You are reading a page from Life Insurance as a Life Work, by Hugh Hart
(1926)
Part of the American Term Life Insurance History Project
Term Life Insurance
CHAPTER XI
SHORT CUTS
It is the critical moment that shows the man. So
when the crisis is upon you, remember that God, like
a trainer of wrestlers, has matched you with a rough
and stalwart antagonist.—"To what end," you ask?
That you may prove the victor at the Great Games.
Yet without toil and sweat this may not be!—
EPICTETUS.
It is amazing how many people try to
obtain the benefits of a successful life with-
out contributing the toil and sacrifice which
normally must be expended before they can
be attained and enjoyed. It has been esti-
mated that the American people lose $3,000,-
000,000 annually through investments in
doubtful enterprises into which they are
lured by the hope of making a large amount
of money without working for it. Tre-
mendous though this wasted sum may seem,
159
LIFE INSURANCE AS A LIFE WORK
it is not, perhaps, so great as the value of
the energy and thought and time that are
squandered in the futile effort to win short-
cut success. In the end, it often takes less
work to attain a desired goal by ordinary
straightforward plodding than by methods
which are shorter but in which there is a
greater element of chance. Those who ex-
periment with the latter are frequently set
back and must start all over again behind
their laborious fellows who have gone for-
ward more slowly but, at the same time,
more surely.
It would seem as though observation
would teach people these simple truths; or,
that a single heart-breaking experience
would teach the lesson to any man that suc-
cess is rarely achieved unless the price is
paid. Unfortunately, such is not the case.
Everywhere we find men frittering their
lives away in one vain effort after another
to get ahead by some hazardous short-cut
route.
Very few men who are dominated by the
160
SHORT CUTS
get-rich-quick idea, permanently acquire
large bank accounts, while the bread lines
and poor-houses draw their recruits largely
from among those who possess varying de-
grees of skill in the technique of dodging
the obstacles of life rather than surmount-
ing them.
The vocation of life underwriting is by
no means immune from the evils of short-
cutting. Admittedly, the selling of life in-
surance is a job which requires continuous
hard work. This fact causes a great many
men to get their heads to thinking of plans
or devices by which they may sell life in-
surance without having to devote to the
work so much time and effort. Many
schemes which they evolve are entirely im-
practical; others are quite ingenious and
have potential value as aids in selling. Un-
fortunately, however, the temptation often
presents itself- to try to substitute these
plans for work, rather than to put them to
the perfectly legitimate use of assisting to
make work more effective.
161
LIFE INSURANCE AS A LIFE WORK
It must not be understood that the writer
would discourage creative thinking among
life insurance men or would advocate no
progressive methods. On the contrary, he
would most enthusiastically urge all life in-
surance men to use every available hour of
their spare time in seeking to devise new
plans and to improve upon old methods of
selling, but would admonish against the dan-
ger of spending time in trying to evolve
short-cut methods with the idea of employ-
ing them as substitutes for hard work. A
plan sound and practical, but cleverly origi-
nal, backed up by energy and sensible appli-
cation, will go far toward enhancing the
production of an alert underwriter. It will
give him freshness in his point of view and
will tend to arouse in him, and in his pros-
pects, an enthusiasm which does not come
from the employment of stale and hack-
neyed methods.
It has been said that "any plan will work
in the life insurance business if the agent
will." It is equally true that no plan will
162
SHORT CUTS
work unless the agent will work that plan.
The following are some of the media which
have proved to be aids to the underwriter in
his selling campaigns:
(a) The mails for personal letter-writ-
ing and sending of insurance lit-
erature to prospects.
(b) Newspapers and other publica-
tions for advertising.
(c) The telephone.
(d) The telegraph.
You should not become deluded by the
short-cut idea to the extent of convincing
yourself that you can sell life insurance
through the mails, or by advertising, or by
any method other than by personal contact
with those whom you seek to insure. Let-
ters, circulars, and various types of adver-
tisements are, however, wonderful aids in
breaking down sales resistance and in put-
ting the prospect in a receptive attitude for
a personal interview.
The telephone is a great time saver for
the underwriter. You can use it in "making
163
LIFE INSURANCE AS A LIFE WORK
appointments, in finding out whether the
prospect is in his office before you attempt
to make a call, and in securing information
that will enable you more intelligently to
present your proposition.
The telegraph has never been utilized as
much as it should be by life insurance sales-
men. A telegram to a ^prospect, summariz-
ing your arguments, especially in case of
competition, is often very effective. It can
also be employed to elicit inquiries, although
if you use the telegraph, you should be ex-
ceedingly careful that your plan does not ap-
pear over-bold or savor of sensationalism.
