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How to Sell Short Term Insurance vs Cobra


More than half of Americans who don’t qualify for Medicare—some 158 million people—get health insurance from their employers. This creates several scenarios in which an individual might lose their health insurance rather quickly. For example, the individual might get fired or laid off. When that happens, they will likely lose their insurance coverage the following month.

On the other hand, the individual might decide to leave their job on their own for any number of reasons. If they don’t quickly land another job that offers insurance, they will need to find new coverage.

Generally speaking, people who find themselves in this situation have two options: They can either buy short-term health insurance, or they can apply for coverage through COBRA.

What Is Short-Term Insurance?

Short-term insurance is—you guessed it—temporary insurance coverage that helps individuals fill insurance gaps that might stem from leaving a job or waiting for other coverage to kick in (e.g., just being shy of Medicare age). Although short-term health insurance doesn’t cover pre-existing conditions and can’t be renewed, it does deliver a number of benefits—such as next-day coverage, affordability, and flexibility. The average individual should be able to get coverage for up to 12 months, though plans vary on a provider-by-provider basis, with some hovering in the three- to six-month range.

For insurance agents, short-term plans come with lots of upside, too. Not only can brokers who sell these plans end up earning higher commissions, but they can also save their clients a ton of money by discouraging them from signing up for COBRA, which is often spectacularly more expensive.

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What Is COBRA?

In 1985, Congress passed the Consolidated Omnibus Budget Reconciliation Act (COBRA). Under this law, eligible employees and their families are able to stay on their employers’ health plans for as long as 18 months after they get fired from their job or laid off or have had their hours reduced to the point where they no longer qualify for benefits. Spouses and dependents may also qualify for COBRA in the event that they get divorced and lose coverage or the policyholder dies.

There’s just one catch, and it’s a big one: COBRA recipients often have to pay their ex-employer the full amount of the company’s plan premium—plus an additional 2 percent to cover administrative fees. In the event that you worked for an employer that offered a generous benefits package, you might be shocked at how big the bill can be.

Add it all up, and insurance agencies and independent brokers have a great opportunity to sell short-term insurance to folks who may be looking for temporary coverage due to any of the reasons outlined above.

How to Sell Short-Term Insurance

By now, you are probably thinking that adding short-term health insurance plans to your product portfolio makes a lot of sense—particularly considering the number of people getting their insurance through their employer and the difficult economic climate we find ourselves in. But you might be wondering how to sell short-term health insurance because you’ve never done it before.

Good news: You’ve come to the right place. Here are three tips to keep in mind that should make it easier for you to sell short-term insurance to existing clients who need it—and new ones, too.

1. Position yourself as a trusted adviser

Most insurance buyers care about one thing: price. But by being committed to going above and beyond and delivering top-notch service to your clients, you can convince them that there are other important considerations to make when it comes to purchasing health insurance.

Case in point? Positioning yourself as a trusted adviser makes it easier to sell short-term insurance if and when the time comes. By consistently trying to help your clients and anticipate their needs, you make your job that much easier when a client loses coverage, because they will turn to you, expecting you to solve their insurance woes.

2. Advertise the fact that you sell short-term insurance

If your clients don’t know you sell short-term insurance in the first place, how can you expect them to call you up asking for temporary coverage in the event that they need it?

It may seem pretty intuitive, but it bears repeating: If you want to sell short-term insurance, make sure that the fact that you carry it in your portfolio is widely known. Do that by publishing blog articles, sending out email blasts, and using social media to raise awareness.

3. Use software that streamlines the sales process

Selling insurance is hard work. When you’re pulling quotes manually, it can seem, more or less, impossible.

By investing in modern insurance quoting software that enables you to sell tons of ancillary insurance products in just a few clicks, you make the sales process exceptionally easier. In turn, this not only increases the chances that you successfully sell short-term insurance, but it also boosts your profitability by ensuring you do so as efficiently as possible.

Interested in more ways to grow your insurance business? Here are some resources you may want to check out:

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