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Targeting The Mid-Market Life Insurance Buyer

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Targeting The Mid-Market

Life Insurance Buyer


Las Vegas

At least 50% of the life insurance companies that LIMRA International follows say they are targeting the middle market or have mid-market units, according to Lynn M. Ferris, associate research consultant in markets research at LIMRA.

But to be successful, marketers need 3 things, she said in a speech here. “You need to build relationships with the people. You must educate them, because they dont understand the products. And you must keep it simple.”

If one of those is missing, she said, the effort will fail.

The comments came during a life insurance conference co-sponsored by LIMRA, LOMA, the Society of Actuaries and the American Council of Life Insurers. Ferris was reporting findings from 9 focus groups of life insurance shoppers. Conducted at the end of 2003, the research examined views of shoppers aged 18-64 in the $25,000 to $100,000 income range. Ferris and Pete Jacques, another LIMRA researcher, headed up the project.

Another session at the conference also explored reaching life insurance buyersbut its focus was on how to do so now that the federal Do Not Call legislation has been implemented. As discussed below, the advice from that session was: Concentrate on getting referrals and on cross-marketing the existing customer base.

The LIMRA study of mid-market buyers comes at a time when many observers are asking how the industry can better reach this market.

In the 1990s, the industry focused mostly how to reach high-net-worth buyers. That gave worksite marketers plenty of room to woo the mid-market with streamlined products sold at the workplace. But now, the individual life industry is once again looking at ways to reach the mid-market with its richer and more varied products.

The median annual income for this market is $42,200, said Ferris, noting that 57% of the market has an income range of $25,000 to $49,999. The high end earns $100,000.

The demographic varies widely in household composition, values and many other details, Ferris noted. Even so, the focus groups found shopping tendencies.

For example, family values, including a parents purchase of life insurance, is a “strong indicator” that the person will shop for life insurance, said Ferris. And, although life events like birth and marriage continue to be triggers for such shopping, “loss of a job or loss of a life insurance benefit at the job” have become triggers as well. Some people who had gone through such losses now are saying, “Wow, I never realized how important that life insurance was!” Ferris said.

One finding that may come as a surprise to veteran life insurance professionals is that the first person that mid-market people tend to call, after deciding to look for life insurance, is their own property-casualty agent.

“That was overwhelmingly the case,” said Ferris. “That doesnt necessarily mean they bought from the p-c agent,” but that is where many started their search for information.

When it comes to making a purchase, however, Ferris had a word of caution: “There are so many things that bother mid-market people [about life insurance], its incredible.”

For example, they do not know how much insurance to buy, whether they might be uninsurable, whether they should have all their insurance at one company or several, whether the company will pay the claim promptly, whether the product is a good value, and more. Also, some find the policy language to be confusing.

“For some people, all of this can be overwhelming, so they do nothing,” Ferris said.

That is why it is so important to build relationships, she continued. “The relationship helps them get answers to questions, and then they buy.”

Client education is likewise important, she said. There are a lot of things people just dont know, unless someone tells them, she said. For example, “one person said he didnt think the industry sold whole life insurance anymore.”

Mid-market consumers do want to buy from an agent, she added. “But they dont want to sit and listen to a long spiel about the company.” They just want the agent to listen to their needs and to give them the information straight, she said.

In the Do Not Call session, Steve Phelan seemed to echo that observation in discussing how people feel when agents contact them by phone.

Calls still can be made to current customers, said Phelan, who is head of marketing support and development at Western & Southern Life in Cincinnati. “But the agent must mix sales calls [including referrals] with relationship-building callsor else people will feel used.”

“People really dont ask a lot,” he continued, “but they do want a little respect. The Golden Rule applies here.”

Under the law, agents can call referrals, Phelan said, so “get good at referrals.” That includes having the referrer obtain permission from the person before the agent makes the contact, he said. And then, make the contact promptly, he said.

Another strategy is to build up the firms cross-selling programs, said Paul Zaits, life marketing manager at Farmers New World Life, Seattle. These are current customers with whom the firm is regularly in touch anyhow, he indicated. His own firm has introduced a number of programs to support agents in this effort, and he said sales have increased as a result.

Reproduced from National Underwriter Edition, April 9, 2004. Copyright 2004 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.