This process is being added to the Agency Training Manual. Make sure to use it with your customers this week and watch the results!
The “Triangle of Protection”: simple to explain, simple for the customer when drawn out.
This conversation can be had with all homeowners, but it’s required for all NEW homeowners, as well as newly-written customers.
Start with a blank sheet of paper on your desk and explain:
“Mr. Customer, thanks for coming in here to get your home insured. Let’s take a second to review this coverage!
The bank has asked you and us to get this in place to cover the mortgage, and it is important to understand that there are three common ways that most people can lose their home – so it is important to know what is needed for full coverage on your home.”
Step 1 – I draw a simple stick figure picture of a house in the middle of a blank piece of paper and then draw a triangle around it.
“The first way we can lose a home is due to a fire. (write fire on the top point to the triangle). The bank wants you to insure this home in the event it burns down, when they lend you money and if you don’t insure your home then they won’t lend you any money. Why is it that the bank finds this so important? Are they looking out for you or for them? (exactly) The bank doesn’t want the chance that their collateral burns up in a fire so they want to make sure that the home gets rebuilt so you keep making your payments……You pay ($xxx 84 a month) to have this covered, but did you know you only have a .05% chance of ever having your home burn to the ground? If the chances are so low why is it such a big deal? Have you ever known anyone that had their home burn to the ground or lost in an earthquake or a windstorm? Tell me about it – Scary right? – “Now, we have a homeowners policy in place for you that offers $450,000 in coverage and costs $84/month.” (write $450K and $84 below fire at the top point on the triangle).
“The second way is due to loss of income. (write loss of income on left point of the triangle).
The most common way this occurs if from and illness or injury that causes you or your spouse to have to miss work and miss a paycheck. What does the bank do if you stop making your payments for three months in a row because you are sick and can’t work and don’t have paycheck coming in? Why doesn’t the bank come calling and telling you that you have to have coverage if you get injured and can’t work and make your payments? (because they will repo your home after 90 days of late payments, the collateral is still intact so they can come back and take it and resell it to recoup their losses) Who are they looking out for? You or them? Have you ever known anyone that this happened to and because of an injury or illness they lost their income for a period of time? Tell me about it – Scary….. Odds of someone getting sick or injured and unable to work for three to six months prior to retirement is 32%…..odds are stacked against us. Who do you think understands your situation and your needs best, you or the bank? (exactly)
“How much is the monthly mortgage payment on your home?” (let’s say they answer $1,500).
“We can make sure that if you are ever out of work due to sickness or injury, your mortgage payment will keep getting paid and the cost of that policy is only $28/month.” (Write $1500 mortgage payment and $28/month below disability on the left side of the triangle).
“The third most common way someone can lose their home is through premature death of one of the bread winners. If you passed away today and your family lost your income each month how would they pay the mortgage? Would it make things tight? What does the bank do if your family can’t make the payments for 90 days after you are gone? (they take the home and resell it to recoup their losses) Why isn’t the bank telling you that you need coverage for this? Who is in the best position to make decisions for your family, you or the bank?
The statistical probability of you not being alive 30 years from now is just under 2%.” (write 1.6% under life).
“If there is a premature death during the time you have that mortgage we will pay off the balance and leave the rest of the money to your family so they can keep the home. The cost of that is $23/month.” (write 150K and $23/month below life).
“Of the 3 protections we are looking at here. Which is the ONLY one that the bank or mortgage company REQUIRED you to have?” Who is in the best position to make decisions for you, you or the bank?
Then, finish by saying – Most people want their home protected from all 3 of these risk, but you tell me, what’s most important to you? What do you want me to help you take care of?
“Do you see the value in protecting your home with ALL 3 of these coverages?”
If they balk at price or object, do what we do in the sales process…ask more questions.
Typically they will choose one of the two…life or disability.