Wealth Planner

There was a time when life insurance agents provided life insurance, investment advisors provided money management, accountants did tax work, attorneys did legal work and so on and so forth. But, for certain types of wealthy clients, that time has passed. “Over the past few decades there’s been a pronounced trend toward the melding of functions when it comes to servicing wealthy clients,” says Hannah Shaw Grove, an expert on the high-net-worth markets and a founder of Private Wealth magazine.

“Professionals like accountants or life insurance producers who have strong client relationships leverage that proximity and trust to help them expand into other service areas, provide more comprehensive solutions to their clients and develop a more profitable business model. In essence, it is the process of becoming a wealth manager.”

Wealth management is the consultative process of meeting the needs and wants of affluent clients by providing the appropriate financial services and products. Wealth management, done well, is about problem solving. It addresses the often-interconnected concerns and issues of wealthy individuals and families and delivers integrated financial solutions. It’s a holistic orientation that is in high demand by the affluent.

“Strong client relationships are important for all wealth managers and mandatory for those who are new to the business model” according to Grove. “Building rapport, in combination with broad-based and insightful assessments, makes it easier to spot opportunities for better, more inclusive service and problem-solving.”

Furthermore, most of these wealth managers are structured to tap the capabilities and proficiencies of other professionals and organizations. They recognize that they can’t be expert at all forms of planning and services and have constructively aligned themselves with the appropriate resources to build best-in-class solutions.

 

High-caliber life insurance agents are one type of professional that has been able to successfully transition from providing a narrow scope of services to delivering a spectrum of planning and investment expertise. There is an elite group of sophisticated life insurance producers who are now operating as wealth management practitioners.

When empirically evaluating life insurance agents against those agents that have adopted a wealth management approach, the latter are significantly more successful on a number of key metrics. In one study, we evaluated the businesses and practices of 316 high-end life insurance agents who were all statistically matched with respect to the amount of life insurance they wrote. About 20 percent of the sample was comprised of agents-turned-wealth managers and the differences in their practices were dramatic. After transitioning to wealth management, the amount of life insurance they wrote on an annualized basis increased by more than 35 percent, within two years they were responsible for between $50 and $100 million in investable assets and they were more than four times as likely to get client referrals.

“There’s no shortage of evidence that a wealth management approach is good for both the client and the practitioner,” confirms Grove. “High-net-worth clients want a wealth management experience that transcends individual products and services and the professionals who are sensitive to those preferences are likely to benefit. Insurance agents, in particular, are a natural fit with the financial elite because they understand the complex aspects of multigenerational wealth and how to orchestrate an intricate long-term planning process to achieve goals.”

Seperate Life From EPF

Life Insurance Association of Malaysia (LIAM) is proposing a separate tax relief for Employee Provident Fund (EPF) contributions and for life insurance premium in Budget 2015 in order to promote financial planning among Malaysians. 

“To achieve this aim, LIAM proposed that the tax deduction be made separately available for EPF contributions and life insurance premiums, ie RM6,000 tax relief for EPF contributions and a separate RM6,000 for life insurance premiums,” said president of LIAM

Vincent Kwo Shih Kang in a statement yesterday.

In addition, LIAM is proposing a tax relief for medical and education insurance premiums to be increased from the current RM3,000 to RM6,000 as the current amount of tax relief is insufficient in most circumstances.

LIAM noted that the current taxation system which provides a RM6,000 tax deduction on combined
EPF contributions and life insurance premiums was last revised in 2005 and has suffered from inflation erosion.

Apart from inflation erosion, the current tax incentive system also does not differentiate the two important elements of financial planning, ie savings and protection where EPF is for meeting long-term savings needs while life insurance is primarily for the purpose of financial protection with a secondary aim of long-term savings.

LIAM is also proposing a separate deduction so people can use the extra money to invest in financial protection plans to address the protection gap issue especially as the Economic Transformation Programme has set the objectives to increase the insurance penetration rate to 75% of the population by year 2020. Currently, the penetration rate of life insurance and takaful is at 54%.
“The life insurance industry plays a very important role in financial protection, financial accumulation and healthcare funding.

With proper advanced planning and the right tax structure, the private sector and the rakyat can be incentivised to play a bigger role and form a public-private sector partnership with the government in sharing the cost of various social economic benefits as our country progresses towards a developed nation,” added Kwo

GST & Insurance

The Malaysian Insurance Institute (MII) is not expecting a decrease in insurance penetration rate next year despite the implementation of the Goods and Services Tax (GST).

