How Health Brokers Can Successfully Cross-Sell Life Insurance

cross-sell-life-insuranceAre you one of the 40 percent of health insurance producers who has seen a decrease in commission revenues since the implementation of the ACA, the Affordable Care Act? Are you looking for ways to replace the decline in revenues and the corresponding increase in time invested? Are you searching for strategies that drive premium and revenue growth? Do you want to increase your value to clients, serve them more broadly while protecting your practice from competitors? If you answered yes to even one of these questions, a single solution addresses all of these objectives. Cross-selling. There are few panaceas in this industry, but cross-selling products to existing clients is the exception.

Cross-selling take so many different forms. It may take a systematic approach of talking to current clients about other risks they face and introducing products that mitigate those risks. Or, it may mean adding a new line of business to your portfolio of products.

From health insurance to long-term care and disability insurance

A client seeking health insurance is already in the mindset of using insurance to defray the cost of possible future health care needs. Consider these equations for the client value of health insurance and long-term care insurance:

  • Health insurance: Premiums paid = Peace of mind of knowing you’re only responsible for a percentage of potential health care expense
  • Long-term care insurance: Premiums paid = Peace of mind of knowing you’re only responsible for a percentage of potential long-term care expenses

Both offer the client the peace of mind of cost sharing. Cost sharing for health insurance seems obvious – no one even considers the possibility of “self-insuring” treatment for a serious condition. Why should long-term care costs be viewed differently? The need for long-term care in the future is almost inevitable, and may come at a time in life when cash flow is constrained. The cost sharing analogy can be used to transition clients from one coverage to another, using a rationale they already buy into.

Likewise, a client’s risk of disability is slightly less than the risk of needing medical care of long-term care. However, because of the significant impact to current and future financial positions, the need for disability insurance can’t be overlooked. The next logical step after discussing health insurance and long-term care insurance is disability income insurance. The value equation looks slightly different:

  • Disability insurance: Premiums paid = Peace of mind of knowing you will only lose a percentage of interrupted wages

Help the client make the connection. Security in retirement is threatened by long-term care expenses. Security in preparing for retirement is threatened by a disability or injury that interrupts, temporarily or permanently, a steady income. At roughly three percent of the salary, the premium for protecting the paycheck is affordable. Premium for retirement disability products are even less. Together these three layers of morbidity-related products, health insurance, long-term care insurance, and disability insurance, provide crucial defenses against potential financial harm of uninsured health expenses and lost wages.

Medigap clients

More than 55 percent of carriers are now using direct to consumer channels to sell their Medigap products, competing with their own independent agent distribution channels. Even so, producers earned 67 percent of sales revenue in 2015, up from 65 percent in 2014, and 59 percent in 2013. Last year 8.5 percent more 65+ Americans purchased Medigap coverage. Many of these middle-income Medigap policyholders have never talked with a financial professional about life insurance. And they happen to be talking with you about covering health care costs in retirement. What an opportunity! There are a variety of simplified issue life insurance products for this market. Clients are often unaware that a couple’s Social Security benefit will decrease when one of the spouses dies. The tax-free death benefit from a life insurance policy can make a difference in the financial security of the surviving spouse. These products are not time consuming, add an attractive first year commission to your revenues and provide real value for clients depending primarily on Social Security income.

Worksite or multi-life accounts

Help your employer clients build a better employee benefit package without adding expenses to the benefit budget. Recommend adding employer-sponsored voluntary products like life, disability, and long-term care insurance to the benefit package. Voluntary products are very popular with employees.

Particularly in an employee workplace situation where the importance of 401(k) contributions and saving for retirement are common topics, long-term care insurance is a simple segue. When long-term care is necessary and other financial resources are not available, many will be forced to spend down 401(k) accounts to pay for care. Long-term care insurance protects their retirement savings balance. Multi-life LTCi can be much more affordable than individual LTCi. Young employees, mid-twenties to mid-thirties, may pay less than $10 each month for $100,000 of coverage. Middle-age employees will of course pay a higher monthly premium, of $20 or so for the same amount of coverage, but even that can be managed in most budgets.

Undeniable benefits of cross-selling

In addition to these points, there are three more reasons to cross-sell life, disability, and long-term care insurance to your health insurance clients.

1. Health insurance requires ongoing involvement. In fact, NAHU 80 percent of the effort comes after the sale. Not so with life, disability, and LTCi. Certainly, some time is invested initially to make the proposal, complete and submit the application, and deliver the approved policy. But the producer is well rewarded for their time. Depending on the carrier, the distributor, and the agent contract, commissions can easily be from 70 percent to 95 percent of first year premium. After that, involvement with claims and other policy administration is minimal.

2. In addition to the time involved supporting health claims, administering the paperwork for health insurance, advising employer clients on their responsibilities to comply with ACA, and guiding first time individual health insurance buyers, takes time from sales. Even if you have access to support staff, their increased workload may impact your sales effectiveness. Use cross-selling commissions to replace, maintain or increase your commission revenue during times of commission disruption.

3. Clients stand to benefit when their financial advisors assess all the financial risks they face and recommend appropriate insurance products to better protect their assets, families, and properties. Studies show client loyalty increases as the number of products increases. And that can only be good news to your practice and your wallet.

Get started

Don’t let lack of experience with cross-selling methods, or knowledge of alternative products dissuade you from reaping the rewards of cross-selling. Brokers Central offers cross-selling tools and tips. If you are considering adding a new line of business, we will provide product education and support at each step of the sales process, including a joint meeting with your client if that is necessary. Call us at 845-495-5000 to learn more about how to get started on a successful path to cross-selling.

As the Founding President of Brokers Central, Yoel Bodek has an innate understanding of how financial products work together to solve clients’ business, financial security and wealth accumulation goals.View Yoel’s BioEmail Yoel.