Delivering Bad News

A young advisor recently asked me ​"do you have any advice around the type of lingo/phrasing to use when breaking news about worse-than-expected rates (due to obesity/high BMI, in this case) to a client?"

My advice is when a carrier clearly gives you a reason, especially something like build, as the reason for an offer you weren’t expecting, you’re not breaking any rules to include that in your explanation. That’s especially true if the reason is something disclosed on the exam (but not the lab results, which are explicitly confidential). As for phrasing, I would suggest something to this effect, adapted to to your communication style:

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"I’m pleased to inform you that your application for life insurance coverage has been approved! However, it was approved at Standard Non-Tobacco rates due to your build. My team has checked a few alternatives in the market place and could not find any meaningful savings and recommends we accept this offer as-is. If you are able to improve your build I would be happy to help you reapply. Please keep in mind that due to the high occurrence of regaining weight, any weight lost in the 12 months prior to a new application for life insurance, half of that loss is likely to be added back for underwriting purposes."

In my experience, nine out of 10 clients that don’t get Preferred rates (especially those that are rated substandard) believe they are healthier than they actual are. Especially ones with chronic health conditions. The hear their doctor say “you’re in great shape” when the doctor really says, “you’re in great shape, for someone with congestive heart failure [or insert some other substantial health condition].”

Telling a client they have received a worse than expected rate class is never easy, but I hope this helps you with how to break the news, without feeling guilty about it. We do what we can for our clients and none of us like reaching the point of being unable to help someone secure the protection they want or need.

Photo attributed to MicroBiz Mag under Creative Commons 2.0 Attributable License, details available here.