The life-changing life insurance career that's often overlooked

Organized as lodges, branches or local chapters, the fraternal insurers oversee mutual aid programs for their members and their communities at large

Fraternal benefit societies offer life insurance agents and advisors unique opportunities to weave charitable and community-building initiatives into their careers. Fraternal benefit societies offer life insurance agents and advisors unique opportunities to weave charitable and community-building initiatives into their careers.

Do well by doing good.

For life insurance and financial services professionals, this adage finds perhaps its fullest expression in an often-overlooked industry niche: fraternal benefit societies. Agents and advisors seeking more rewarding and successful careers might do well by taking a closer look at them.

Why? The societies offer producers unique opportunities to weave charitable and community-building initiatives into their careers. And in so doing, many among them find their lives transformed.

“Our agents and advisors say the experiences in the field changes their lives,” says Teresa Rasmussen, president of Thrivent Financial for Lutherans. “They want to be part of our mission; they find it very fulfilling.”

In business for the members

Not-for-organizations, fraternal benefit societies sell insurance to members that share a common bond or purpose. Many have a religious orientation: The American Fraternal Alliance counts among its members nearly 20 organizations for Catholics. Others cater to individuals in particular trades or professions (teachers, police, firefighters, etc.) or nationalities (e.g., Serb National Federation, Sons of Scotland, Polish Falcons of America).

Organized as lodges, branches or local chapters, the fraternal insurers oversee mutual aid programs for their members and their communities at large. Collectively, the all-volunteer work they do is impressive.

According to a July 2014 study of the Maryland School of Public Policy, fraternal insurers generated nearly $19 billion in member benefits between 2007 and 2011. Counting only direct contributions, the societies chalked up $2.4 billion in charitable and community assistance, an average of $478.3 million per year. Members of fraternal lodges also volunteered nearly 400 million hours of their time during the five-year period, which averages out to $1.6 billion annually.

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Generating these eye-popping numbers are the fraternal insurers’ field producers. The volunteer efforts, say top executives interviewed by National Underwriter, are yielding tangible benefits not only for the members and communities served, but also for agents and advisors spearheading them. Topping the list: deeper and more trusting personal and professionals relationships with the members.

That’s true, not least, of 20-somethings entering the profession. Says Kevin Marti, president and CEO of Gleaner Life Insurance Society: “Young people are very motivated by the fraternal model. They’re attracted to the caring, giving and comradery developed in a fraternal type of environment.”

The caring and giving is wide-ranging. Through “Thrivent Choice,” a program of Thrivent Financial, 305,000 of the insurer’s members directed an estimated $54 million to 29,000 churches and non-profits in 2015. Over the same 12-month period, Thrivent Action Teams — a volunteer army of nearly 1 million people — contributed more than 5 million hours to community outreach initiatives. And they raised more than $50 million for charitable causes.

Some of the fraternal insurers’ philanthropic efforts target the poor or the homeless. Last year, field reps from Modern Woodmen of America prepared 548,000 meals to feed the hungry in local communities. The “Knockout Hunger” program drew on the efforts of 3,000-plus Modern Woodman chapters.

Other initiatives have a broader focus. In 2014, Gleaner Life Insurance funded nearly $170,000 in educational programs (e.g., scholarships and youth training), patriotic events (donations to veterans organizations), and community outreach (family picnics, elder and animal support, lifestyle and safety activities, etc.).

Still other efforts involve alliances with organizations that a have a purely philanthropic focus. Through Thrivent Builds, a 10-year long partnership with Habitat for Humanity, Thrivent’s financial service reps and members have contributed $212 million and 4.4 million volunteer hours to build homes for 16,000-plus families and individuals.

Many of the fraternal insurers direct their good works towards rural communities that have fewer resources to cope with locals’ needs, such as rebuilding after a natural disaster. Often, too, they avail members and the communities they serve of resources needed during a financial emergency.

Should, for example, insured members of Modern Woodmen die in a car accident, the society will not only pay out a death benefit, but also provide a monthly annuity to guardians of the orphaned children. The children also receive a minimum of $16,000 to fund their college education at an accredited school. 

Children who otherwise would not quality for a life policy can also be insured up to a certain limit. Or should they require physical rehabilitation following an accident, Modern Woodman matches funds raised by members for the needed services.

“We’re really facilitating a way for our people to be benevolent, to give back, to be charitable, and to be community-minded citizens,” says Modern Woodmen President & CEO Kenney Massey. “And, when appropriate, we encourage them to facilitate the various activities with their children.”

Work-life balance

All of this unpaid work and giving can be taxing for even the most disciplined and civic-minded financial service professionals. Acknowledging as much, as well as producers’ primary task — generating insurance sales — executives at the fraternals say they expect their agents and advisors to participate in (though not necessarily lead) philanthropic and community efforts. 

They also expect of their field reps an appropriate balance in commitment to professional, charitable and personal responsibilities. Not everyone fits the bill.

“We always say we’re looking for the racehorse with a big heart, or the tiger that’s benevolent,” says Massey. “We want that special person who’s highly driven. 

“Many are in this business for the money, which is not always bad,” he adds. “But reps who don’t want to be involved in community service or participate in volunteer activities won’t be happy here.”

New recruits who are a tad more focused on the money may find that certain benefits compensate for the volunteer undertakings. Modern Woodmen funds life, dental and health insurance policies for their career agents, as well as retirement benefits.

The fraternals also have professional development programs. Example: Mission for Life, an intensive one-day program hosted by Gleaner Life that teaches best practices in life insurance sales and client servicing.

Also to weigh is the satisfaction and loyalty of members they bring on board, intangibles attributable in no small measure to their philanthropic and community outreach efforts. Many fraternal-affiliated advisors form lasting personal and professional relationships not only with members, but also parents, children and grandchildren.

