Like most insurance markets, the life insurance market is continually evolving. New products continue to be unveiled with new riders and features; older products fall out of vogue, then back in again.
To uncover the state of today's life insurance market, the Agent's Sales Journal surveyed nearly 500 producers -- you, our readers -- on what challenges you're facing today, what products you're selling, and what you need to excel in your field. We also asked you to rank specific insurance carriers based on how well they meet your needs.
The results of the study are published here to help you learn from your colleagues. What are they doing that you can adapt to your own business? How are they finding new clients? How are they learning about new product offers? Find out here.
The state of life insurance
Almost 60 percent of agents surveyed have written more than $25,000 annualized first-year premium in the last 12 months. Ninety-four percent sell term, 71 percent universal, and 62 percent whole life. And half of them sell term more than any other kind of insurance, which should come as no surprise: The premiums are more affordable, and the policies are generally easier to sell.
Agents are also optimistic about their sales: In the past 12 months, 54 percent of agents surveyed said they've sold about the same amount of life insurance as usual, but 60 percent said they plan to sell more than usual in the next 12 months. Some cited new, easier-to-sell product offerings in their portfolio. Others said they're planning more marketing or building their businesses to reach higher sales goals.
Referrals came out as the number one way to prospect for new clients, as they have in past Agent's Sales Journal studies: The top three methods for prospecting are referrals (48 percent), selling to existing clients (28 percent), and direct mail (9 percent). Other methods (Internet, telemarketing, leads, seminars, worksite marketing, and magazine/newspaper/TV/radio advertising) aren't very popular methods among our respondents.
"Insurance Coach" Michael Beck, a nationally known executive coach, public speaker, and industry trainer, frequently speaks to the power of referrals. "The real power is that a referral is a third-party endorsement, and your credibility is pre-established, and in effect, your abilities have been pre-sold," he said.
Who you're selling to
As for client demographics, 42 percent of respondents said they write the most individual life insurance to those in their 40s, while 25 percent write to the 30-something demographic, and 21 percent write to clients in their 50s. Very few prospects under 30 or over 60 are buying life insurance. This is likely because the younger set doesn't see the need or can't afford it -- and the older set already has insurance, may feel they don't need it with their grown kids on their own, or can't qualify for it.
And a whopping 75 percent sell more life insurance to men, compared with 25 percent to women. Laura J. LaTourette, CFP and president-elect of the nonprofit group Women in Financial Services, said agents generally sell more life insurance to men because men "still tend to see themselves as the breadwinner even if their wives work and make as much or more than they do." Men will typically get the larger policy, and women may forgo coverage altogether.
LaTourette said agents can tap into the lucrative female market by first recognizing that women's financial buying power is increasing. More women are making the financial decisions for themselves and for their families.
"What (agents) need to do is say, 'I'm going to take the time to sit down with the person, find out what she wants and what she needs, and then go after the product.' Women don't want to be sold to, they want to be talked to."
Staying in front of the consumer
Steven Budnick, president of Agency for Corporate Planning Inc., said regular policy reviews can lead to more sales and provide a value-added service to clients.
"When we meet with the insured annually, we can update our files, make recommendations, and put through the proper changes on the policy. This keeps the insured and the agent current," Budnick said. "The agent is also protecting themselves from a lawsuit by keeping updated records of review and recommendations. It is also good that the agent reviews all the reasons why the insurance was secured in the first place. Clients sometimes forget why they are paying for a promise in the future."
And other agents seem to agree: 90 percent said they perform policy reviews with their clients at least every five years, and 37 percent said they conduct them annually.
Whatever the method, agents are making repeat customers. Eighty-seven percent said they've sold life insurance in the past 12 months to clients they've sold to before, though only 7 percent said all their business comes from existing clients -- the majority, 39 percent, said less than half their sales come from their current book of business.
Producer challenges
Most agents say their biggest obstacle is client resistance: 62 percent indicated that procrastinating clients are the toughest challenge to selling life insurance, and 46 percent said their clients just don't recognize the need for life insurance. Forty-nine percent said prospecting is their biggest challenge. (Chart 1)
According to Richard Dulisse, assistant professor of financial planning at The American College, there are four general categories of objections that advisors face when pitching life insurance: no need, no money, no confidence, and no hurry. Need and money are tangible, he said. Agents can almost always find a way to quantify the need, whether through needs analyses, worksheets, or software. And there's a way to find the money, whether it's by walking the client through their budget or finding a more affordable product.
But "no hurry" is a tough nut to crack, Dulisse said.
