Quality business, which is sold to meet the needs of qualified prospects, is business that is more likely to stay on the books.
- Quality business means persistency. Persistent business has a direct impact on your compensation. Lapsed business can result in the loss of first-year commissions, as well as subsequent renewals and bonuses. In addition, you may have lost the potential for additional sales to these policyholders, as well as any potential referrals.
- The type of individual to whom you sell can impact your persistency. Statistics show that lapses occur more often among lower-income earners than among upper-income earners. As people mature, they tend to become more stable and take a longer-term view of life. That's why there is generally a sharp rise in persistency after age 30.
Work with the policyholder to conserve the case. You'll be notified by corporate headquarters when one of your policies is about to lapse for nonpayment of premium, so you'll have enough time to contact the policyholder before the end of the grace period to try and save the business. Find out why the business is about to lapse. If the policyholder is experiencing a temporary financial shortfall, urge him or her to find some way other than dropping the policy to cope with the situation. If there is sufficient cash accumulation, suggest a policy loan to pay the premium. If the financial problem is more long-term, consider changing the mode or frequency of payment to improve the policyholder's cash flow.
- Service is an important part of maintaining quality business. As we discussed in ON-Trac II, Unit V, After the Sale you must keep pace with the changes in your clients' lives.
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