Cost-of-Living Plan Definition
An insurance plan whose benefits are adjusted in accordance to fluctuations in a specific index of prices--for example, a pension plan that annually makes adjustments to the retirement benefits it pays based on changes in the Consumer Price Index (CPI).
Do you, as a producer, do needs analysis? Do you, as a company, encourage, suggest or require needs analysis of your producers? Here’s a frank discussion of the current climate and some Best Practices.
Distinguished Programs Group
Needs analysis is typically a process of “profiling” a consumer to discover insurance needs or wants, recommending individual products or a plan of insurance, and then reviewing that customer’s needs on an annual or regular basis to keep them up-to-date. A plan of insurance, in this instance, is a number of products that fit together to cover all aspects of the customer’s needs, and may include Property/Casualty, Life, Health or Health Supplemental, Annuity, Long Term Care (LTC) and Variable products.
Special Markets Insurance Consultants, Inc. More educated and wealthy customers may have their producer/representative, their attorney and their CPA involved in the process.
MexiPass International Insurance Services, LLC
Who Does it, When?
Some companies say that newer producers might perform this analysis but more seasoned producers don’t, so much. The assumption is that the seasoned producer is more savvy and able to do an estimation of the needs without the hard facts. Some companies say that their producer surveys or file reviews indicate that most of their producers do some sort of fact-finding on a routine basis, typically at the first meeting with a consumer.
Business Risk Partners, Inc. Other companies say that their producers don’t do it at all, because their product(s) are such a niche that a consumer either needs/wants it or not.
Advanced E & S Group It is hard to imagine that purchasing life insurance or LTC products, for instance, should be done without some sort of rudimentary fact-finding on the part of the producer. As companies typically have income-multiple guidelines for different phases of the consumer’s “life cycle”, producers must determine which phase the consumer fits into. Without hard facts from the consumer, even seasoned producers must be doing guess-work instead of a true analysis of needs.
American Business Insurance Services, Inc. Few companies require the producer to send in the needs analysis as part of the application (the exception, of course, is variable products and the risk profile required). If producers do not do this type of fact-finding, they may be selling what they want to sell, whether through comfort level or commission level, rather than what the consumer really needs. And this is the point at which regulators get concerned. Who Needs or Wants it Done?
Some consumers have a high aversion to a formal needs analysis. They may know what they want and will not listen kindly to a producer’s opinion that that product may not be suitable. They may not feel comfortable discussing their financial situation with someone they don’t know (or conversely, someone they know too well). And some consumers have grave concerns about all types of private information, including health. However, when a producer takes the time to build trust, many of these objections may be overcome. So, the first Best Practice is one that many producers take the time for: getting to know their customers. Unfortunately, some do not practice patience in building this connection or rapport with potential customers. As to who needs this analysis done, the answer is probably “more than are comfortable with it”. Again, the Best Practice producers work toward that comfort level by building a trust relationship with their customer. Over time, they can help build a program of insurance products that fill the customers’ varied needs with customer buy-in. Improving the Odds
So, how have companies and producers worked together regarding needs analysis?
Training is key. Best practice companies who only use seasoned producers ensure they provide the newly contracted producer with sufficient information as to how their particular products may differ from competitor products. Some more complex pro