"If you've done everything else right in the interviewing process, if you have properly identified the prospect and qualified the prospect, if you've gone through finding the need, gone through finding the money, and you've built trust, if you've done all that, the last hurdle is motivating the prospect and getting them emotionally involved in wanting the product," he said.
People don't buy because of logic, Dulisse said. They buy because of emotion. Once you uncover the emotion behind their motivation to buy, it's easier to make the sale.
As for prospecting, Brian Ashe, president of Brian Ashe and Associates Ltd. and past chairman of the LIFE Foundation, said the prospecting environment has gotten a little tougher with the "do not call" regulations, but what it really boils down to is increased activity. Prospect more and ask more questions of the people you deal with every day -- your dry cleaner, your postal worker, the delivery person at your office.
"I'm a big proponent of asking questions," said Ashe. "Ask the people you deal with every day, 'Would you have any objection to discussing your financial plans with me?' I think if (agents) ask that question regularly, they could generate an additional 15 cases every year.
Why do you sell life insurance?
Sixty-six percent of agents said they sell life insurance because they get to provide their client with a valuable planning tool to meet their financial objectives. That beat out cross-selling opportunities (21 percent), commissions (3 percent), and prizes and other incentives (1 percent). (Chart 2)
"Being able to offer products that ensure that my clients' survivors are provided for," one respondent wrote as his reason for selling life insurance. "I have a firm belief in the need for life insurance and share that with my clients daily."
And when selecting a life insurance product for clients, 86 percent said it's absolutely necessary that it be the best product for their client's needs. Only 8 percent said the product with the highest commissions was an absolute necessity; in fact, 56 percent said high commissions are nice to have but not a necessity, ranking compensation lowest among all the options. (Chart 3)
What do you need from your insurers and wholesalers?
Agents are loyal to only one or two insurers even though they're contracted with several: While 27 percent said they're contracted with six to 10 life insurance companies, 32 percent write the majority of their business through one company, and 33 percent through two.
And 32 percent of agents broker their life insurance through one wholesaler or marketing organization, and 30 percent through two. Eighteen percent of agents surveyed don't use a wholesaler at all.
But agents have needs, and the majority want more leads: 48 percent said the number one thing insurers can do to help them sell life insurance more effectively is to provide leads, and 55 percent said leads from wholesalers are most important.
Four of the top six needs from insurers were related to the application and underwriting process. Forty percent of agents said insurers could provide a simpler application process. "A 10-page app for a $20 monthly term plan is ridiculous," one respondent said.
Other essentials from insurers include policies being issued more quickly (34 percent), better marketing and point-of-sale material (25 percent), and direct access to an underwriter (22 percent). (Chart 4)
From wholesalers/marketing groups, agents indicated that underwriting assistance is crucial (36 percent), along with better marketing and point-of-sale material (30 percent), training (25 percent), and access to multiple carriers and product lines (23 percent). (Chart 5)
But overall, agents are happy with the service they're getting from their wholesaler/marketing groups: 79 percent said the life insurance sales support they're receiving is useful.
If agents were to write a life insurance case through a new wholesaler, they say product offerings would most entice them (54 percent) along with lead offers (49 percent) and sales support (41 percent). Only 28 percent said commissions would play a role. (Chart 6)
Getting the information
But wholesalers and insurers aren't agents' favorite sources of life insurance information: Trade publications are, with 40 percent turning to their favorite industry magazine to learn about the latest in life insurance. Twenty-one percent said their insurance company home office provides them with good information, and 20 percent said they turn to wholesalers.
And how do agents like to receive the latest industry offers? Twenty-six percent said email is their favorite way to learn about new offerings, while 20 percent prefer direct mail, and 16 percent each prefer ads in insurance publications and offers from their wholesalers/marketing organizations.
Summary
Your optimism for the future of the life insurance market indicates many sales may be ahead. All that's left is learning how to gain more referrals, how to prospect more effectively, and how to overcome clients' objections to buying life insurance as soon as possible.
You may want to try tapping into the younger and older demographics, as well as targeting more women in your prospecting methods. Realize, however, that marketing to new groups takes new techniques. Take the time to learn how to market more effectively to untapped demographics, and take the time to learn about your new prospects.
Since referrals are a big part of your business, work on cultivating those. And continue finding the best products for your clients' needs. On the pages that follow, we talk about index universal life, selling to seniors, and other product offerings you may want to consider marketing to your clients. Find out what they need, then show them what they could use. With the proper steps, success can be yours in the life insurance market.
Christina Pellett is managing editor of the Agent's Sales Journal. For more information about this study, call 800-933-9449 or email ASJeditor@ AgentMediaCorp.com.
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