Life insurance plays an instrumental role in the portfolios of many ultra-wealthy individuals. Policies are used in many creative ways to facilitate wealth enhancement and transfer, estate planning and asset protection.
Life insurance is an incredible, flexible utility when the goal is preparing for and paying estate taxes. However, with the new tax law, the number of families requiring life insurance to pay estate taxes has plummeted.
The challenge for the ultra-wealthy is that the life insurance industry is highly competitive—flooded with practitioners that vary in experience and competency. Only about 10% of life insurance producers have the requisite expertise to be truly effective, according to our studies. This extends to the ability to source the best coverage—including addressing reinsurance issues—from the universe of potential carriers, deftly manage the underwriting process and coordinate seamlessly with other professionals and advisors.
Exceptional life insurance producers are very similar in their approaches. They all have solid back offices, are technologically sophisticated and are extremely responsive. They are even likely to engage the same carriers when ultra-wealthy clients need new coverage and share a clear commitment to the client’s welfare.
At the same time, relatively few life insurance producers have the networks of relationships and professional branding to access the ultra-wealthy on a consistent basis. The ability to effectively connect with the ultra-wealthy is the biggest impediment to success.
The most effective way to access ultra-wealthy clients in need of life insurance to pay estate taxes is to be brought in by professionals such as lawyers, accountants and multifamily offices. The 10% of life insurance producers dominating the market are the ones who are able to develop strategic partnerships with these other professionals.
The 10% are usually thought leaders sharing their insights and expertise with other professionals and even competitors. Doing so gives them greater stature and makes it easier for other professionals to refer them to the ultra-wealthy.
These life insurance producers are also very systematic in how they build their strategic partnership with other professionals. After they develop a deep understanding of the business models of their prospective strategic partners, they work with them to enhance their practices. By helping an attorney, for instance, to generate more billable hours, there is a very high probability that the talented life insurance producer is going to get a higher percentage of the attorney’s ultra-wealthy clients in need of life insurance.
Life insurance producers can help other professionals become more successful in a number of highly effective ways. While trading ultra-wealthy clients is not an effective approach, the life insurance producer can bring various processes to other professionals that will result in them getting new ultra-wealthy clients. This approach to building relationships with other professionals is what regularly differentiates the 10% from the other 90% of life insurance producers.
Aside from being highly technically adept, the life insurance producers with a lock on the ultra-wealthy market are the ones most proficient at developing strong—and mutually beneficial—relationships with other professionals.
Russ Alan Prince, president of R.A. Prince & Associates, is a consultant to family offices, the ultra-wealthy and select professionals.
