Are your prospects afraid of wasting money on disability insurance that they’ll never use? Despite the frighteningly high odds of disability, many people can’t imagine ever becoming disabled themselves, so this is a common objection. You can overcome this objection to close more disability insurance quotes with risk reversal strategies.
What Is Risk Reversal?
In sales, risk reversal refers to the idea of shifting risk from the buyer to the seller. Many sales operate on a “Buyer Beware” approach. Some buyers may not want to make a purchase because they’re worried that they’ll come to regret it.
Risk reversal is a concept routinely used to remove the fear of buying. Common risk reversal tactics include the money-back guarantee, three-year warranty and satisfaction guaranteed promises.
The idea is that if prospects are wavering on the buying decision, risk reversal will push them into action. It’s a theory that has been proven to work in direct mail and in retail environments. And as online shoe retailer, Zappos, discovered, it’s particularly effective in online selling. By implementing an easy “return under any circumstance” policy and even paying the shipping for the return, Zappos overcame potential objections to buying shoes online, quickly achieving rapid growth and success.
Applying Risk Reversal to Disability Insurance Sales
Although risk reversal is a proven strategy in retail sales, you may be thinking there’s no way this concept applies to insurance sales. When selling insurance, we can’t throw around return policies and satisfaction guarantees. If you don’t actually use your disability insurance policy or your long-term care insurance, you don’t get your money back. So, it’s pretty obvious that risk reversal does NOT work in insurance … right?
Actually, I’m here to tell you that risk reversal works very well in LTCI and disability insurance sales.
First of all, with a disability insurance policy that includes a return of premium rider, policyholders CAN get their money back. Return of premium rider terms vary, so it’s important to read each policy carefully, but in general, these riders allow policyholders to receive all or some of their premiums back, minus any benefit they’ve received, at the end of the policy term. The downside is that this rider increases the cost of the policy, so someone who’s looking for inexpensive coverage will not be interested. However, a prospect who has sufficient funds and is worried about wasting money on an unused policy, this option can be very attractive.
Another Approach to Risk Reversal
The return of premium rider isn’t a good fit for every prospect, but there’s another way to leverage the concept of risk reversal. The key is to demonstrate the risk of NOT buying rather than eliminating the risk of buying. See the twist?
Here’s an example of how risk reversal works in DI selling:
- First, explain that in financial planning, disability insurance is one of the essential protection pillars. You protect your assets with property/casualty insurance; your health with health insurance; your life with life insurance; and your ability to earn a living with disability insurance (also known as paycheck protection or income protection). Of these protection pillars, income protection is arguable the most important. Think about it – if you don’t have any income, you can’t afford any assets, health insurance or life insurance. The paycheck is the source of many good things.
- Next, let clients know that you have a professional obligation to tell them about the need for paycheck protection. If you didn’t share this information, you wouldn’t be doing your job and in fact, you’d be placing clients at financial risk.
- If clients refuse coverage, ask them to sign a Waiver of Liability form. The conversation goes something like this. “Mr. Smith – I certainly understand if you want to forgo paycheck protection at this time. However, I do need to protect myself by having you sign this Waiver of Liability. The Waiver confirms that I informed you of the risk, and you are deciding to proceed against my advice. I like to document my files, because in some cases, when clients become disabled and financially desperate, they sue their financial advisors, claiming they were never told about the need for paycheck protection. Of course, I know you would never do that, but I’m sure you can understand why I like to document my files.”
This risk reversal strategy is a smart way to protect yourself from errors and omissions claims. But, it also causes clients to take a second look at their “no” decisions. And in many cases, those second looks result in new “yes” decisions, helping you close more disability insurance quotes.
Need a Waiver of Liability form? Download our free legendary disability insurance sales script. The Waiver of Liability form is included, along with some other tools you’ll find helpful.