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Heed The Power of The Middle Market

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Before Michael Keller joined Farmers New World Life, Mercer Island, Wash., he was “all about trying to move up from the middle market.”

The vice president of life marketing for Farmers used to perceive the middle market, with an annual income between $35,000 and $100,000, as “down market, but it really is not,” he said at LIMRA Internationals 2003 annual conference here.

“Its huge. There are 60 million households out there, mostly underinsured,” he said. Not only is the market huge, but it buys life insurance. Keller should know. Life sales at Farmers have been up over the previous year for the past two years.

Keller suggested that those in the industry who insist that life insurance is a product thats sold and not bought are short-sighted. Farmers has done surveys and spoken with focus groups about their perceptions of the product and their willingness to buy.

The company learned that the middle market segment wants to buy life insurance, it just doesnt know how. They research it on the Internet, they ask friends and family about it, but they are not approached by producers who want to sell to them, Keller said.

Agents largely ignore this segment, and consumers dont approach agents because they are afraid they cant afford what agents have to sell, he said.

“If you capture them early, they are loyal,” Keller said. “They are not shoppers and they are not bombarded with offers from other companies. All they want you to do is pay attention to them; you dont have to do a lot to keep them.”

When approaching this segment, certain things should be kept in mind, he said. One is that trigger events that cause people to consider buying life insurance are different for “todays generation” than the traditional triggers.

Keller defines todays generation as people in their mid-20s to early 40s.

Todays generation buys less from emotion and has more of an economic focus than do older generations, he said. Trigger events for them are, in order of importance: losing ones job; making ones final mortgage payment and having a child enter college or a vocational school.

Traditional life event triggers are, in order of importance: the birth of a child; the purchase of a home and the death of a close family member or friend. Todays generation ranked death of a family member or friend 26th in terms of triggering the decision to buy life insurance.

Research by Farmers supports the notion that the middle market is ready to buy. Ninety-five percent of people in the middle market feel that financial planning makes sense, according to Farmers. Sixty-eight percent of people in the middle market are unhappy with their current financial planning process, which for most, Keller says, includes no advisor or life insurance agent.

Farmers delineates eight market segments within the middle income market: new family; empty nesters; school-age families; newlyweds with a dual income; single parents; young married renters; affluent families; and mature families.

Farmers has an Internet-based model available to its agents that allows an agent to click on the segment his client falls into. He can then enter their specific finances and the model creates a list of products the client should consider buying.

“It gives a snapshot of what they should be doing at this stage and a preview of whats coming,” Keller said. This is important, because although this segment wants to buy, it is confused as to what to buy and how much of it to buy. So, their agent needs to be able to prioritize for them, Keller said.

But how does an agent reach this market? Keller said the last place a consumer wants an agent is in his home. This would entail cleaning the house and making sure the children behave, he said. Consumers much prefer to see an agent in her office, he said.

One way Farmers is trying to reach this market is through alliances. One is with Target Corp. department stores, based in Minneapolis. Farmers has space in a handful of Target stores. The commissions are split between the agent and Target. The main drawback in this scenario is that shoppers are usually in a rush and dont often want to spare the time to talk about insurance.

Dos and donts for the middle market include informing them without lecturing, Keller said. Dont talk about change; they know whats going on in their lives, he added. And, dont talk about problems, present solutions.

Reproduced from National Underwriter Life & Health/Financial Services Edition, November 14, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.