Financial advisors know the importance of building long-lasting and trust-based relationships with our clients while providing them with the best possible financial solutions. However, there are times when clients may want to cancel their insurance policy. In such situations, it becomes crucial for us to handle policy cancellations with keen insight, empathy, and client-centricity. MDRT members from Singapore Karyl Phua and Nicholas Ho share actionable and pragmatic tips to navigate policy cancellations with the utmost professionalism, sensitivity, and understanding.

Understand your client's unique priorities and aspirations

What we must always keep in mind is that every client is unique, and their financial goals can change over time. Karyl Phua, a three-year MDRT member, emphasizes the significance of understanding each client's distinctive perspective and explaining to them suitable financial plans that would fit their needs and identifying the changes in their financial situation or life goals that may significantly influence their financial decisions.

“I will contact them after they hit a milestone. For example, when they get married, have kids or if there are any deaths in their family, or any career changes like loss of job, or if they are migrating. This is how I identify life goals that might impact their financial planning,” Phua shares.

One way to avoid policy cancellations is by creating a plan that matches your client’s needs and ability from the start. “At the early stage of planning, I do ensure that my clients are able to commit to the policy in the long run, or have enough surplus to commit to the policies,” Phua says. "To achieve this, I thoroughly examine clients' financial situations, considering monthly and annual income and expenses, as well as total wealth, both of their assets and liabilities. This information helps me identify if there's room in their budget to comfortably accommodate policy premiums without straining their financial well-being.”

Phua emphasizes the importance of long-term commitment to insurance policies, offering a clear breakdown of premium structures, benefits, and potential returns. Flexibility is pivotal for her in policy selection, as she tailors coverage and premium options to match clients' financial capacity. This may involve exploring different policy durations or adjusting coverage levels for a balance between affordability and adequate protection.

By following these practices, Phua ensures clients are positioned for long-term commitment to insurance policies, prioritising their financial stability and aligning policies with their goals.

Address concerns and recap policy benefits with diligence

When a client exhibits hesitation to continue their policy further due to changes in their lives, Phua will help them go through their portfolio again and re-explain all the benefits they currently have and take another look at their possible shortfall and identify if there are any opportunities to increase coverage. “If they plan to surrender any plans, explain to them the implications of that as well. I will also do a cost benefit analysis if they choose to terminate a plan and rebuy in future” she explains. In Phua’s experience, clients usually see it is not beneficial for them to proceed with the cancellation.

As such, it is important to align other options and the implications of them cancelling to address any misunderstandings they might have and reinforce the relevance of financial planning for them to achieve their financial goals.

For this conversation to be effective, remember to personalize your explanation to align with your client's specific situations. Nicholas Ho, a three-year MDRT member shares, “To create excellent client satisfaction, loyalty and advocacy, it is critical to understand your clients’ situation, perceptions and expectations. Serve wholeheartedly and try to understand what kind of value creation you can provide that is beneficial to your client by putting yourself in their shoes.”

In this context, Phua shares how she worked closely with young small and medium-sized enterprises (SME) owners to ensure their needs are well met with a financial plan customized to their specific situation. "I help study and calculate their business revenue and earning patterns, then create a cash flow management strategy to handle fluctuations effectively. I advise on budgeting, expense prioritization, and building emergency funds. I ensure all forms of inflow and outflow streams are accounted for — to curate a specialized portfolio for them, " she explains.

Adopt the powerful and client-centric technique

Ho advocates understanding clients' needs beyond salesmanship and uses the client-centric technique to make the client your priority. Financial advisors today are facing an increase in expectation for service excellence and being held to higher standards than ever before, so it is vital to build a connection and trust with your clients. 

“At the end of the day, it’s really not about making another business transaction, it’s about building a strong and long-lasting relationship with your clients,” Ho shares. When confronted with policy cancellations, empathy, tact, and understanding must be at the heart of your interactions. Recognize that your client's decision may be influenced by various factors, and as compassionate advisors, it is our responsibility to offer expert guidance with consideration.

“It is our job to allow our clients to understand their own needs and paint them a clear picture of all their policies and long-term financial plan. However, cancelling policies is not a faux pas in this industry. If there are other newer policies that allow our clients to enjoy the same or more benefits with a lower premium, we should be encouraging our clients to choose the newer policy and terminate the current one instead” Phua shares.

Contact: MDRTeditorial@teamlewis.com

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What you should do to avoid policy cancellations