1.10.2 Full and Accurate Disclosure
It is imperative to disclose all information so that the client can make an informed decision. Not only the good points about a product, but also whatever drawbacks or downsides a particular product may have.
Does the client understand the transaction taking place - the upsides and the downsides?
Product presentation should include motivation, just not false motivation. It is imperative to openly discuss a policy's limitations as well as its virtues. Full and accurate disclosure is the cornerstone of the product presentation. That does not mean reciting the facts - it means explaining the facts so that you're sure the customer understands those facts. Education, discussion, and disclosure are keys in product presentation. The goal is to explain and educate the client so the client can make his or her own decisions about what's right for him or her. The goal is not just to sell.
The Florida study manual, page 63, provides an example of how to present possible features of a variable universal life policy, along with a summary of the product's benefits and limitations, thereby giving full and accurate disclosure:
"One of this policy's features is that it offers 12 separate account options, as well as a fixed account. This gives you flexibility and control over how your policy's cash values are allocated. It also gives you the opportunity to adjust the level of risk. Now, keep in mind that these cash values are not guaranteed. A level of risk is involved..."
You can see how the product is being presented to the client in a positive way, yet also pointing out any potential downsides.
If the client is well versed in the particular product being presented, then the client can make an informed decision, which breeds trust in an ongoing client/agent relationship.
Two forms that many producers use as educational tools and in sales presentations are the NAIC Buyer's Guide and the Policy Summary. In Florida, an agent is required to deliver to the applicant a Life Insurance Buyer's Guide and a Policy Summary. These documents are usually delivered before the agent accepts the applicant's initial premium.
The buyer's guide is an informational consumer guide book that explains insurance policies and insurance concepts in general, whereas the policy summary addresses the specific product being presented for sale (premiums, dividends, benefit amounts, cash surrender values, policy loan interest rates, etc.).
In practice, most of the advertising and sales literature a producer uses is prepared by the insurer under the careful eye of its legal staff. The use of preprinted material in a sales presentation is recommended since such material has been reviewed for compliance.
The organized sales presentation proceeds according to six steps.
- The approach
- Establishing the general problem
- Establishing the specific problem
- Assessing the need
- Presenting the life insurance solution
- The close
