Return of Premium life insurance policies solve problems

Return of Premium (ROP) life insurance is an easy sale, especially to millennials. But the other current generations also seem to like it including Gen X-ers and even baby boomers.

Affordability is what makes term insurance so easy to sell. The only distaste would come from the fact that it's sort of like rent-a-policy. You can use it while you're paying but when you stop paying, you can kiss your investment goodbye as it will be kept by the insurance company.

Return of Premium policies solve that problem. I'll help you with the increase in cost shortly. Stay with me and I'll get you there.

From a technical viewpoint, there is actually a rate of return on ROP products. Let's say a 30-year level term policy without ROP is $2,000 per year, and the ROP is $3,000 per year. The difference is $1,000 a year for 30 years, or $30,000. The rate of return on the invested difference can be as high as 3 percent. That's certainly better than bank returns.

Logically and financially, it's a good buy.

So how do you sell it? You offer ROP first.

Previously, I've written about how to successfully present the product.

Approaching prospects with term insurance is your easiest and most acceptable entry point for a client relationship. Target people who obviously need the coverage.

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Our economy has created a great opportunity for ROP life insurance sales. (Photo: iStock)

Most people have very little savings. The loss of a paycheck is devastating, but there are remedies like unemployment compensation.

There's only one remedy for the loss of a paycheck due to death. Life insurance.

By the way, the prospect will attempt to put you off by saying he has a group policy.

Here are your next questions:

- How much life insurance do you have through your employer?
- Will that pay off the mortgage, educate your kids in college and replace your income for five years?

These questions alone are going to further your conversation.

Recently, I was getting an MRI for my back. The machine uses nuclear material. The operator covered me with lead protection, then left the room. After completing the scan I asked him about the hazards of working around nuclear material. If he acquires cancer as a result of his exposure, he may become un-insurable. If he loses his job from the disability of cancer, he would have no coverage.

I got the sales appointment.

It's easy to be referred to his colleagues after closing that sale. Would anyone working in a dental office have the same exposure around x-ray machines?

Asking people about their work opens the door to many discussions that should be designed to disturb the prospect to action. Also, consider a disability waiver. I received a lapse notice on one of my clients. When I called to ask him about it, his wife told me that he had a stroke and lost his job, therefore couldn't afford the insurance. I had placed a waiver of premium rider on the policy. We saved the policy and I have a new story to tell other prospects.

I also love to ask questions about kids. Parents just gush about their kids, which can lead to a very productive statement:

"It sounds like you and your husband are doing a wonderful job raising them. In your opinion, how difficult would it be to find another provider who will do as good a job as you can by yourself? The death of your husband would most certainly create an income crisis. Your family should not need a highest bidder."

I don't believe in being timid when approaching people about life insurance. The delivery of a death benefit emphasizes that point.

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