“The growth of life insurance has always been slightly higher than the country’s gross domestic product and the trend is expected to continue in that vein. The growth of the industry has always been in tandem with the growth of the country’s economy. As long as we are growing economically, the insurance market will also grow.”

He said the life insurance industry, which is targeting to achieve 80 per cent penetration rate by 2020 from 54 per cent last year, would be able to achieve its target despite challenges.

 

The challenges for the industry, besides the lack of talent, are to align the products to the market. The Malaysian market is not short of portfolio offerings but is lacking in distribution channels and market awareness.

Medical Claim Barriers

SOME months ago, I was hospitalised for nausea, high fever, constant vomiting and muscle weakness. Initial tests ruled out cancer, but subsequent tests confirmed resistant bacterial infection, which needed strong antibiotic drips.

Decisions for additional tests and treatments were based on the insurance policy, which had numerous exclusion clauses and conditions that needed to be met before such tests could be claimable.

The policy stated that hospitalisation had to be for 24 hours for any fees could be claimable. This requirement was fulfilled since the doctor insisted that I had to be admitted for eight days.
I had learnt my lesson years ago when I was hospitalised after an accident but voluntarily checked out within 24 hours, which rendered my claim void.

There are certain tests and treatments that are only claimable upon performing other medical procedures, without which, the whole amount would be non-claimable.

This is ridiculous. Certain procedures are dangerous if not needed, leaving the insured in a dilemma.
It is unfair how insurance policies dictate how we fall ill or die before any sum is claimable.
Insurance companies have such unreasonable clauses that it is no wonder that the eventual hospital bill charged to the insurance company is exorbitantly high since there are so many unnecessary procedures that need to be done to ensure that the charges are claimable.

With the advancement of medical technology, some serious illness, even cancer, can be treated with simpler medical procedures.

Complaining to the Financial Mediation Bureau is a long affair, which decides cases based on terms and conditions in the contract but gives no leeway to debate the unfair contract terms and unreasonable mutuality clauses, where one claim is claimable only if another medical procedure is performed.

The National Association of Malaysian Life Insurance Field Force and Advisers, and Life Insurance Association of Malaysia must work to review unfair contract terms in insurance policies.
One way is to introduce an Unfair Contract Insurance Terms Act to ensure that the terms and conditions of insurance policies are simple and straightforward.

Such an act must be applied retrospectively so that existing insurance policy holders have an avenue to challenge any unfair terms and conditions of the policy.

Policy holders often have their claims rejected over a minor detail and/or the non-performance of an unnecessary medical procedure.

Falling sick or being involved in an accident that requires admission to a hospital is stressful.
In desperation, most insurance policy holders would take the easier way out, and submit to unnecessary tests and treatments to ensure compliance with the policy, leading to a vicious circle of escalating healthcare cost and insurance premiums.

Ng Shu Tsung, Kuala Lumpur

Closing A Deal

Closing lines: They can be a little cheesy, sometimes unnecessary and most times overly dramatic. But they've also worked -- on some occasions -- to help close sales and gain clients. Of course, in reality, you're not "closing" a sale, but opening a relationship once that prospect signs up for a policy.

And while there is no "best" way to close a sale, and no one closing line is a fit for each prospect, some of the following helped agents turn the other individual in the room from prospect to client.
Take a look at some of the best closing lines out there and please, let us know what sales techniques you feel work best.

1. "Just one more thing"
This is a line made famous by the 1970s classic TV detective, Columbo. He often used this line when he was done questioning suspects. Straight-faced, he would head for the door, seemingly ending the interrogation. But he would pause just before exiting the room, turn, glare at the suspect and say, "Just one more thing."

Whatever followed that phrase would pack an incredible punch and leave the suspect deep in thought. The tables were turned, the suspect is weakened and Columbo, at this point, usually gained the upper hand.

When prospects are being sold to, they naturally have their guard up. When they feel the sales process is coming to a close and they are no longer being "sold to," they let their guard down. This is when the agent or advisor should say the most powerful thing in his or her arsenal of lines. "Just one more thing...your family depends on you."

