When I entered the life insurance business in 1956 things were simpler but nonetheless challenging. The training program consisted of teaching the recruits to be an expert in one simple plan and then training them to prospect for people who could use the plan. The field force was still being rebuilt to replace those who left during World War II.
In 1960, there were only six CLUs in our entire state and about five members of the Million Dollar Round Table. As a business, our store of knowledge was very thin–we were truly green in both knowledge and experience. But we also began to grow. In 1961, when I became a CLU the number of CLUs doubled, reaching 12–and more followed each year thereafter.
As we grew in know-how and experience, we embraced an early form of financial planning called “programming.” This entailed the setting of a prospect’s goals and objectives and measuring them against all current assets and life and health insurance. In virtually every program there were gaps that needed to be filled, and life insurance was often the only vehicle that could readily do the job. Such growth enabled agents to be more successful and raised our value to the public we served.
Increased knowledge also helped us to transition into more sophisticated uses of our products to solve business and estate problems. Business buy-and-sell arrangements and corporate stock redemptions along with deferred compensation plans, qualified and non-qualified, became fertile fields to agents who had grown to become advanced life underwriters. Estate planning for people with tax and distribution problems also provided opportunities for our savvy and experienced people.
Creative ways to pay large premiums were conceived to help people who had large problems that insurance could solve–but little cash flow. Split-dollar plans brought together the premium-paying ability of one party with the insurance needs of another. The variations of this concept and its uses have been almost endless. Alas, there have also been some abuses, particularly when used to benefit charities. But those have been few overall and have been largely kept in check by regulations.
Supporting this growth and enhancing our value to the public over the years has been the mission of two great institutions. Our business has been blessed by the presence and work of the American College and the Life Underwriter Training Council, both created by the industry itself. The LUTC provides basic to advanced training in the application and sale of life insurance, and the American College provides fundamental knowledge of such issues as economics, law, taxes and ethics that directly or indirectly relate to the sale and use of life insurance. Some growth of our people would perhaps have occurred without these organizations, but certainly not to the extent that has been achieved. Because of their presence, we were a very focused business–green and growing.
But along the way, external forces impinged upon our marketplace and much of our business lives changed. We had a couple of recessions, inflation and stagflation in the 80s with the prime interest rate rising to over 20%. There was great concern among the companies that such interest rates would cause severe disintermediation of policy cash values subject to call at 5% and 6%. A combination of legislation affecting policy loans and policyholder loyalty prevented the meltdown. Once again the sacrosanct nature of cash value life insurance was demonstrated.