long-term care riders, waiver of premium benefits, etc. And the truth of the matter is that the Internal Revenue Service really participates in the ‘design’ business because of its definitions of what a life insurance policy is or can be. Companies don't have much latitude to offer improved policies that don't pass IRS muster.
“One thing they could do is improve the ‘story telling.’ During the period from 2000 to 2010, one major mutual company ran an ad that showed how a whole life policy had returned about five times what the S&P 500 had returned in the same time period. Interesting factoids and product ‘framing’ like that can make people think about our products differently – and more favorably.”
Finding the premium dollars
It was obvious that these two had strong feelings about the value of whole life, so I zeroed in to try to get a practical view of how they actually sell the product. I was curious as to whether there were certain demographics, income levels, or professions that they focus on, and if so, how they actually do that.
Mr. Ashe told me, “I don't have a specific whole life prospecting method. We look for people who have the need for life insurance, and then we match the product to the need. If the prospect has a permanent need, we will suggest whole life or some form of universal life.
“Many younger prospects have a permanent need but don't have the extra premiums needed to pay for the benefits of a whole life policy. We recommend term life then, but with the admonition that they should convert to permanent life insurance as soon as their financial capability permits. We do so because, for most people, the need for life insurance does not go away, it just ‘morphs’ from ‘dependency needs’ to ‘liquidity needs' or ‘estate conservation needs’ or ‘charitable needs,’ etc.”
Ms. Chung said that she focuses on benefits no matter who she’s talking to. “I explain the benefits of a whole life policy to all of my prospects. For an individual with the ability to save, a whole life policy offers tax-deferred growth, tax-free access, and an income-tax-free death benefit. For the individual who currently does not have the ability to purchase a whole life policy, it is important that he or she understand the opportunity. Often, once a prospect understands the benefits, he or she will reprioritize and ‘find the premium dollars.’”
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