2. "Level with me"
To some, this phrase may seem a bit too aggressive. To others, maybe it's not aggressive enough. Let's face it, you are selling protection and financial security to your prospect and their family.
This phrase, like the aforementioned line, should be used towards the end of your meeting. For example, as you approach the end of the selling process and the customer says he wants to think about it, ask him to get to the point: “Level with me. Have I failed to show you the value that you will receive from your investment?” Then be quiet.

Inevitably, the prospect will see that you are selling him something of value. You are selling him protection. You are selling him something his family needs. 

3. "You can put a price on anything, except a good night's sleep"
Sure, sure, it's one of the more cheesy closing lines in existence, but this saying is true. Life insurance agents and financial advisors are selling products that allow for their clients to have peace of mind. And, as we know, peace of mind usually aids in a good night's sleep.
You, as an agent or advisor, are selling client's a good night's sleep. Not one person you meet should be able to tell you that there's no way they would be able to rest better, knowing their family was taken care of should something happen to them. If they are, in fact, able to tell you this, then maybe that's not to type of client you want.

4. "Could this be a benefit to your family?"
This one is pretty self-explanatory. A prospect's answer to this should always be "yes" because life insurance would undoubtedly benefit a family in need. And with that answer, they've pretty much sold a policy to themselves.

Just ask the question: "Could a check for 500,000 be of use if your husband/wife passes away?"

5. How much would you be willing to spend to make sure your family is taken care of?
This question could elicit a range of responses, but usually, if a prospect gives a specific dollar amount, it winds up being much less than the price of a monthly premium on a life insurance policy.

The point of this line is to refute the widespread assumption that life insurance is too expensive for the average Malaysian household. Indeed, people are usually shocked when they learn how affordable it actually is.

This line, like many of the above, could be used at any time during a meeting with a prospect. But it may work best if saved until the end of a pitch going nowhere. Before leaving, ask, "How much would you be willing to spend per month on a [insert dollar amount] life insurance policy?"

The prospect's possible response: "Right now I can only afford an additional [insert low dollar amount] in monthly expenses."

And your response: "That's great because we have [insert product name] that is only [insert amount lower or equal to prospects number] per month and will provide your family with [amount of pay out] in the event of your death."

It's hard to say no to something affordable that can benefit those that depend on that prospect the most.

Great Sales Ideas

Life insurance producers face each New Year intending to make it the best one yet -- a banner year. But as we all know, it takes more than even the best intentions to be successful in our business.
Even though there is an abundance of good advice on how to pump up production, all too frequently the results at year’s end are below expectations. My job includes getting acquainted with producers and following their careers, and it’s abundantly clear that the most successful individuals focus on a few issues. I call it “A Life Insurance Producer’s Four-Point Plan of Success.” It may be helpful in the year ahead.

Demonstrate the value of life insurance as an asset class
With Term Life products accounting for 80 percent of all life policies sold, it seems fair to conclude too many of us are order takers. We’re not selling the concept of life insurance as an asset class. As you know, a life insurance policy is also an asset, providing non-correlated returns, liquidity and tax advantages.

While some might consider the premiums an expense, life insurance is an asset that will provide cash, as promised under the contract, at death to designated beneficiaries. The amount paid by the insurance company at death will not be affected by market conditions. While this isn’t a new idea to producers, it can be big news to consumers, including those who already own life insurance plans.

The most consumers seem to know about life insurance is that they must die before there’s a payout, which may help explain why what we sell has so little appeal.

We talk too much about ‘life insurance policies’ and not enough about life insurance as an asset with an internal rate of return (IRR) that generates guaranteed tax-free income, a statement no other investment can make.

Since IRR can be applied to any asset class, it’s an easy and straightforward way to show clients why permanent life insurance is a sound choice.

Give clients what they want

Even though it’s sometimes easy to think otherwise, clients usually know what they want. They may not be adept at expressing themselves or feel reserved about speaking up, but they still have a picture in their minds of what they want.

More often than not, the image they have in mind is a comfortable, enjoyable lifestyle they can count on over the years. What goes with it is having the financial resources so they can educate their kids, have an adequate retirement, and afford some type of long-term care if they need it. Although it may seem otherwise at times, most people have a sensible outlook on their lives, their expectations and the future.

Today, no one is better equipped to give clients what they want, to help them reach their objective than the life insurance producer. No one. Today’s life insurance programs are more flexible than ever.

