Life insurance is a promise that should be kept. The essence of life insurance is that it’s not a gamble or wager. It’s a guarantee, as opposed to other investments that can’t provide that certainty.
This is why an essential part of any life insurance plan is to make sure it lasts. Insurance professionals should have a plan in place to ensure that the policy doesn’t fail or lapse. This not only requires careful pre-planning but also involves regular follow-up and monitoring after the sale. Follow-up after the sale is good business. It shows they still care and value you even after you’ve made the sale. That says a lot about them, as opposed to those who make the sale and you never hear from them again.
Here’s what agents should do in a pre-planning mode to make sure your life insurance policy won’t fail.
Term Policies
Term life insurance policy, by definition, is meant to expire after the term. However, term insurance can be made renewable and convertible to grant protection against the risk of uninsurability. That’s one way a policy can fail — if it can’t be renewed. Even if term insurance can be renewed, the premium can increase due to age. If those premiums get too high, you may not be able to make payments and the policy will expire. That’s not good for anyone.
This is a conversation you should have with your agent before sale. Insurance agents should explain the options and document that conversation so as to avoid surprises later on. They might suggest level premiums over the term and the ability to convert the policy into a permanent insurance without a new medical exam.
They should make a follow-up after the sale to stay in communication with you regarding the status of a policy. You’ll also find that in some cases, this leads to new life insurance sales for clients who are seeking to upgrade their policies or switch to permanent insurance.
Permanent Policies
Poorly structured policies or escalating premiums that are no longer affordable can cause even a permanent policy to lapse, which will result in the loss of the life insurance protection. A lapsed policy can be a devastating shock and be seen as a broken promise, so the policy has to be planned and explained during the pre-planning process — before the sale is made.
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