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Imagine one of your clients wants to buy life insurance (yes, it happens). But you never get around to sell the product because you had bigger fish (read: “products”) to fry. Or what if you knew a client had a large life insurance need, but you never raised the topic because you were just too busy? In both scenarios, did you fulfill your duty as an ethical financial advisor? If you failed to do so, did you just create a potential errors-and-omissions claim?

We might ask the same question of the entire life insurance industry. That’s because millions of Americans need life insurance today. But they’re not getting an opportunity to buy due to changing field force demographics. Consider these statistics:

  • According to LIMRA, the number of life agents has plummeted from about 250,000 in 1975 to some 150,000 recently. Meanwhile, the number of agent recruits has fallen to about 35,000 per year, down from 55,000 in 1975.
  • Not surprisingly, the industry is only selling about 9 million life policies a year, down from 17 million in the mid-1980s. Yet over this time frame, the number of U.S. households with children increased by about 20 percent. Talk about a missed opportunity.
  • Making things worse, 50% of Americans say they need more life insurance and 25% say they’d buy if given the opportunity. But fewer and fewer are getting that opportunity.
  • And the outlook will likely remain cloudy since the distribution force is aging (median age of an independent life producer is 56) and has largely migrated to the affluent end of the marketplace.

But there’s good news. Many insurers have launched alternative distribution models that leverage Internet efficiencies to tap the vast middle market. But more can be done if you’re up to the challenge. Here are a couple things to try:

  • View the risk of dying too soon as a pivotal financial risk. If you’re not equipped to handle it, be sure to refer your client to someone who is.
  • Recommend life insurance sales as a potential career to the unemployed people you know. Same for the young college graduates who continue to have trouble landing their first jobs.
  • If you do a lot of life sales, considering hiring a college intern to assist you. You never know how the seeds you plant today will take root in the future.
  • If you’re a member of the National Association of Insurance and Financial Advisors (NAIFA), make sure they’re providing your name to the Agent Locator on lifehappens.org. This will give consumers access to one more agent who will answer life’s call.

Finally, always probe for the life insurance need. If you uncover it, make an appropriate coverage recommendation. And if the prospect refuses to buy, have the person sign a release documenting his or her refusal. That piece of paper might prove useful some day in a court of law.

For more information on ethical business practices, please visit the National Ethics Association’s Ethics Center. For more information on affordable errors and omissions insurance for low-risk financial advisors, visit EOforLess.com.

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