Now I know what you’re thinking. What does Star Wars have to do with the topic at hand. I’ve always loved Star Wars. In my more geekier days, I even read all the books. And the most recent trilogy is just so bad, that they should just cancel it. How do you rewrite almost 40 years of Star Wars history? Canceled out 40 years of Star Wars Canon…almost as bad as a Final Expense Charge back!
Charge backs, whether they are from Cancellations, Insufficient Funds (NSFs), or Not Takens can ruin your day! These are dirty words that we have to deal with in the Final Expense world. But there are ways to reduce your charge backs. And reducing charge backs will increase your bottom line. So what can you do to increase your Final Expense income by 10-25% a year?
First, make sure the amount is affordable to your client. Sometimes, our people will bite off more than they can chew. Many times, I have walked back clients from a larger premium to make sure they can afford it. Also, I will re-ask them if the amount they have chosen is indeed affordable to them. “Now are you sure that this will fit into your budget? I don’t want you to lose your insurance when the gas bill goes up during the winter!”
Second, make sure you choose the draft based on the day they get their Social Security/Disability. This is a MUST! I don’t care what they say: “Well, I get my money on the 3rd, but I want this to come out on the 5th, just to make sure the money is in there.” That’s code for “I’ll pay for everything else first and if I have enough money left over, I will make my insurance payment.” I tell people it HAS to come out on the same day their Social Security or Disability comes in. That’s one of the reasons why I like the Social Security Billing form from Transamerica. Even when the 3rd falls on a Saturday or a Sunday, Transamerica will go in on Friday and get the money when it is deposited into their account. So whether it’s the 1st, the 3rd or the 2nd/3rd/4th Wednesday, those should be the only options you give your clients!
Now some carriers do not allow you to choose the 2nd/3rd/4th Wednesday. What do you do in those situations? Choose the latest the date could be. If it is the 3rd Wednesday, open your calendar and look at a month where the 1st starts on a Thursday. June of 2017 is an example. You will see that the latest the 3rd Wednesday can be is on the 21st. So that’s the date you pick. NOT THE DATE OF THE NEXT 3rd WEDNESDAY!
Third, send a thank you card and/or deliver the policy. I use www.sendoutcards.com to send thank you cards, but you can just go to the Dollar Store and buy some and mail them out the day you get the sale. Then you can cement the sale when you come back and deliver and go over the policy. That is also a good time to ask for referrals.
Those are some ways to help increase your persistency, but what happens when you do get a chargeback??
First, find out what happened! Call the carrier. Sometimes there was an NSF, because a routing/acctount number was entered incorrectly. Find out what the exact reason for the NSF was. If the carrier says it’s because there was no account by that number, you can check the voided check to make sure the numbers were copied down/entered correctly.
Then if you found out it was just an NSF/insufficient funds, go to the client’s house. Figure out what happened. Try to do it IN PERSON. You need to do this even in situations where they call to cancel. Don’t answer your phone and go to their homes. Find out the reason. There will always give you a smoke screen over the phone. When you show up, they will be cordial and explain the situation in detail.
Maybe you were replaced and didn’t know anything about it. Now, it is going to be rare that they actually found a lower price Whole Life carrier if you are an independent agent, but if they did you still want to find out. Many times, they signed up for AARP or Globe Life, which are usually term policies.
Then you can reiterate the deficiencies of term and save your sale. Again, they will not tell you this over the phone in most cases. Maybe you sold them $10,000 for $60/mo yesterday and today they get an increasing term mailer from Globe Life offering that same $10,000 for $25. They have forgotten everything you have told them about term. You WILL LOSE THE SALE 99 times out of 100 if you do not go out there in person! People are generally not rude at the door. So they will let you in and you can find out what happened.
If they won’t answer the door or you can never reach them when door knocking, as a last resort, give them a call. If they act clammy and won’t give you any info, this is when you can use the $1000 Guarantee from the presentation to your advantage. Just straight up ask them, “Were you able to find something better? Because if so, then you may qualify for the $1000 we talked about when I met with you.” Then they will open up. Don’t try to save the sale right there, but tell them you have to come to their house to fill out the paperwork to get them the $1000. When you get in the home, you can show them the problem with what they purchased and why it is not better than what they currently have.
Another thing I do, just from a business standpoint, is that I put 20% of each sale in a savings account to cover charge backs. Because most of our charge backs are paid for by future commissions, you won’t need to dip into this fund. Then I just use that money to pay for my taxes each quarter. That’s just smart. Treat your business like a business!
And if someone NSFs 3, 6, 9+ months in, look at it like it’s a blessing. Don’t look at it like money you lost, but money you’ve made. You’ve made 3 month’s worth of premium. Or 6 months or 9 months! That’s money in your pocket. Then you can try to save the sale. I always give them 2 options. “Well, you can make a double payment next month, which is sometimes hard for folks to do, or we can just rewrite you with another carrier so that you will only have one payment to make next month.”
Now you’ve received the commission from the first advance and then you will get a whole new advance from the next sale! Keep a view of the big picture. Many of our clients will fall off the books after 1 year and they will not be able to make a double payment.
I have clients that seem to only be able to keep a policy for 9 months to a year. I love them! Every year I get to rewrite them. The longer you are in this business, the more often that will happen. After a few years in the business, you will make far more money on rewrites than you could ever lose each year in charge backs.
Now, if someone falls off the books because they missed their first payment, you give them one more opportunity and then you move on. Royal Neighbors of America will actually allow you to re-date a policy one time and move it to the next month. Most companies won’t allow that though. If they miss a payment again, let them be someone else’s headache!
If you apply these tips to your Final Expense business, you will easily increase your income by 10-25% per year. Don’t leave money on the table because of the fear of going back out to their house. There’s a reason many agents fail in this business (or any business for that matter). They don’t treat it like a business and do what is necessary to be successful!