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As the theater
darkened a hush fell over the audience and the heavy curtain rose revealing a magnificent
array of musicians adorned in splendid red military jackets with brightly polished
gold buttons and wearing crisp white slacks. Acting upon a signal from the conductor's
baton the highly disciplined Marine Corps Band filled the vast auditorium with a
spine-tingling, heart-warming rendition of "Stars and Stripes Forever".
The entire audience, filled with excitement, pride and patriotism, rose to their
feet, but I couldn't help but feel a little depressed. The cause of my sadness was
the realization that, even though I knew the performance would be a wonderful experience,
the concert eventually had to draw to a close.
As professional salespeople, we share distinct parallels between our presentations
and the Marine Corps Band concerts. Just as the band immediately captures the attention
of their "customers" with the overture, we must capture the attention of
our prospects early on by actively engaging them in the sales process. Just as the
band's audience sits back waiting to be entertained, our prospects sit back waiting
to be sold. Yes, prospects actually do enjoy being sold, especially if they can participate
in the process.
Reviewing my 32 years experience with insurance sales, I conclude that most sales
which are lost, are lost due to agents and advisors presenting themselves as teachers,
rather than professional performers who engage their audience. Consequently, they
don't "set the stage" with a great overture and they bore and confuse their
"audience" as they attempt to teach them about things in which they have
no interest. A perfect example of this can be found in the sale of disability insurance
to fund formal (IRC Sec. 162) sick pay plans.
In spite of the fact that the fact that the D.I. industry has all but buried the
sales force with mountains of printed material on the subject, the agent/teacher
has made little progress selling disability insurance in the vast, salary continuation
marketplace.
In 1982, U.S. News & World Report participated with LIMRA in a survey of 3,200,000
small businesses. The survey revealed that less than 27% of the business owners had
individual disability insurance. Further, most of the owners said they had never
been approached to purchase individual policies and the majority had never heard
of a formal salary continuation plan. This situation exists even today because the
financial services industry has developed more agent/teachers than they have agent/performers
and has fostered and promulgated the philosophy that unless the agents and advisors
can speak fluently and effectively on each and every provision of a formal (IRC Sec.162)
sick pay plan, they will be unable to sell the disability insurance necessary to
fund such a plan. Nothing can be further from the truth!
Recently I attended a two-hour meeting on salary continuation plans conducted by
a major insurance company. Because the session provided two hours of continuing education
credit, the room was packed with participants. The presentation was interesting,
well conducted and filled with colorful power point slides. I am certain that all
in attendance learned more than they ever imagined about market size, great potential
and Internal Revenue Codes, but no one learned how to sell the insurance!
There is, however, a relatively simple solution to this problem. Agents and advisors
should think of themselves as performers. With this mindset, let us examine how the
agent/performer generates sales in his or her "theater" using these
three basic entertainer type skills:
- Captivating Overtures
- Engaging the Audience
- Ending the Show
In disability insurance
selling, the "captivating overture" is: an interesting question the prospect
can answer with confidence. For example, in the context of corporate salary continuation
plans, the agent/performer's overture could be:
"Mr. Business Owner, if you were unable to work for a long period of time due
to an illness or injury, what would you do for the continuation of your income?"
This fits our description of an interesting question that the prospect can answer
with confidence.
Business Owner's reply: "If I were too sick or too hurt to work, I would simply
continue to pay myself. After all, I own the company."
Agent/performer: "Mr. Business Owner, I am certain you would and so would
I. But let me ask you a question. Would you pay yourself with before-tax 'salary
dollars' or after-tax 'dividend dollars'?"
Business Owner's reply: " 'Salary dollars', as I always have."
Agent/performer: "Mr. Business Owner, there is a problem with that. If
you are too sick or injured to work and have no formal sick pay plan to continue
your income, the IRS will not consider any payments to yourself beyond 30 days as
'salary dollars' which are a deductible business expense. You may still pay yourself.