We can customize life policies with any of a growing number of riders to meet specific client objectives, and it may surprise many consumers that they don’t need to die to take advantage of the benefits of a life insurance policy, or, as we say, living benefits.

Today’s clients are more concerned with outliving a retirement plan than they are death. With increased longevity and life expectancy, their concerns are well founded (10,000 people are turning 65 every day and seven out of 10 will have some sort of chronic illness). This is why living benefits have so much value to consumers. We all know adults who are caring for an aged parent. These products provide solutions that help meet these challenges.

The flexibility doesn’t stop with policy riders. It goes further with the ability to ‘trade in’ a policy for a ‘model’ that better fits current needs. And because a life policy can have value, they can, if necessary, sell it.

Be of service

Since life insurance producers think of themselves as salespeople, this is also their public image; it’s the way most people think of them. This is one reason why it’s difficult for producers to get prospects to listen to their story, agree to an appointment (and then keep it) or provide referrals that have value.

Life producers aren’t alone. Even though we often claim to be ‘different,’ other businesses and professions face the same obstacles. Salespeople in other fields have had the foresight to overcome their obstacles by offering their customers a high level of service that fosters satisfaction, builds loyalty and establishes beneficial relationships. The attitude of making the sale and moving on must change if life producers want to be successful.

Frankly, the customer service experience for producers is simple — there’s nothing complicated about it. Even though it’s largely ignored, the single tool most effective in building client rapport, confidence and continuing business is the largely ignored annual policy review.

Producers complain because they don’t have enough leads and that the phone never rings. All this suggests that we have a lot of time on our hands. Why not put it to good use doing policy reviews? Lifestyles change, health changes, obligations change, goals change, and the policy review is the way to determine the appropriateness of a client’s current life insurance program, where it may not measure up, and what is needed to get it into sync with their current situation and future objectives. The key to sales is customer service.

Getting past the pleasantries

We all think about our lives and the way we would like them to progress. But, more often than not, we don’t have the answers for what it will take to make this happen.

As most producers know, prospects will ‘open up,’ as they say, if they have the opportunity. When we go to the doctor, we don’t spend time talking about a recent vacation, an upcoming sports event or ‘blowing the breeze’ about our kids. Yet, our meetings with prospects often start that way. It may only distract us from using the time to learn what the issues that concern clients and having the opportunity to share possible solutions with them.

As most every producer has learned, prospects will ‘open up,’ if we let them. And that’s every producer’s job — to clear the way so prospects can talk about what’s most important to them. When this happens, producers know how much prospects appreciated the opportunity. When meeting with prospects, it’s time to get down to business.

Becoming successful requires a plan, one that helps a producer stay on track for writing more of the right kind of business.

Life Riders Subject to GST

Bank Negara’s objective of increasing the penetration rate of life and family takaful insurance will be dented with the imposition of the goods and services tax (GST) on certain insurance products, according to National Association of Malaysian Life Insurance Field Force and Advisers (Namlifa) president Kho Chui Ing.

One of the main goals of Bank Negara’s concept paper on the insurance industry, which is still at its consultative stage, is to raise the life insurance and family takaful penetration rate - currently at 54%, to 75% by 2020.

 

“Unlike the practice in Singapore and other countries, where life insurance on the whole is exempted from GST, in Malaysia only the basic life insurance policy is exempted but the rider plans that complement the policy is taxable.

The main riders include medical insurance, personal accident and critical illness coverage on the life insurance policy,” Kho said.

 

“By imposing such tax, a consumer who has a life policy could end up paying higher premiums. Alternatively, there could see a “knock-off” on the cash value entitlement, which the policy has generated over time.

This affects the long-term sustainability of the policy, which is one of the objectives in the concept paper to safeguard the interest of consumers.

 

“Namlifa is concerned that if the sustainability is affected, this may result in a high possibility of lapses of policies. Higher cost and reduced cash value may deter the public from buying insurance. Furthermore, the imposition of GST is not only for new life policies but also applies to existing ones as well,” he added.

According to Kho, riders in investment-linked and life policies should not be subject to GST as they are “incidentals” to the basic life policy. Furthermore, he said unlike general insurance, life insurance is for long term protection. He said exempting medical insurance from GST would help reduce the Government’s healthcare expenditure and at the same time, enable Malaysians to own personal medical insurance for better health care going forward.