That can add up to a lot of people — and a huge impact on a small community. Massey cites one exemplary Modern Woodmen advisor who counts among his clients over 1,400 policyholders in a town of 5,000.

The fraternals’ producers’ are benefiting their communities in other ways as well. In 2015, a Gleaner Life advisor contributed more than $4 million to the society’s scholarship foundation, making the educational fund self-sustaining. Scholarship awards have also been bumped up to $3,000 per student from $1,000.

“The program has really grown into something very important and impressive,” says Gleaner Life’s Marti. “Since the 80s, the foundation has paid out over $2 million dollars in scholarships to high school graduates going to college.”

The philanthropic focus of the fraternals is one tie that binds advisors to their members and communities; another is the products they peddle. Like mutual insurers, many of the fraternal societies return earnings to policyholders as dividends (typically for participating whole life policies) or as “excess bonuses.” The monies may be received as interest or cash; or be used to purchase additional death benefit or reduce premiums.

Also to consider: The fraternal insurers’ primary mission is to serve their members/policyholders — not distant stockholders with objectives that may not dovetail with those of the former. That alignment of interests helps to promote positive outcomes in terms of quality of product, planning and service after the sale.

“Because we’re not beholden to Wall Street and shareholders, we’re able to take a long-term view of the business,” says Thrivent’s Rasmussen. “We can focus on what’s best for our members now or for their grandkids in 50 or 100 years.”

One measure of an insurer’s customer focus (and of customer satisfaction) is persistency: the percentage of policies that remain in-force, rather than lapse or be replaced by policies of competitors. Catholic Life Insurance President & CEO Mike Belz boasts that the carrier’s persistency rate is “running in the high 90s.”

Caveats to consider

All well and good. But producers aspiring to affiliate with a fraternal insurer also have to weigh cons that may disadvantage them relative to their peers at for-profit insurers. Among them: a potentially more limited choice of products with an investment component.

Modern Woodmen and Catholic Life don’t offer their members indexed and variable insurance products, respectively. Both cite the products’ complexity and investment risk as reasons for keeping the offerings off the carriers’ portfolio. 

For other fraternal insurers, technology infrastructure is the issue. Gleaner Life’s Marti says the insurer’s policy administration platform cannot manage fixed indexed solutions (notably annuities), in part because of the products’ many moving parts (e.g., participation rates, interest rate caps, annual resets/ratchets). The securities expertise required to invest funds appropriately is a second hurdle.

To surmount it, Marti says the society plans to tap the expertise of Asset Allocation & Management Company, since 2014 a unit of Securian Financial Group. On the IT front, Gleaner plans to modify its admin platform to make it indexed-friendly. 

Also due for an overhaul are the mainframe systems at Modern Woodmen. The hardware and software revamp aims to avail the insurer’s members of “anytime, anywhere” access to information about their policies. A web portal will boast self-service capabilities to allow members to revise out-of-date information, such as beneficiary designations.

The insurer also aims to enhance mobile capabilities by enabling field reps to conduct business — fill out e-applications, present policy illustrations or access home office apps and resources — through smartphones and tablets.

Additionally, these tech investments aspire to make more flexible the software used to develop and administer new products and policy features. “Using the new IT systems, we’ll be able to add a product rider or benefit much more easily,” says Massey.

And perhaps also more creatively when designing protection products tailored to the insurer’s member and community orientation. Such innovation in the fraternal space is underway.

Case in point: Thrivent Financial, which now offers disability income insurance to stay-at-home moms. Thrivent also recently launched a universal life policy that is competitively priced with term insurance and allows policyholders to add coverage as their income or circumstances change.

The product rollout, says Rasmussen, has “reinvigorated” Thrivent’s UL sales: Revenue in the fourth quarter of 2015 was up 85 percent from the same period in 2014.

To further boost sales, Thrivent is investing in initiatives that aim to capture a growing market for life insurers: tech-savvy millennials who prefer to do business online. To that end, Thrivent launched Brightpeak Financial. The division offers a web portal featuring information about protection products, online calculators and web-based applications.

Consistent with its broader mission, Thrivent set up Brightpeak to help “young Christians" grow stronger financially. Though Lutherans are still a majority of Thrivent's policyholders, membership has for several years been open to all within the Christian community.

This broadening of the customer base has been a trend among fraternal insurers. Catholic Life is no longer just for Catholics (though it philanthropic mission remains oriented to the church.) Gleaner Life, established more than a century ago for farmers and their families, now caters to people from all walks of life. Modern Woodmen, too, has expanded beyond its humble beginnings.

In Thrivent’s case, the outreach also has an international component. Through Thrivent Builds Worldwide, financial reps participate in community development initiatives abroad. Among them: “premier destination trips” to El Salvador or Nicaragua, where reps build simple, earthquake-resistant homes in partnership with Habitat for Humanity.

During these “life-changing” expeditions, says Rasmussen, reps make new friends and learn about the cultures and challenges of the host country. Often, too, the exchanges result in new members for Thrivent.

“Happiness is not about what you accumulate, but about relationships you build and how you live your life,” says Rasmussen. “Our financial reps get to experience this through Thrivent Builds; many who come back from a trip abroad say their lives have been transformed.”

Which brings us back to our opening maxim. If “do well by doing good” rings true for you — if you aspire to bring greater meaning and purpose to your work in financial services — then your future may lay at a fraternal insurer. The nearly 70 non-profits occupying this niche of the insurance world are, no doubt, hoping it does.

See also:

Insurance industry keeps up charitable giving campaigns

Dave Ramsey's unwitting attack on charitable giving

The charitable gift annuity: 10 talking points for donors

7 smart ways to embrace charitable endeavors this holiday season

 

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