He is a wise underwriter who utilizes
these facilities for furthering his work. If
you undertake to employ them, however,
you should watch your costs by keeping
careful records of the results; you should
promptly follow up the contacts which you
form, and tie up your sales arguments with
the spirit and logic of your preliminary
plan.
You should give each of your plans a fair
164.
SHORT CUTS
trial before discarding it, and should not
hesitate to invest money in carrying out any
plan which you have considered carefully
and believe to be a winner. Freak ideas or
methods, however ingenious, which may
tend to cheapen you or your business in the
eyes of your possible clients, should be
avoided. The life insurance vocation is a
serious and dignified work. It should be
maintained upon a plane in keeping with its
best traditions and the dignity of your call-
ing should not be sacrificed to your desire
for financial profit.
One of the short cuts employed to the
detriment of the life insurance business, is
the high-pressure system, which was more
frequently used a few years ago. The high-
pressure salesman was usually a man of
strong personality and of exceptional per-
suasive ability. He would simply rush his
prospect off his feet, then secure his signa-
ture and check before the applicant had
given sufficient consideration to his proposi-
tion. This method often proved to be a
165
LIFE INSURANCE AS A LIFE WORK
quick way of getting the man's money, but
unfortunately the prospect would often re-
act against the proposal after he had
thought the matter over and would then feel
resentful toward the salesman who had
stampeded him into making a premature de-
cision. As a consequence, the high-pressure
salesman, instead of building good-will
among those with whom he dealt, would find
himself withbut a clientele of persons who
wished to buy insurance from him in the
future; and, what was worse, the experi-
ence of the insurance companies showed
that insurance secured by high-pressure
methods did not stay on the books as well as
that sold in a more conservative way. In
other words, high-pressure methods proved
to be very unprofitable, both for the com-
pany and for the salesman.
Building up a life insurance clientele is
similar, in many respects, to building up a
law practice. The lawyer's most profitable
clients are not those whom he is called upon
to serve only once, but rather those clients
166
SHORT CUTS
who, satisfied with his services, continue to
consult him concerning their legal questions
and take pleasure in referring other clients
to .him. If you do not serve your life insur-
ance clients in such a manner that you can
go back to them from time to time and make
future sales to them and to their associates,
you have missed the most profitable and
satisfactory method of conducting your
business.
The modern underwriter, as we have said,
does not sell policies. He begins at the
other end. He first diagnoses the insurance
needs of his prospective client; he then
points out to the client what his needs are,
and explains why he should have insurance;
he then recommends insurance on the
proper plans and for the amounts necessary
to meet his client's insurance needs. The
life underwriter who at once endeavors to
sell his prospect a policy of insurance with-
out analyzing his needs is short-cutting.
He fails in his duty to his client. The un-
derwriter who wins the permanent loyalty
167
LIFE INSURANCE AS A LIFE WORK
of his clients by giving to them professional
life insurance service, is building solidly;
the policy salesman is not. At the outset,
the underwriter may not see the advantage
of carefully analyzing the needs of his cli-
ents, but after a few years, all else being
equal, he will find that his business is on a
far more substantial basis than the business
of the man who endeavored to serve his own
interests rather than the interests of his
clients.
Two of the most pernicious forms of
short-cutting in the field of life insurance
salesmanship are those known as twisting,
persuading policyholders to discontinue pol-
icies already in force in order to substitute
new policies, and rebating, allowing a
policyholder a discount on the amount of
premium by returning to him all or part of
the first commission received.
Every honest life insurance man knows
that when a person is insured in a sound
legal reserve life insurance company, that
person should be encouraged to keep his
168
SHORT CUTS
policy in force for the following reasons:
(1) The premium rates are based upon
his age and he cannot, at a later
age, buy insurance at as low a
rate as that which he pays for his
present policy.
(2) A certain financial value attaches
to the premiums he has already
paid, part of which he may lose
by discontinuing his insurance.
(3) He may not be able to pass the
medical examination for other
insurance.
Occasionally, of course, a policyholder
may be carrying a form of insurance which
will not meet his needs or the needs of his
family, in which event it is obviously the
underwriter's duty to point out to him the
kind he ought to have or even to assist him
to have the adjustment made with his pres-
ent company and preferably through the
agent who wrote the insurance. In most
cases, however, the policyholder has every-
thing to lose and nothing to gain by ex-
169
LIFE INSURANCE AS A LIFE WORK
changing one policy for another, unless he
is converting a term policy to a permanent
form.
