The New Language of Permanent Life Insurance
August 16, 2016 by Annuity Outlook Staff
Life insurance sales have never been easy, even though 86 percent of consumers say that most people need life insurance protection.* Clients often don’t just want to think or talk about it, but those in the financial services industry know how important it is to families and effective financial planning. Where does the conversation start? What words invite more conversation and which ones tend to put people off?
A recent study conducted by AXA, in partnership with Maslansky + Partners, a consulting firm specializing in the effective use of language, revealed a new way to talk about life insurance. The improved positioning language helps break through barriers and provides insights on how you can better connect with clients and prospects.
Knowing consumers are often turned off or confused by discussions about permanent life insurance in particular, AXA wanted to find a way to open up conversations and help consumers understand the value of these products and how they differ from term life insurance.
“Permanent life insurance is designed to be more than just protection for the family,” said Ron Herrmann, head of the Financial Protection business for AXA. “But many consumers don’t understand that, in many cases, they can access the cash value, income tax-free, to supplement retirement income, help pay for college or other expenses. Because they think of life insurance as simply protection, they can be skeptical about the savings part. That’s why it’s important to position permanent life insurance products correctly, so that consumers can get past their preconceived notions and really hear what these products have to offer.”1
“The single biggest problem in communication is the illusion that it has taken place.”
– George Bernard Shaw
How to Talk about Permanent Life Insurance
Research showed that some consumers didn’t understand the difference between term and permanent life insurance. Others thought that using the policy as a vehicle for savings seemed too risky. Still, others didn’t understand how the accumulation of cash value in the policy could help with expenses or provide retirement income. Bottom line: they thought life insurance was for family protection only.
The study found that changing the way financial professionals talked about permanent life insurance made a difference, helping consumers to stop and listen, and to see the benefits this type of life insurance can provide.
Most consumers generally don’t know much about permanent life insurance. In turn, what they don’t know can hurt you and them, because they miss out on the numerous benefits life insurance protection can provide.
To get consumers to listen, you must take their mindset into account. There is a right way – and a wrong way – to start this conversation.
Addressing (Mis)Perceptions
Because consumers tend to know so little about permanent life insurance, starting the conversation in the wrong place can lead to trouble. It’s important to keep in mind their #1 concern when having any conversation about life insurance: protecting their family. You have to start from where they are today and what they already know, not where you want them to be and what you want them to know.
Live More, Keep More, Build More
The research indicated that financial professionals need to touch on the three things that potential clients were really looking for when it comes to a product like permanent life insurance:
- Protection for their family (Live More)
- Minimizing their taxes (Keep More)
- Growing their money over time (Build More)
Live More
When discussing protecting your client’s family, this language had the biggest impact: Unlike term insurance, permanent life helps you live more for today by protecting you and your family against life’s unknowns while providing ongoing access to your money when you need it.
Of course, life insurance is purchased to support beneficiaries in the event of death, but no one likes to be reminded of their own mortality. Instead of talking about death, keep it positive and describe the value of the benefit: protection and safety.
Talking about “beneficiaries” is tricky. It’s easy to sound too informal and corporate, but it’s also a mistake to be too personal. If you want to describe beneficiaries in another, more personal way, keep your language plain and simple. If you’re overly formal or informal, you can alienate your audience.
When speaking to clients about cash value, talk about access, not loans. You should avoid talking about cash value as a “loan” at all. Since it’s their money in the policy, they don’t think you should charge them if they need to use it, which is what “loan” implies to them. Instead, by focusing on access, make clear they can get to it if they need it.1
When it comes to accessing money, these phrases resonated most with consumers:
Permanent life insurance is for you and your family, which means you can access your money throughout your life if you need it, while knowing your family is protected no matter what. As your life evolves, you can use the cash value to help pay for your mortgage, your child’s college expenses, or simply to live more comfortably in retirement.
So providing examples of how they could keep more money and provide comparisons to products they are more familiar with, may go a long way in the process.
Keep More
The next principle is “Keep More.” Remember that the potential clients you are speaking with may not know much about permanent life. So providing examples of how they could keep more money and provide comparisons to products they are more familiar with, may go a long way in the process.
Here is “Keep More” in a nutshell:
Like 401(k)s or IRAs, permanent life helps you keep more of your money by minimizing your taxes. Unlike 401(k)s or IRAs, it has no contribution limitations…and no income taxes on any money you pass along.
Build More
The next principle is “Build More.” It’s all about growing their money. And as you saw above, the idea of building more by minimizing taxes is a compelling differentiator for consumers. So how should you talk about earning money with an insurance product? Growth and earnings aren’t something people automatically think of when it comes to insurance. This language pleasantly surprised many of the research participants. It’s an important differentiator for permanent life insurance and explains why clients might want to put their money into permanent life as opposed to another type of financial product. But the idea of purchasing an insurance product also raises some red flags. They, of course, want to build their assets, but they are buying insurance to be protected, and so anything that implies this protection might be at risk worries them.
Here’s “Build More” summarized:
Unlike term insurance, your permanent life cash value can grow over time like equity in a home. And, unlike taxable accounts, the money you put in the policy grows tax-deferred. That means you can build your assets more quickly over time.
Summary
When you are introducing potential new clients to permanent life insurance, research shows language truly matters. With the right core positioning and proof points, you’ll be able to open the conversation in a way that gets the client asking questions and wondering what else permanent life insurance can do for them.
And if you remember only one thing about introducing permanent life insurance to potential new clients, remember this: Protecting one’s family is the primary reason almost everyone buys any sort of life insurance policy. So don’t short change protection. Start with it. And explain how a permanent life insurance policy can provide that protection and so much more.
1 Policy owners would be accessing the cash value through policy loans and withdrawals. Loans and withdrawals reduce the policy cash value and death benefit, may cause certain policy benefits or riders to become unavailable, and increases the chance that the policy will lapse. If the policy lapses, is surrendered or becomes a Modified Endowment Contract (MEC), the loan balance at such time would generally be viewed as distributed and taxable under the general rules for distribution of policy cash values.
Special thanks to AXA for its cooperation and permission to share some of its study results in this article.
“AXA” is a brand name of AXA Equitable Financial Services, LLC and its family of companies, including AXA Equitable Life Insurance Company (NY, NY), MONY Life Insurance Company of America (AZ stock company, administrative office: Jersey City, NJ), AXA Advisors, LLC, and AXA Distributors, LLC. In business since 1859, AXA Equitable Life Insurance Company is a leading financial protection company and one of the nation’s premier providers of life insurance, annuity, and financial products and services distributed to individuals and business owners through its retail distribution channel, AXA Advisors, LLC (member FINRA, SIPC) and to the financial services market through its wholesale distribution channel, AXA Distributors, LLC.
Guarantees provided are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC.
Withdrawals will reduce the guaranteed death benefit and are income tax free to the extent the policy remains inforce.
For Financial Professional use only.
