True Tales: Don't skimp on the death benefit

I was just starting in the profession and trying to win a company contest in which if I wrote 50 life insurance cases in the first six months, I would win an award. This contest was used by the company to determine the likelihood of beginning advisors lasting beyond their first three years.

One day I was out networking and prospecting, and someone asked how I was doing, I said, “I’m doing great. I only have to write two more policies in the next month to win a contest.”

A woman I met at a networking event responded that she didn’t need any life insurance, but she wanted to help me. “Come out and sell my husband the smallest policy you can,” she said. So, I went to their home and presented a five-year term policy with $250,000 of coverage but wound up selling a $100,000 policy — the smallest and least-expensive term life insurance that my company offered at the time. I thought they should have purchased the higher amount, but she was just trying to do a favor for me, so I didn’t push for more coverage. With that sale, I qualified for the award and was thrilled.

A couple of years later, the husband died in his sleep. You hear dozens of stories from other advisors about their claims experiences and how the family was so grateful or how a problem was solved. You’re told that when you pay your first death claim, that is the moment you understand the importance of the work we do. My excitement was to experience both sides of the insurance process and understand the value of life insurance. 

I drove out to the couple’s house with the insurance paperwork, excited, anxious and nervous. I’m only a few years into my career, and this client was my first death claim. So, I’m thinking, “I’m doing the right thing. I’ll be the hero. This will be great because I’m showing up with the money, not the bills.”

I show up at the door, and the husband’s brother greets me. No one else will talk to me. He steps outside the house, closes the door behind him and asked if I was the advisor who sold this insurance policy.

“Yeah, I did.”

“You didn’t do your job,” he said. “Why would you only sell him $100,000? He’s the primary earner. She is screwed. He needed significantly more than this.”

The brother’s blunt reprimand was not how I imagined my first death claim was supposed to go. This couple didn’t even want insurance. They were just helping me out so I could win a contest. I did recommend that they buy more coverage, but they didn’t want to pay for it. I even suggested in a review meeting during the previous year that they should increase their policy, but they said they “didn’t need” more insurance. The current policy was enough.

The insurance company paid the claim, so at least the client had $100,000 that she wouldn’t have had otherwise. But the family never talked to me ever again. 

Now every time someone tries to push down the amount of death benefit they want to buy, I tell them this story and always raise the coverage to the proper amount. I remind them that the dollar figure may seem big at time of application, but at the time the claim check is issued, the money always seems too small. While I was proud that my first family had something to fill the gap, I was disappointed that the payout wasn’t enough to solve bigger problems. My first death claim has had a lasting impact on me and how I operate, and I never want to feel like that again.