Are you working to help provide insurance agency payment options to your clients?
Insurance Payment Options are one of the single most important things in an insurance agency.
Why, you ask? Well, it is how your agency receives payments and what keeps your customer’s policies intact.
The 2 BEST ways to get paid are Electronic Funds Transfer (EFT) or automatic withdrawal. There’s also the option to pay in full. With automatic withdrawal, the amount comes out of the client’s bank account every month.
There is usually a discount for this form of payment and the customer avoids service fees (with most carriers.) Automatic withdrawal is set it and forget it.
Pay in full also has its perks. Pay in full has a pretty large discount with most carriers and there is no worry of a policy lapsing (except at renewal).
I stopped using the phrase/words Electronic Funds Transfer (EFT) with clients because that doesn’t mean anything to them unless they are in the sales industry.
I use automatic withdrawal. However, most agents use EFT when discussing this feature.
EFT is a great feature for both the customer and the agency. It allows a payment to be drafted monthly from a bank account (or sometimes a card, but this can be tricky when the card expires, so the card is NOT recommended.)
This method of payment usually gives a discount on the policy and also removes service fees with most carriers. This method also allows the client to set it and forget it.
For the agency this type of payment is great. There is no customer service involved and it is consistent cash flow. This electronic process allows for a “hands-off” customer service that is always reliable.
The only downside is when the policy changes/increases and the payment is different. Sometimes the customer is notified by the bank and sometimes they are not, so if the agency gets notified and you do not do renewal calls to update clients, this may be where EFT can backfire and be a negative for both the customer and agency.
Efficiency
Do you have agents who struggle with efficiency and time management, but spend most of their day taking payments and chit-chatting with customers?
EFT insurance payment options is your solution! Not only will it free up the customer’s time, but it will give that agent time back in their day as well.
The question is, are your staff using this to waste time or are they willing to recognize that? Most agents that do this, don’t see it as an issue or as a waste of time.
Don’t get me wrong, building rapport and having relationships with clients is important, but we want to be efficient with our time!
Examples:
- Progressive implemented an EFT system to streamline premium payments for policyholders. Customers were encouraged to set up automatic bank transfers for their monthly premiums. This initiative reduced the administrative burden associated with processing paper checks and improved cash flow predictability for the company. It also enhanced customer satisfaction by providing a convenient and automated payment option.
- State Farm introduced a comprehensive EFT system that allowed policyholders to make premium payments electronically. They also integrated EFT into their claims settlement process. The implementation of EFT improved customer experience by offering a convenient and secure payment method. It also reduced the time required for claims settlement, benefiting both the company and its policyholders.
EFT adoption in the insurance industry can lead to operational efficiency, cost savings, improved customer satisfaction, and enhanced financial processes.
Agents should assume the sale along with the insurance payment options EFT or pay in full. Make it sound “as a matter of fact”, as if there are no other forms of payment.
Most people in today’s day in age are used to it and it is just how things are. Insurance is required by law, they have to pay it every month, you might as well make it easier on you and them.
Objections
When encouraging someone to switch to electronic funds transfer (EFT) for insurance policies, you may encounter objections from clients. Here are common objections and suggested responses:
Security Concerns:
- Objection: “I’m concerned about the security of electronic transactions.”
- Response: “We prioritize the security of your financial information. EFT transactions are encrypted and follow strict security protocols. In fact, electronic transfers are often more secure than traditional paper methods, reducing the risk of loss or theft.”
Lack of Control:
- Objection: “I prefer having control over when and how payments are made.”
- Response: “EFT provides you with control and convenience. You can set the payment schedule to align with your financial situation, and you’ll receive notifications before each transaction. This way, you have transparency and the ability to manage your payments effortlessly.”
Preference for Paper Checks:
- Objection: “I’m old-fashioned and prefer writing checks.”
- Response: “While checks have been a traditional method, EFT offers a more streamlined and efficient process. It eliminates the need to write and mail checks, reducing the risk of delays and ensuring your payments are always on time. It’s a modern, time-saving approach to managing your insurance. Physical checks also carry the routing number and bank account number and can easily be hacked into or stolen with those numbers making them a security risk.”
Concerns About Overdrafts:
- Objection: “I’m worried about overdrafts if automatic payments are made.”
- Response: “We understand the concern. With EFT, you can choose the withdrawal date to align with your cash flow. Additionally, we provide notifications in advance, allowing you to ensure sufficient funds in your account. It’s a proactive way to manage your payments and avoid any potential issues.”