However, because your business is incorporated, you must use the expensive 'dividend
dollars' not the cheap 'salary' ones. In addition, the IRS may require you to pay
the same 'dividend' to your other shareholders. Mr. Business Owner, having no formal
plan to continue your income as a deductible business expense when you are unable
to work isn't a very good strategy. Wouldn't you agree? You may, of course, establish
such a plan if you write the details into your corporate minutes and communicate
them to your employees. Merely formalize what you would do anyway! By doing so, you
will have regained deductibility of payments to yourself and have avoided the possible
IRS treatment of those payments as dividends. My question now, Mr. Business Owner,
is, exactly where will the money come from if you are too sick or injured to work?"
Business Owner's reply: "From my corporate profits."
Agent/performer: "Mr. Business Owner, wouldn't that put tremendous strain
on your cash flow? No successful businessperson commits the profits or surplus from
their business to a long-term, open-ended liability! It can be disastrous! Is that
what you really want? Mr. Business Owner, there is a better way!"
From the overture to this stage of the production, the agent/performer has engaged
his audience through an interactive questioning process. He now ends the show.
Agent/performer: "Mr. Business Owner, I ask that you purchase a disability
income policy providing $5,000 per month, $60,000 per year - i.e. 60% of your $100,000
annual pre-tax income, to fund your formal (IRC Sec. 162) sick pay plan. The $2,000
annual premium required will become a deductible business expense and the policy-provided
'sick pay' will increase your corporate cash flow 245% over the self-funded plan
in the event of your long term disability. Let me show you how it works, fair enough?"
(Incidentally, unless you are an accountant, don't give specific tax advice to
your clients. Suggest they consult their own CPA.)
Three Methods of Continuing a $5,000 Monthly Income
To a Disabled Corporate Owner
|
I.
NO PLAN
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II.
QUALIFIED SICK-PAY PLAN (Self-Funded)
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III.
QUALIFIED SICK-PAY PLAN (Insured)
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Corporate Profit
Income Tax*
Left Over |
$100,000
34,000
66,000
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Corporate Profit
Sick-Pay
Left Over |
$100,000
60,000
40,000
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Corporate Profit
Premium
Left Over |
$100,000
2,000
98,000 |
| |
|
|
|
|
|
| Dividend Check** |
60,000
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Income Tax* |
13,600
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Income Tax* |
33,320 |
| |
|
|
|
|
|
| Net Cash Flow |
$
6,000
|
Net Cash Flow |
$
26,400
|
Net Cash Flow |
$
64,680 |
*34% Corporate Tax Bracket
**Treated as dividend due to absence of a plan
***$64,680
is a 245% increase over $26,400***
Agent/performer:
"Mr. Business Owner, which plan would you prefer?"
(Hint: PICK three, PICK three, PICK three)
Successful insurance
sales people are true performers. They view prospects as their audience and constantly
strive to make their presentations interactive and entertaining. The Marine Corps
Band knows they must begin each performance in a captivating way; they must entertain
their audiences and set them up for the grand finale. Successful salespeople do the
same, for they too realize, "when they begin the overture, they start to
end the show!"
Keep these distinct parallels in mind as you develop your dynamic sales presentations!
You
will be happy you did!
Jim McCarty, CLU, RHU, LUTCF, is the author of the fast selling book "Above
The Line...Scorching Strategies for Sizzlin' Disability Insurance Sales Success". For the past 25 years, he
has been a professional sales trainer, speaker and consultant specializing in the
insurance industry. Jim frequently appears as a main platform headliner and has been
a presenter at three Million Dollar Round Table annual meetings. Jim recently was
presented with the coveted Ernest E. Cragg Ambassador Award by the Life Underwriter
Training Council (LUTC). He shares his experience through dynamic speaking engagements,
hard-hitting audio tapes, and informative, nationally published sales achievement
articles. Jim is Vice President of Insurance Sales for the Eastern United States
at Express Financial Advisors.
SIZZLIN' SALES SUCCESS
chersman@home.com
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