Are P&C agents missing out on additional sales right under their own noses? A major of P&C agents have commercial clients or are working with owners of small, tightly held businesses. Commercial insurance is obviously a must, but life insurance is largely overlooked.
Example 1: Moe and Larry are each 50% owners of their printing company. They have commercial insurance to help mitigate risk and protect their company. But what would happen to their business if Moe was heading home from work and was struck and killed by a driver? Could the business go on? What would happen to his 50% stake of the company? If they have buy/sell life insurance policies on each other, this messy transitional period could be a lot smoother. There are a few ways to set up buy/sell policies and they can be funded with any type of life insurance (term, ROP Term, UL, or WL). (I like ROP and I’ll tell you why shortly.) Instead of Moe’s widow now having 50% stake in the company, she would receive the life insurance death benefit in exchange for Moe’s shares of the company. Now the company is 100% owned by Larry and he doesn’t have a disinterested 3rd party (Moe’s widow) as a new business partner.
Example 2: Moe and Larry have been doing really well and decide it is time to hire an experienced sales person to free up their time and allow them to focus more on running the business. Curly is a seasoned salesperson and with his expertise, helps drive up revenue with new and existing sales each of the first 3 years with the company. Suddenly, Curly passes away in a freak accident on his farm. What will Moe and Larry do to continue the growth of their company? With a key person life insurance policy (still just term, ROP, UL, or WL), they could have insured Curly for up to 10x his annual salary. This would help them recoup lost revenue, lost sales, and give them time to hire and train a new salesperson to fill Curly’s shoes.
The reason I like ROP term for buy/sell and key person insurance is that if there is a claim, it pays out like a normal term policy would, but if the business breaks up or the key employee takes another job, or he decides to retire at age 65, premiums can be continued on the ROP term and at the end of the term, the owner would get 100% of his premiums back.
Commercial insurance is a must for small, medium, and large companies but when discussing this with your clients, be sure to go back and discuss how you can help their business continue if something were to happen to an owner or a key employee.
You are not only rounding out your book of business and increasing revenue, you are keeping competitors out, and helping your clients get insurance they know they need but maybe never have time to talk about which hopefully leads to warmer referrals.