Unfamiliar With Technology:
- Objection: “I’m not comfortable with technology or online transactions.”
- Response: “We’re here to assist you every step of the way. Setting up EFT is a straightforward process and our customer support team is available to guide you through it. Once set up, you can enjoy the convenience without needing extensive tech knowledge.”
Preference for In-Person Transactions:
Objection: “I like the personal touch of visiting the office to make payments.”
Response: “We value the personal connection with our clients too. While EFT offers convenience, our office is always open, and you’re welcome to visit us for any inquiries or discussions. EFT simply provides an additional option for those seeking a more automated and efficient payment method.”
Fear of Missed Payments:
- Objection: “I’m worried I might forget about automatic payments and miss a due date.”
- Response: “EFT is designed to make things easier for you, not more complicated. You can set up reminders, and we also send notifications before each transaction. This helps ensure that you’re always aware of upcoming payments, minimizing the risk of missed deadlines.”
Tailor your responses to address the specific concerns of each client, emphasizing the benefits and convenience of electronic funds transfer while addressing any reservations they may have.
If EFT is just a clear and unruly “NO” then there is one other insurance payment option. Pay in full is an option that also comes with benefits and discounts. It also pretty much guarantees that the policy in question will be in force the entire policy period with no cancellations.
Advantages
With this payment method, you will find these advantages for the customer:
- Discounts or reduced overall cost.
- Simplified financial planning without recurring monthly payments.
For the Agency and Carrier:
- Immediate revenue influx.
- Reduced risk associated with missed payments.
Pay In Full
A one-time payment relieves any stress about insurance lapses, monthly payments, and extra hidden fees.
Most middle-class households do not have the financial ability to pay in full, or they don’t prioritize their insurance this way. Those households that budget well will plan for this and be prepared to pay in full.
The only downside is when changes are made that increase the premium, getting the customer to understand the increase and how it works can be a possible future struggle, but it doesn’t happen often.
Convincing a customer to pay their insurance premium in full can be approached in several ways. Here are some strategies you can consider:
Upfront Savings
Emphasize the cost savings associated with paying the entire premium upfront. Some insurance providers offer discounts or reduced fees for customers who choose to pay in full. Highlighting this upfront savings can be a strong incentive.
Discounts and Incentives
Offer additional discounts or incentives for customers who choose to pay in full. This could be a percentage discount on the total premium or the inclusion of additional coverage features at no extra cost.
Financial Benefits
Explain the financial benefits of paying in full. By paying the entire premium upfront, customers avoid the hassle of monthly payments and potential installment fees. This can lead to long-term savings and a more convenient financial arrangement.
Stress-Free Coverage
Highlight the peace of mind that comes with having coverage secured for the entire term. Remind customers that paying in full means they won’t have to worry about missed payments or potential lapses in coverage.
Avoiding Late Fees
Emphasize that paying in full eliminates the risk of late payment fees. Some insurance providers charge fees for late or missed payments, and paying in full ensures that the customer won’t incur any additional charges.
Improved Credit Score
Explain that consistently paying insurance premiums in full and on time can positively impact their credit score. This may be especially relevant for customers who are working on improving their credit history.
Convenience and Simplification
Highlight the simplicity of paying the entire premium at once. This approach can appeal to customers who prefer to streamline their financial responsibilities and avoid the monthly task of making individual payments.
Customized Payment Plans
If the customer is concerned about making a large upfront payment, work with them to create a customized payment plan. This could involve breaking down the full premium into manageable, interest-free installments over a shorter period.
Transparency
Be transparent about the potential benefits and drawbacks of both payment options. This helps build trust and allows the customer to make an informed decision based on their preferences and financial situation.
Communication
Open communication is crucial. Ensure that you effectively communicate the advantages of paying in full and address any concerns or questions the customer may have.
Remember to tailor your approach based on the individual needs and preferences of each customer. Understanding their financial situation and providing personalized solutions can enhance the likelihood of them choosing to pay their insurance premium in full.
Conclusion
EFT and Pay in full are by far time management strategies to help your agency run smoother with fewer distractions and interruptions from those monthly payers, lower-timer clients, and literally “time wasters”.
We are in a time where technology has made everything easier, allowing us as agents to use our time wisely to build relationships and sell policies, instead of wasting time on taking payments.
Both of these Insurance Payment Options are beneficial to you and your customers! Ask them every single time and if they complain, tell them you are trying to save them money and you have to ask until their policies are set up on EFT, per agency standards.
💼 Check Out the Blog Associated With This Video: Insurance Processes: The 10 Processes Your Agency Needs
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