Use Human Life Value to Grow Sales

The Human Life Value approach to selling life insurance is a win-win for the consumer and the advisor.

By Peter Bates

A growing number of advisors are adopting the Human Life Value approach when selling life insurance to their clients and prospects. This concept maintains that a person should carry life insurance that is equal to the present value of the capitalized value of his future net earnings. This ensures that his family will not suffer disastrous financial loss when he dies.

The following case studies demonstrate how two agents have used this approach to take care of their clients’ total financial needs and, in the process, sell more life insurance.

Case study No. 1:
Tom Zugger of Buffalo’s Mass Mutual had known Bill Scott for years. As co-owner of Scott, Danahy and Naylon, a property and casualty firm in Buffalo, N.Y., Scott was well acquainted with the insurance industry. Nevertheless, he was carrying only about $600,000 in personal life insurance. Deep down, he knew he was underinsured but hadn’t gotten around to changing his coverage.

Then something happened that got him thinking. He’d been referring some of his clients to Zugger for life insurance and found out that they were very happy with the increased coverage Zugger was offering them. Zugger had begun applying the Human Life Value method to his selling. So Scott called Zugger and said he was inspired to look into more coverage for himself. He said to Zugger, “What’s good enough for my clients should be good enough for me.”

“I did an analysis of his entire financial situation,” says Zugger, “and we determined it would be good if he saved additional money in the next 10 years or so before retirement.” In his early 50s, Scott clearly needed more insurance for his estate plan. At the top of the list of Scott’s concerns was the hefty estate tax his children would have to pay upon his death simply because he had been very successful in his business.

Zugger’s plan provides the liquidity to pay the estate tax at death. And he’s very happy with it. By offering good service through the Human Life Value approach, Zugger has been able to reap the benefits of good referrals and acquire a high-profile client.

Case study No. 2:
Scott Menta, CFP, CFC, CLU, is a financial planner at MetLife. A while back, he had a negative experience when a client died. He had to deliver a $330,000 check to the widow and children. “It will keep you going for a while,” he told them, with regret, “but you’ll probably have to sell your house and go back to work.”

After that experience, Menta studied the Human Life Value method and began using it with his clients and prospects. When he makes use of this approach, he takes time to explain it thoroughly, sometimes using an analogy like this:

“If your house were to burn down, how much of it would you want replaced? If your car was stolen, how much compensation would you expect?” His clients and prospects invariably say 100 percent. He continues: “But if I talk about the concept of an income stream, that’s not immediately clear. So I say: ‘Think of your life and career as a money-making machine. If it stops functioning, what do you expect to receive in compensation?’”

Menta’s approach not only brings a chuckle, it also brings about the dawn of realization. “The hardest part is getting them to sit down and talk to you,” he says. “You can almost hear them thinking: ‘OK, how much is this going to cost me?’” When they do ask Menta that question, he usually responds, “That depends on what you want to do.” He then reviews the options with them.

He’s gotten a very favorable response the past three years using this approach. His clients are now averaging 10 times the coverage they had previously. “The best part comes when I show them that the premiums can be made affordable for anybody,” he says. “They don’t need to take out a second mortgage to pay them.”

Peter Bates is a contributor to Advisor Today.