"While the policyholder is the principal
sufferer if his policies are twisted, the fact
should not be forgotten that there are two
other parties interested in the transaction
who would be innocent sufferers; namely,
the company that has been carrying the in-
surance, and the agent who originally wrote
it. Each has an interest in this business,
based upon the policyholder's carrying out
his part of the contract by continuing to pay
the premiums. Each suffers, therefore, if
the business does not remain on the books.
Furthermore, it is only by dissatisfying the
policyholder with his policy that the twister
can induce him to take insurance elsewhere,
and in the process of dissatisfying him
with his policy, he knocks, by implication
or otherwise, the policyholder ^s company
and its agent. This practice tends to un-
dermine confidence in the whole institution
of life insurance. Twisting, therefore, is
170
SHORT CUTS
one of the lowest acts to which an agent
may stoop, and the agent who adopts this
short cut to making sales has no standing
among decent insurance men.
Rebating, like twisting, is another dis-
honorable short cut to insurance selling.
Life insurance premium rates are mathe-
matically ascertained. They embrace a
proper charge to cover the commission for
the agent who sells the insurance. As long
as life insurance is rarely bought by those
who need it, and it is, therefore, necessary
to induce men to perform their duty to their
dependents, the life insurance agents who
perform this constructive task must be com-
pensated. Rebating, as we have said, con-
sists in giving to the applicant for insurance
all or a part of the agent's first commission.
Obviously, if this were done universally, life
insurance agents would be unable to earn a
livelihood and would have to turn to some
other vocation. Also, since men rarely buy
life insurance unless it is sold to them by
agents, it will readily be seen that if the
171
LIFE INSURANCE AS A LIFE WORK
practice of rebating should become general,
the entire structure of insurance would de-
cline and probably cease to exist. Society
would thus lose this great institution which
contributes so much toward the amelioration
of suffering, the protection of the weak, and
the stabilization of business.
Recognizing the evils of rebating, most
states have passed laws prohibiting the
practice, so that the rebater not only takes
an unfair advantage over his co-workers
and weakens the structure of life insurance
by his act, but, also, in most commonwealths,
violates a law on the statute books.
It might erroneously be inferred that re-
bating would be a blessing to the purchasers
of life insurance by enabling them to buy
their insurance at a low initial cost. In the
individual case, of course, a man might pro-
cure his insurance with a smaller outlay, but
he is, in reality, accepting a bribe, which is,
in itself, unmoral. There is the further dis-
advantage that only those able to buy large
policies are singled out for the granting of
172
SHORT CUTS
rebates. Those who are least in need of the
rebate are the ones most likely to receive it,
and thus there is a discrimination, as re-
gards price, against the person who can buy
only a small or average amount of insur-
ance. Experience has shown this to be
precisely the case. The man purchasing a
small or medium-sized policy rarely at-
tracted a rebate, whereas the large buyer
tempted the rebater to give back part or the
whole of his first commission in the expecta-
tion of making an eventual profit from the
renewal commissions received in subsequent
years.
A similar condition prevailed among our
railroads a few years ago when rebating was
practiced for the benefit of certain large
shippers while the small shipper was re-
quired to pay the full rates. Statutory en-
actments have eliminated this evil among
the railroads, just as similar laws against
insurance rebating have gone far toward
eliminating this pernicious form of short
cut in the life insurance business.
173
LIFE INSURANCE AS A LIFE WORK
More potent, perhaps, than the compul-
sion of law, has been the improved ethical
standards accepted by the life underwriters
themselves. The sentiment against rebat-
ing is so strong that, even if the laws did not
prohibit it, no man would be able to engage
in the life insurance vocation and retain his
standing among his fellow agents if he prac-
ticed rebating.
There is no actual short cut to success in
life insurance, but knowledge of the busi-
ness comes nearer being a short cut than
anything else. Complete understanding of
what life insurance is and what it does en-
ables the underwriter to deal only with es-
sentials and he thus saves his own time and
that of his clients. The facts which he pre-
sents arrest attention at once; the confidence
which his knowledge creates in the minds of
his clients eliminates the necessity for ex-
tended argument; and, furthermore, the
well-informed underwriter is not long in ac-
quiring a deserved reputation for being an
authority on life insurance, with the result
174
SHORT CUTS
that his clients rarely appeal to other
sources for life insurance advice. Knowl-
edge of life insurance, therefore, largely
eliminates time-wasting and nerve-racking
competition. Samuel Johnson has well said
that "Knowledge is more than equivalent
to force." The life insurance man who has
a thorough knowledge of the business,
coupled with the capacity to use this knowl-
edge properly, has found what will even-
tually prove to be the shortest cut to success
in selling insurance.
176