Life is full of risks, and as insurance agents, we help our clients reduce their exposure to some of these risks by selling them products that will indemnify them if they have a covered loss. However, as we all know, most insurance policies—and this is certainly true when talking about health insurance—do not provide total protection, and it’s impossible to insure everything.
Because insuring against every potential threat would be cost prohibitive, consumers must, with their agents’ advice, determine which risks to transfer to an insurance company and which risks to retain and hopefully avoid.
From an advisor’s standpoint, the goal should be to help maximize our client’s insurance budget so that we reduce his or her exposure as much as possible. When doing that, it might be helpful to think in terms of net coverage. In other words, instead of focusing exclusively on how comprehensive a particular line of coverage is, we should take a look at the big picture and analyze how protected the client is overall.
For example, it wouldn’t make a lot of sense to sell a client a top-of-the-line, low-deductible, low out-of-pocket health insurance plan if doing so would eat up the client’s entire insurance budget and leave him or her unable to pay for life insurance or other important types of coverage. Sure, doing so might minimize the point-of-service costs for health care, but if it increases the risk of other types of losses—in this case, leaving the family exposed in the event of the client’s death—then the household’s net coverage has actually decreased, not increased.
Similarly, we need to consider how protected the rest of the family is from the type of loss we’re discussing with our client. Again, it wouldn’t necessarily make sense to sell a client an expensive platinum health plan if it means his or her spouse or kids would go uninsured. It would be better to sell a lower-cost plan with higher cost sharing and use the premium savings to insure other family members.
Hopefully this makes sense. Obviously, each client is different, and agents must use their judgment when making policy recommendations. When you’re making those recommendations, though, it’s helpful to look at the whole picture instead of focusing exclusively on the product at hand. Most clients won’t naturally think this way, so it’s our job to point out where they may have some potential exposures and make recommendations to help reduce them. In the process, we might have to sell less insurance for a particular risk so they can afford to buy insurance for another risk.
The good news is that our license allows us to sell multiple product lines, so this sort of approach does not necessarily mean a cut to our commissions; it just means that we’ll be getting checks from multiple insurance companies. One quick reminder: if you don’t currently represent all lines of coverage that you would like to, now is the time to change that. Take a look at AHCP’s training videos to get up to speed on solutions you don’t currently offer and visit our state-specific carrier page to get appointed with different insurers in your market. Please let us know if you need any assistance.