There is nothing quite like a recession to make people ask, "What if" questions about their futures. Maybe their most urgent question is, "What if I was to lose my job?" But many people, particularly those in the middle market, also appear to be asking, "What if something was to happen to me?"
Why do we think this? Look at recent life insurance sales trends. According to LIMRA statistics, sales of term life policies -- the mainstay of the middle market -- were down 4% in the first quarter of 2009, compared to the first quarter of 2008. By comparison, universal life sales were down 33% and variable life sales were down 61% for the quarter.
Some would point out that upscale consumers are "falling back" into term policies due to limited cash flow, but that accounts for some of these relatively resilient term life sales. What we and many others believe is that the current economic slump has awakened middle market consumers to a better understanding of what life insurance is: A financial safety net that is only as strong as you make it.
As unemployment numbers have risen, many breadwinners have had to ponder -- or suffer through -- the effects of six months of unemployment and thus can more easily envision the advancing edge of poverty. It is not much of a leap for these individuals to realize that if they were to die, the families they'd leave behind would be living in poverty in a matter of months, in many cases.
We know that many of these individuals are aware of their exposure to financial ruin. LIMRA has reported that 44% of middle market consumers consider themselves under-insured when it comes to life insurance. And we know that producers would love to earn their share of the LIMRA-estimated $17 billion flood of premiums that insuring this vast market would create. These factors alone should be enough to convince our industry to move more aggressively in serving the middle market. Yet there are other, equally compelling reasons:
There aren't enough upscale clients to go around. If the recession has taught us anything, it's that we as an industry have spent too many years competing for the business of a segment of the marketplace that's too narrow. The expanding economy temporarily provided shelter from this reality, but we are in a new era. One way for producers to expand their opportunities is to move into the middle market; the sooner they do it, the better.
Change is in the air and the government needs money. The industry's focus on upscale customers has begun to draw the ire of policymakers who characterize our work as "serving the rich" to the detriment of the financial security of the middle class. Now, as the nation's focus turns to various anti-recession efforts, a tide of anti-insurance sentiment is rising. This sentiment is focused on health insurers now, but clearly the life insurance industry is vulnerable to reforms that may restrict the tax benefits of our products and further erode sales. The more the middle class is engaged in the life insurance industry as customers and agents, the less likely the industry will be an easy target for those who would seek to demonize us.
Our industry desperately needs new blood. LIMRA's 2009 study, "The Forces of Change," shows that the typical insurance seller is in his 50s. So it is not a surprise that the key relationships our producers have are with people who are middle age and older. Where are the new agents fresh from college or early in their careers? These are individuals who are getting married, having children, saving for college -- exactly like the middle market consumers who need life insurance protection. Thus, by recruiting and training new producers to tap the middle market, our industry prospers and renews itself for the future.
Take advantage of new tools
These younger agents grew up with a range of technologies that will reshape the way we serve the middle market. The confluence of computing power and Internet connectivity is spawning a range of new tools and resources for producers to serve this market with greater efficiency.
Additionally, some carriers have developed prepackaged approaches that can help producers pursue middle market customers more efficiently. These tools and approaches, combined with some creativity, can help producers penetrate the middle market in profitable ways. Let's review just a few of these opportunities.
Turnkey marketing solutions: Work with carriers who can help you be more efficient and effective with marketing. Some of them have made significant investments in marketing tools, and you just need to take advantage of them. For example, you can customize pre-designed ads and use automated direct mail systems to generate leads. This is much less expensive and time consuming than developing your own tools.
Web-based educational tools: Some carriers and third-party companies have developed educational sites that are very consumer friendly. You can partner with them to develop "ready-to-buy" prospects. The fact is that term life products -- the mainstay of this market -- are fairly easy for people to understand. Prospects can watch an online demonstration and "get it" right away. What slows them down is getting the answers to a fundamental question: How much life insurance do I need? An interactive site can help guide prospects to an answer that is clear and based on their specific life needs. Once the prospect is convinced of the need to buy and how much to buy, it is in the producer's hands to finalize the sale and get the policy on the books.
Streamlined administration tools: There was a time when producers spent more time selling than doing paperwork. Now there are online companies that are bringing the reality back. These companies have built systems that reconcile the rules of various jurisdictions and the applications of numerous carriers to streamline the application process. They fill in forms automatically, and queue up e-mails to parties involved so you can just tailor them and send. These companies also tie together the activities that surround the application, such as medical exams and case management work, so the producer has one, holistic view of the prospect's movement through the application process. By using the technologies, the producer can focus time on closing sales and cementing relationships with these new clients.
Case in point
Here's an example of how a producer might use these tools to bring in a group of new term life customers with great efficiency.
Imagine that the producer has an existing business relationship with the owner of a group of auto repair facilities. The owner has a large universal life policy, but his 75 employees do not have a group life offering and, very likely, have not been approached for a life insurance sale other than through direct mail. The producer explains to the business owner that he will provide access to life insurance to the employees in a highly educational, low-pressure way.
Then, after gaining access to the employees' street and e-mail addresses, the producer leverages a carrier's pre-packaged e-mail and postcard tools to send personalized messages to the employees. These employees go to a Web site to take part in an interactive educational session, with some of them emerging as "ready-to-buy" prospects.
The producer then can handle these prospects personally, or tap into a third-party company that will handle all the administrative work and "tee up" the prospect for close of the sale.
Are we there yet?
In discussing these emerging tools for accessing the middle market, there is a caveat. We are just beginning to explore how to use technology in ways that let producers serve middle market customers efficiently and with the potential for creating a meaningful producer-client bond.
If technology-enabled sales of life insurance were a footrace, we'd consider our industry as just mapping out the track, clarifying the rules and taking a few determined steps forward. We still have a long way to go.
That said, now is the time to learn more about these tools. The middle market opportunity is growing, their need for security is at a peak, and better marketing, sales and service tools are emerging every day.
The next step is yours.
Alan Lurty is senior vice president and head of business development for ING's U.S. Retail Life Business Group. The ING Life Companies, ReliaStar Life Insurance Company and admitted in New York, ReliaStar Life Insurance Company of New York, are currently the second largest issuer of term life insurance policies in the U.S., according to LIMRA.
Michael Rowell is founder and CEO of Efinancial.com, which provides consumers with quick, simple access to life insurance while also acting as a wholesaler in partnership with other distribution companies.
