Selling The Charitable Policy

SELLING THE CHARITABLE POLICY

Want an easy, effective way to enable people to do what they want to do-help their favorite charities and the community? Agents also help themselves and the agency. Like many successful routines, it's so straightforward, it sweeps people off their feet!

Here's how it works: When anyone in the agency writes a Life insurance application, while compiling the paperwork (or even before then, during casual conversation), get the name of the client's favorite charity or cause. Everybody has one. It might be medical, educational, religious, cultural, scientific, environmental . . . there's a full range. For convenience, we'll refer to the charity simply as 'the cause.'

As the Life application is being completed, the agent can ask: 'How would you like to give your favorite charity-the cause-a surprise gift? I'll ask the insurance company to issue a separate policy in favor of the cause. You'll be the donor. Whenever you die, proceeds from this separate policy will go to the cause. They policy will build two important kinds of cash for the cause: current and deferred. If you tell me how much you'd be comfortable donating as a premium, for which you'll also receive tax benefits, then I'll tell you how much coverage you can get. Or, if you prefer, tell me how much coverage you'd like to consider and I'll quote rates.'

Don't make a big deal of the charitable policy. Don't push if there's reluctance. Don't even suggest it if there's a serious shortfall in the client's high-priority insurance program. On the other hand, don't assume that the suggestion will be rejected. No one should be offended by your trying to help a favorite charity. People can do amazing things when they want to. For most Americans, a certain charity holds a special spot in their hearts.

Many might hesitate and say, 'I'd like to donate a policy, but money is kind of tight now.' You might respond, 'It's your choice, of course, but money is very tight for charities, too. Some are being forced to close operations. Let's finish this other paperwork and you can let me know later.'

There are many variations on this theme. For example, dividends from an existing or new policy can be assigned to a charity. Paid additions can be donated. An old policy or one which is being replaced can be provided. The gift need not be a new policy in order to be useful and tax-deductible.

There are several ways to handle the product:

• A separate application may be taken, concurrent with the primary application, showing the cause as owner and beneficiary.
• The agent may request an additional policy to be issued which can be taken at the applicant's option. If the additional policy does not show the charity as owner and beneficiary, a simple change form can order those changes.
• The second policy may be delivered to the client with application to be completed and signed on delivery, subject to company rules.

Not all Life companies support charitable policies. Lapse rates may be high if charity-owned policies are not sold and serviced properly. But in a P/C setting with frequent service, a solid agent/client relationship, and other advantages available to both parties, persistency can be extremely good. Furthermore, the second policy's acquisition costs are low in such sales since the accompanying primary policy covers most of them. While most Life companies do not have direct experience with charity programs from any source, and certainly not through P/C agencies, they probably go by what they hear, good or bad, from other sources. Ask them.

Carriers can promote this easy tier of additional volume by helping producers promote the charitable concept. Mail stuffers, educational seminars, training materials relating to charitable policies, and other marketing aids will go a long way. Carriers can ease underwriting costs, especially in view of the increased volume and decreased expense reaped through the sale of the second policies. They might waive or reduce policy fees on the second policy, or offer a second-policy credit. They might create special features aimed at this market niche. And carriers-or the agency-can offer press releases, public relations pieces, seminar co-sponsorship, and other mass-market exposures to build interest.

Charitable policies can lead to an endless stream of business. One agent started on this road specializing in charitable policies for colleges in a single state. Without even a P/C connection-he was a Life-only producer- the agent amassed a seven-figure fortune within a few years. On a modest level, such charitable cases lead to more cases, with referrals building to influential charity supporters, in turn leading to officers and board members. Often a charity policy leads to a chance to work on the P/C Line as policy donations are delivered.

Some agents give seminars to supporters of the cause, while others offer open seminars to the general public with numerous causes represented in the audience. Some agencies and carriers have special sections dealing only with charitable operations. Estate planning (and all that it leads to) is a natural tie-in. 'How to make money by giving it away' can become a topic of wide interest, and on a joint P/C and Life base, it can be very effective. P/C accounts for colleges and universities, hospitals, churches/synagogues, and other nonprofit organizations can follow the Life production. The personal insurance business of key community figures often is tied to such organizations.

CAVEAT: Don't ask for an official endorsement of a charity, at least in the beginning. That's a long trail and you probably won't get it. But you don't need it. Individual gifts of policies will be warmly received. If the organization's active members include other insurance people whom it doesn't want to offend, you'll meet them eventually and they may want to work with you on this project. Other insurers, on the other hand, may pointedly avoid writing insurance for the cause, but don't object to others doing so for the cause's benefit.

All of this, you may ask, just from asking about a second policy? Maybe. Even if it doesn't blossom into maximum potential, at just a moderate level of success it can increase Life profits by 25%, 50%, or more. Don't say it won't work; try it. People will thank you, even if they don't buy.