Continuing Education for Financial Service Professionals
Mastering the Life Insurance Sales Process
Mastering the Life Insurance Sales Process
Copyright © 2015 CLIFE Inc. All rights reserved. Any reproduction of parts or all of this book and its contents by any means electronic or mechanical is prohibited.
The information in this course is provided for educational purposes only; it should not be construed or interpreted as providing advice. Agents and advisors should always seek guidance from their principals and compliance experts in regards to informing themselves and others about details of the products they sell and other considerations of their business.
We welcome all feedback and suggestions for additions to the book. Please send your comments to info@clifece.ca. CLIFE INC. 1595 Sixteenth Avenue Suite 301 Richmond Hill, ON L4B 3N9 www.clifece.ca
Mastering the Life Insurance Sales Process provides a continuing education credit upon satisfactory completion of an online test. Please see the website for details or email info@clifece.ca.
Note to Readers: This course makes references to other CLIFE courses we offer. This is the only CLIFE course that has ad-vertorials; all other courses are purely informational.
Establish the Need for Life Insurance and Your Sales Approach
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Knowing who needs life insurance and to what purpose is just as important as knowing the life insurance product.
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Life insurance needs assessment and fact-finding exceed know-your-client (KYC) and suitability requirements for those who sell securities.
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Both requirements are designed with consumer protection in mind.
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Incidentally, satisfying these requirements also protect you, the financial advisor, from claims by policy owners or beneficiaries.
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An advisor can show from a needs assessment that: life insurance coverage was discussed in light of coverage (types and amounts) needed; o conflict of interest was managed.
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The Canadian Council of Insurance Regulators (CCIR) and the Canadian Insurance Services Regulators' Organization (CISRO) endorsed three principles for managing conflicts of interest that might arise in the sale of life and health insurance products. These are: The interests of the consumer must be placed ahead of those of the advisor; Actual and potential conflicts of interest must be disclosed; and • The recommended product must be suitable to the needs of the consumer.
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The third principle (suitability) is specifically addressed in The Approach, developed by the Canadian Life and Health Insurance Association (CLHIA). The Approach states: “The recommended product or service must be appropriate for the needs of the client as determined by a needs-based assessment done by the advisor and/or as identified by the client.”
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The Approach is based on satisfying six criteria. When these criteria are applied during the sales process, an advisor can show that his sales practices are consistent with the principle of suitability.
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The Approach does not place new demands on advisors or require them to change their behaviour; it only suggests a means by which an advisor can provide “best” advice and recommendations to the client or potential client.
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One of the requirements in The Approach is the need for documentation of client meetings, depending on the advisor’s current practices. Client files should be maintained in such a way to clearly show how recommendations link to client circumstances.
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Documentation is key. If a client complains or there is a client dispute, proof of your practices may be required by: Insurance regulators;
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The insurance company that provided the product in question;
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Your E&O carrier;
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The Canadian Life and Health Insurance OmbudService (CLHIO), and
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The courts, if there is a lawsuit.
Learn strategies to know your client better, and much more in the CLIFE course, Be A Better Advisor This Year (5 CE credits).
Satisfy These Criteria 1. 2. 3. 4. 5. 6.
The criteria for an advisor to satisfy The Approach are based on: Disclosure; Joint understanding of client expectations; Fact-finding; Needs assessment; Recommendations and advice; Information.
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