Agent Media, LIFE study shows recent trends within marketplace
According to the Life and Health Foundation for Education (LIFE), several trends have begun working in favor of the life insurance market in the past year (see sidebar, page 16). And a recent joint study by Agent Media, publisher of the Agent's Sales Journal, and LIFE, shows the results of these shifts. In the past 12 months, 41 percent of agents have sold more life insurance than the year before, and 35 percent have maintained their previous levels. But they don't plan on stopping there -- 73 percent say they expect to sell more life insurance next year than they did in the past 12 months, while only 22 percent predict maintaining their current production levels. (See Charts 1 and 2)
"The life market in general is poised to be in a really good spot," said Marian Sole, senior vice president of AXA Equitable Life Insurance Company. And Marv Feldman, LIFE's president and CEO, agrees.
"Consumers are more aware of the need for life insurance and the fact that they need to buy it," said Feldman.
The market is not, however, without its concerns, Feldman pointed out.
"The problem I see is the independent producer is probably not meeting the middle market needs as much as they should," he said.
The 2008 Life Insurance Study set out to probe how these successes and challenges are affecting producers nationwide. We also spoke with industry experts to get their take on the results and glean useful advice for those producers facing inevitable challenges in a growing marketplace.
Selling habits
Agents overwhelmingly indicate that they write the most individual life insurance for those in their 40s (40 percent), leaving those in their 30s and 50s at second and third places (22 percent and 21 percent, respectively). To prospecting producers, this could mean opportunity in the form of underserved markets -- those in their 20s and 60s (1 percent and 13 percent, respectively). Alternatively, it may point to a pattern of selling that agents find most successful, largely because of the life circumstances of 40-somethings.
(See Chart 3)
"(In their 40s), people are starting to appreciate the need for it and have young children," said Dennis Pettinelli, a wealth management coach who spent more than 30 years as a general agent for John Hancock. "People in their 20s and 30s don't have the money."
Pettinelli also points out that the producer's own age group may play a role, as a 2007 Agent Media study showed the average age of producers is 51.
Agents are also tending toward male consumers, as 72 percent said they sell the most individual life insurance to men. Again, females in this case represent an underserved demographic that can certainly benefit from life insurance, especially single mothers, members of dual-income families, and breadwinners. (See Chart 4)
Most agents are conducting annual policy reviews (42 percent), with 25 per-cent tending toward one to two years and 17 percent at two to five years. Only 11 percent never conduct policy reviews -- but they certainly should, said Sole.
(See Chart 5)
"You should be doing one every one to two years," she said. "There won't be enough changes every few months to make a difference, but you need to re-evaluate to see where the market is going. Gauge the health of the policy and see if there's a new product they're interested in."
And cross-selling is a less popular sales method for producers, with 37 percent making less than half their sales to clients who purchased another insurance product from them in the past. This may indicate that many agents aren't mining their own books of business, something experts have repeatedly suggested as an effective and efficient means of prospecting. (See Chart 6)
About the same number of producers said selling to existing clients is their most effective method of prospecting (32 percent), with the majority choosing referrals (48 percent). As one agent said, "I need to be more aggressive with my referrals."
Challenges and solutions
When asked for their main challenges with selling life insurance, agents identified, among others, the following:
o Clients procrastinate (55 percent)
o Clients do not recognize need for life insurance (47 percent)
o Prospecting/finding new clients (40 percent)
o Clients perceive it as too expensive (35 percent)
o Underwriting problems (25 percent)
Other challenges included "clients don't understand products" (10 percent) and "premiums are too high" (10 percent). (See Chart 7) But there are many ways to address these challenges.
Procrastination is a top challenge largely because clients do not want to face the inevitable prospect of dying.
As such, they need to be shown the need in order to gain the motivation to move forward.
"Clients procrasti-nate because they haven't been educated as to the real risk they're taking," said Pettinelli. "If you go home today and your refrigerator is broken, you'll go buy a new one immediately." Pettinelli also suggests persistence in order to break through the common obstacle of consumers who are simply too busy to sit down and choose a policy.
"The consumer has 30,000 things coming at them each day," he said. "Don't just say, 'I'll call you back.' Clients are way too busy to have us drag the sales process out, as we tend to do."
Agents can also apply the same tactic as they do for procrastinators to clients who do not recognize the need for life insurance. Pettinelli, however, suggests agents tread lightly when presenting their case. Rather than using scare tactics, explain the need in an engaging manner and take a risk management approach. That way, said Pettinelli, you're not simply telling clients they need the policy and leaving it at that -- you're involving them in the process and characterizing life insurance as an essential financial tool rather than just another bill to pay.
Prospecting, a challenge that regularly falls into the top five challenges for producers, is most often approached using referrals and an existing book of business. Less popular methods include direct mail (7 percent), telemarketing, the Internet, and seminars (3 percent each).
One agent specifically addressed the issue of cost perception by saying, "It's becoming harder and harder to sell life insurance. People's incomes are really stretched, and they are willing to sacrifice the life insurance to meet other bills."
But cost concerns, a common pain point with consumers, can be tackled in the same manner as are needs and procrastinators -- when shown the urgency of a life insurance purchase and the value therein, cost tends to become much less of a factor.
And underwriting problems can be solved with effective field underwriting on the part of the agent, as well as training and education, said Pettinelli.
"Part of the problem is agents understanding the company rules and why they have the rules," he said. "I can understand why in the first couple of years, it's just too much to learn, but if people try to understand the underwriting rules and why they exist, they'll be better able to grasp field underwriting questions."
So while training is essential, agents still have a lot of work to do.
Change and opportunity
In the end, said Feldman, agents need to motivate themselves to keep up with constant change and product development in order to maintain success and exceed expectations. Specifically, he advocates a focus on one particular market segment or product type.
"Not everyone can be a generalist," he said. "Sometimes, you have to be a specialist, just like you do in the medical market -- and I think you're going to see more and more of this taking place."
But despite the obstacles -- roadblocks faced by all producers in all markets -- the life insurance market has always been and will continue to be a great industry for producers willing to make the effort.
"It's the greatest time in the world to be in this business," said Pettinelli. "There are 10,000 baby boomers a day retiring without defined benefit pension plans. It's a great time to get in on the boom."
Christina Pellett is managing editor of the Agent's Sales Journal. She can be reached at 800-933-9449 ext. 226 or ASJeditor@AgentMediaCorp.com.
More Coverage:
LIFE Foundation Highlights Top 3 Life Insurance Trends
Making the Most of Life Insurance Awareness Month
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