Paul shares five tips when selling mortgage protection life insurance.
Although this episode focuses specifically on mortgage protection life insurance, many of these ideas will apply other forms of insurance or financial products.
“The big challenge is asking the customer to buy something today; they will hopefully never actually need.”
Humans are hardwired to think short term. We place a greater emphasis on what we give up on today. The cost of attaining insurance today weighs heavier than the future benefit.
Ask the customer future-oriented questions. This will focus the conversation toward the future outcome and away from their sacrifice today.
People don’t like to think about dying. “Acknowledge the unpleasant nature of the life-insurance conversation.”
Refer to your customers as the leaders of the family. Leaders make tough decisions for the greater benefit of their families. You are setting an expectation with the “leadership” label.
“Remember, you’re not selling insurance. You’re selling protection.” Draw a parallel to other ways the customer protects their family.
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How do I sell mortgage protection life insurance?
(Transcribed from podcast)
Today we have a question that came all the way from India, so a big shout out to Atul, from India. He put together a question and it’s based on selling insurance in the mortgage industry.
Here’s what Atul is doing. Atul is in the mortgage industry, banking industry, and once a homeowner gets their loan, he’s trying to sell them on an insurance product. This insurance product is basically life insurance for the mortgage. So, if the individual who gets the loan ends up passing away for whatever reason, the mortgage is then covered by the policy. This is a pretty common service to offer. Many of you out there who have received mortgages, you probably have received things in the mail for life insurance to cover that mortgage. It’s a pretty familiar concept. We’re going to answer that question on today’s show.
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Let’s get into Atul’s question. Atul, again, is selling a life insurance product that will cover the homeowner. Whoever has the mortgage under their name, if they were to pass away, the mortgage would be paid in full. Now, here’s the challenge that Atul is facing. The premium that he is asking them to pay, the actual price of this insurance product, is typically three to five percent of the total loan amount, and you have to pay for it all up front.
Let’s use simple math here. I apologize, we’re going to use American dollars, just because that’s what I’m familiar with. Let’s say you have a $100,000 mortgage. That means to buy a life insurance product like this, it would be anywhere from $3,000 to $5,000. Think about this for a moment, if you are a homeowner, if you just got ready to buy this home, you’re spending a lot of money already. You’re already laying out a lot of cash. You might be hesitant to buy this product. But it is a valuable product. It gives you peace of mind. It offers your family protection, so it does add value. The key is getting the buyer to change the way they think.
Now, insurance in general is a tricky sale. I don’t care if you’re selling life insurance, homeowner’s insurance, commercial liability insurance, it’s a tough sale. The reason why it is a tough sale, you’re purchasing something that you, hopefully, never really need. If you’re trying to sell someone on a life insurance policy and you say, “Hey, in case you die, your mortgage is covered,” the person you’re selling it to hopes that just doesn’t happen. So we’ve got to keep that in mind. You are asking someone to buy something that they hopefully will never have to use.
The other side of this … we’ve got to remember that we, as humans, are hardwired to think short term. We’re hardwired to think about the here and the now. And, we’re more likely to place a greater emphasis (the greater weight, if you will) on the things that we have to give up today versus what we could potentially gain in the future, right? We as humans, are hardwired to think about that. We’re focusing more on what we have to sacrifice today versus what we will gain in the future.
In this case, you have a decision maker who is focused more on what they have to pay today for something that they might not potentially even need in the future. Again, that’s another challenge when it comes to insurance. But with all that being said, there still is a way that you can go out there and sell more effectively in this type of scenario.
In order to do this, Atul, if I was in your position and I’m trying to sell this product, I would do a couple of things. Number one, I would talk to that new homeowner and I would stretch their time horizon into the future. Get that buyer to think long term. You’re going to want to ask them some future-oriented questions about their long-term financial goals—what are some of the goals they have for their family. We want to get them thinking into the future because we want to paint a picture in their mind. We want them thinking about the future with their family, and we want to connect all of those things together for a very important reason. When we put them into the future, they’re less likely to think about what they have to sacrifice today. That’s the first part. Ask them some future-oriented questions to get them thinking into the future.
