The Sale
Many advisors immediately think of a death benefit and a term insurance solution when processing a key person case. A more nuanced approach, however, uncovers many other aspects to consider and solutions besides the 10-year-term contract. Consider some of the ways a key employee may be lost to an employer:
– Disability.
– Retirement.
– Loss to a competitor.
Each factor has the same effect as a death would: lost revenue and the need to replace a key employee. Utilize our resourceful CreativeOne sales team to work alongside the expert executive bonus plan (BOES) team at Principal to help you design solutions to fit your client’s specific concerns.
The Process
Regardless of the product solution, a key-person sale uses a simple structure:
The business is the owner, and beneficiary, of a life insurance policy insuring a key employee. Upon an employee’s unexpected death, the business receives the death proceeds (generally income tax-free).
The Client
The question of who is or is not a key person is not always a clear answer. To help clients decipher the key person in their organization, consider focusing on the “difference makers” inside in these areas:
– Operations.
– Customer relationships.
-Sales volume and profitability.
The Fact Finder and Quantifying the Risk
How much insurance is enough? If your clients are using the five-times-compensation approach, they may be under-insuring the risk. Use Principal’s resources to truly understand the risk to the business, how to quantify it and how to get it through financial underwriting the first time. Start with the key person calculator or a request for proposal.
The Product
Are you presenting clients with other products beyond term insurance? If not, you may be walking away from big sales that could potentially protect their business on multiple fronts. Learn how key-person insurance, funded with permanent insurance, can do double duty in aiding in retention of key employees. Understanding the multifaceted nature of the risks highlights why a permanent solution with real cash value may be the right answer.
The Underwriting
Have a willing buyer? Use accelerated underwriting to get the case, with a face amount of $1M or less, through quickly.
The Administration
Even if it is term insurance, there is a real need for effective reporting and administration in any corporate-owned insurance program. Learn from the pros at Principal why their no-cost administration platform is a critical part of working in this space.
The Training and Resources
While this email contains a lot of information, it’s only scratching the surface on the key-person story. See below for more training resources on key-person insurance and the BOES platform:
Now What?
By combining CreativeOne’s experience, expertise and educational resources, we are confident our advisors and producers are receiving quality service and support they won’t find elsewhere. We are always willing to go above and beyond to help our advisors capture opportunities, and we genuinely strive to add value to the life insurance process. Call us at 800.992.2642 to discuss upcoming client opportunities, and we’ll help you prepare a strategy for your next meeting.