Determining Needs

[Levi]

In spelling out how much coverage one needs for Life Insurance I have always used the DIME method.

Anybody else use something different?

 

[DHK]

Human Economic Life Value.

It's the principle that insurance is designed to replace the economic value of what was lost.

Look at your financial underwriting guides and see how much you can issue based on one's income. The maximums are based on human economic life value.

 

[Levi]

Thank you DHK! I appreciate it.

 

[DHK]

The attached PDF was available online for quite some time, but now I can't find a link to it anymore.

It's Robert Castiglione's 2004 MDRT presentation on creating a Wow experience in life insurance sales. While I wouldn't count on the commission math that he uses (he's assuming a death benefit only focused sale of permanent life insurance), all his other points are very valid.

How can it be that with all indicators aiming toward what should be record sales, the results are actually the reverse? What then is the main cause of the decline of life insurance sales, low income for agents, and increased consumer dissatisfaction? Years of research, consumer interviews, and a host of empirical data all lead to the same answer. Needs Selling!

Needs selling has undermined agent productivity and has tainted the public’s attitude toward life insurance. It contains serious mathematical errors and violates every rule, definition, and the traditional purpose of life insurance.

The problems with needs selling and analysis can be summarized as follows:
1) Needs selling limits the size of the sale of insurance below proper amounts.
2) Needs selling miscalculates the true need for life insurance.
3) Needs selling tends to focus on premature death needs.
4) Needs selling is a poor motivator to get the consumer to buy.
5) Needs selling promotes term life insurance.
6) Needs selling automatically creates objections from the prospect.
7) Needs selling requires constant review due to changes in the variables used.
8) Needs selling does not promote the living benefits of permanent life insurance.
9) Needs selling does not find the money for life insurance premiums.