The next thing you need to do is acknowledge the unpleasantness of this conversation. It’s important to acknowledge that with your buyer, because if you don’t, it seems like you’re tone deaf. I’ll give you an example of this. I remember a long time ago, the first time I actually purchased life insurance, the agent who sold me the insurance said, “I realize that this is unpleasant to think about. I realize that it’s something that’s hard to grasp.” Just by that agent acknowledging that, it helped put me at ease a little bit. I, at least, felt understood and I felt validated in the way I was thinking.
I think it’s important, Atul, in your case, you also need to acknowledge the unpleasantness of the conversation. You might do it by simply saying, “You know what, Mr. Customer? I understand that this isn’t the most pleasant conversation or the most pleasant thing to think about …” But then, you want to start building a little pressure in. Here’s how we can do that. You can follow that up by saying, “Although this isn’t a pleasant thing to think about, Mr. and Mrs. Customer, as the leaders of the family, it often means that you do have to deal with things that are unpleasant. You have to make tough decisions. You have to make good long-term decisions, just like we talked about: your long-term financial goals, your long-term goals for your family. It’s important that we look at this and we take a long-term view and think about what is best for your family in the future and how we can protect them.”
Now, we’re starting to open up the conversation a little bit. We’re acknowledging the unpleasantness of the situation, but what we’re doing is we’re letting them know, “You are the leaders of the family and as a leaders of the family, you are now having to make tough decisions. You’re having to think about the future.” You’re kind of tipping your cap to them and calling them a leader. And that’s important as well, because we’re starting to frame their decision making around what a leader would do. Which means they’re going to make tough decisions. They’re going to make future-oriented decisions. They’re going to focus on what the greater good will be. That’s what a good leader will do.
Once we do that, we want to start using some parallels or analogies. We want to look at the basic concept that we’re selling here. We want to look at the basic and fundamental concept. You’re not just selling a life insurance product to cover the mortgage. What you are really selling is protection. That’s what you’re selling. You’re not selling insurance, you’re selling protection. So, in order to sell protection, you should look at other ways that this customer has already bought into the idea of protecting their family.
Here’s how you might position this. Let’s say you’re talking to that same customer, “Mr. and Mrs. Customer, what we’re really talking about here is protection. Forget the insurance side of this for a moment. We’re talking about protecting your family in the long run. Let’s look at some other ways you’re already doing that. Throughout the mortgage application we saw here that you have a nice savings account. You have money set aside. And the reason you have that money set aside is to protect your family in case something would happen, right? Not only that, but we look at some of your investments that you’ve already made, and you made those investments in order to protect your family. You probably lock your door at night before you go to bed, and you do that to protect your family as well. What we’re asking you to do, with this product or service, is to continue to protect your family into the future, because if something were to happen, you would want to make sure that they are protected. You want to make sure that you’re able to continue to protect them just the way you’ve already been doing.”
Let’s think about what we just did. We took this idea of life insurance to cover the mortgage, and we equated it to protection. We’re basically saying this life insurance is really just protection. And then we showed that customer all the ways that they’re already trying to protect their family. What we’re offering them is just an extension of that. So, we’re now selling them on protection. At this point, you’ve presented your argument. You’ve said, “Here it is. What do you think?” You’re gauging what interest level they have, if any. And this is probably where you’re going to get some price objections.
The first thing I would consider doing— after doing a little bit of research, it looks like the most common way to purchase this type of life insurance in India … I don’t know if this is the same around the world, but in India it looks like they need to make an upfront payment. Let’s say again, it’s a $100,000 mortgage. They’re going to have to pay three to five percent of that up front for the policy. That means $3,000 to $5,000 they’re paying up front. If it were me, I would look for ways to finance that and see if you can roll that premium into the mortgage payment, as an extra $20-$30 (whatever it might be), I don’t know. But if you can take that insurance and just put it into the mortgage payment, I would have to believe buyers are going to be more open to that because they’re not laying out their cash all up front. Instead, they’re paying as they go. This is good for several reasons, mainly which, they don’t have to lay out a bunch of cash today.
Now, the other option I would also consider … when people are making a decision like this, (and really all decisions—they like to have choices), to me, it seems like you’re just presenting one option: “Here’s the premium. You pay it. This is the insurance.” It’s important to present three options to the buyer. Give them three options. When people have more options to choose from, they have a stronger sense of control. They’re more likely to move forward. See if there are three different ways you could package this product or service to recommend it to that buyer.
Atul, I hope that helps you out. Keep up the good work down there in India.
Make it a big day!