Due Care as a Marketing Tool

Competency is one of the hallmarks of professionalism. Expertise (knowledge plus experience) is the foundation of competency. A critical marketing technique in the promotion of a professional private practice is offering expertise to demonstrate your competency.

The following example demonstrates one of a series of bulletins offering due care as an important expertise of a life insurance expert.

Performing Due Care
When Purchasing Life Insurance:

For non-insurance professionals and their clients, an ounce of prevention. . .

Situation: Most life insurance sales and purchases are made on the basis of how the product offered illustrates future costs, cash and loan values, overall return on investment, and the death benefit at any given point in time. For the uninitiated - including most life insurance agents - sales illustrations represent the insurance offered. But the purchase of life insurance is a large commitment spread out over several years. The contract may not perform as well as illustrated in even the most conservative sales illustrations. Even though the insurance is not bound until the contract is placed, the illustration undoubtedly remains the basis for most offers and purchases. Still, people worry more about the insurer’s solvency and claims paying ability than the contracts they purchase. Insurer solvency issues are comparatively much less significant in most cases because the rating agencies pretty well document solvency and management capabilities. Solvency notwithstanding…

The only promises life insurance companies make when they underwrite their products are the contractual guarantees. Policy illustrations are not promises. Rather, they comprise the hypothetical illustrations of what might happen if certain (undisclosed) assumptions come true. Sales illustrations do not show the undisclosed, underlying assumptions upon which a policy series is underwritten, subjecting the uninformed buyer to the risk of losing the insurance altogether or to not realizing anticipated gains several years into the contract. As dividends continue to go down, expenses rise and profit margins wither, insurance sales illustrations that look better than others at the outset may not pan out that way at all and should not provide the basis for the buyer's decision. The risks are too great.

The Problem: Non-insurance professionals who do not understand how to determine the suitability of life insurance contracts to their clients' situations put their clients' long-term interests at risk when they offer such advice. The risks: potential loss of the insurance if the premium goes up and the client cannot afford to pay it, or having to pay premiums much longer than anticipated, based on the sales illustration at the time of purchase.

Solution: For the savvy non-insurance professional advisor, there are two alternatives. Either…

1. Learn the process of performing due care and execute it diligently whenever you participate in your clients' life insurance decisionmaking,
   
   
   Or…
   
   
2. Include in your services to clients the informed opinion of a life insurance professional who does due care properly for your client's and your protection.

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