In today’s world, life insurance professionals must to be ready to serve the needs of different client groups, each with its own requirements and buying experiences. A large opportunity exists for producers who can effectively deliver solutions to two very different end-consumer segments – the middle market and the mass affluent.
Life Insurance Markets
The life insurance business has significant untapped potential. Consumers need protection, whether it’s the young families of the middle market or the well-off older consumers of the mass affluent. Recent LIMRA research indicates that 22% of U.S. households have no life insurance and 44% say they need more1. Another LIMRA study states that 27% of households say they intend to buy life insurance in the next 12 months, while only 12% actually purchase life insurance in a given year2. These statistics show us insurance professionals that we must do a better job of articulating the problems life insurance is designed to solve for each consumer segment and deliver effective solutions to these problems in ways the different client segments want and understand.
Middle market consumers need simple, essential protection and – with more than 18 million households – represent a large group of prospects. In most cases, they are younger families, ages 25-45 with children, just starting out – meaning they’re not rich…yet3. They have basic protection needs such as income replacement, final expenses, and debt elimination. They want a simple, easy, time-saving, and affordable buying experience, so their loved ones are protected. Their most likely buying source is someone with whom they’re familiar, such as their local insurance agent or bank representative. They also may buy direct, given their technology fluency and needs understanding. The products that would appeal to this segment are term and whole life insurance.
The mass affluent market segment, approximately 22 million households, is at the opposite end of the needs spectrum compared to the middle market segment because it has considerable total assets that need protection4. These folks tend to be older – ages 50 to 75 – well-established empty nesters with complex planning needs, such as estate/legacy planning, business succession planning, and/or charitable giving5. They want a more investment-oriented relationship that gives them piece of mind that their portfolios and planning are integrated and optimized. They are most likely to purchase life insurance through financial planners, higher-end career life agents, life producer groups, or brokerage general agents (BGAs). Universal and variable life products would appeal to this segment.
How these solutions are delivered becomes very important if the life insurance professional is to capitalize on this opportunity and serve these different market segments. The life insurance professional must communicate the benefits of life insurance in terms prospects understand. To make this communication as effective as possible for middle market customers, it should be tied to major life events such as marriage, divorce, home purchase, having children, or the death of a loved one. The conversation should reinforce the fact that their families and values are protected, and the solution will grow and change with them.
For mass affluent clients, major life events include divorce or separation, job change, and having grandchildren. The message should be that their legacy will be intact and they’ll do right by their loved ones, business associates, or charitable organizations. If done correctly, this communication can compel those who would otherwise not act to obtain the protection they need. The key to this delivery is for life insurance professionals to further their training on life insurance sales topics, and continually refine their communication abilities to effectively convey the right solution.