Given that life insurance sales suffered a more dramatic decline in the first half of 2009 than at any time since World War II, one might expect that all advisors are hurting. While that may be true of most producers, some actually have grown their practices during the recession.
“I’m having a very good year selling life insurance,” says Chris O’Shea, an advisor representative at Allegiance Financial Advisors, Jacksonville, Fla. “In terms of premium dollars, my sales are up from 12% to 15% since last year.”
E.L. “Duke” Marston, a principal of Marston Financial & Insurance Services, Belfast, Me., has enjoyed a similar rise in sales. “I’m finding that individuals are still interested in life insurance, both permanent and term policies,” he says. “In light of all that has happened in the economy and in the credit markets over the past year, they understand the value of a product that offers a guaranteed benefit.”
These comments contrast starkly with the conclusions of a recent study on life insurance sales from LIMRA International. The Windsor, Conn.-based firm reported that individual life insurance annualized premiums plummeted 26% in the first quarter of 2009, then dropped another 20% in the second quarter, yielding a combined 6-month decline not witnessed since 1942.
Variable life sales, which fluctuate with the market, suffered the most, falling by 50% in the second quarter and 55% for the first half of the year. Universal life sales fell 29% and 27%, respective, over the same periods.
Ashley Durham, a senior analyst of product research at LIMRA, attributed the dip in sales in part to tighter budgets faced by individuals in the current recession. Another factor is the rise in premium costs, increases made necessary in many cases due to stiffer capital reserve requirements.
Yet, advisors have continued to build their practices despite the difficult environment for life insurance sales. What gives? Those interviewed by National Underwriter credit their own efforts, some of which were undertaken to counteract the effects of the contracting market.
Marston attributes more than half of his revenue gain to a decision he made in 2008 to purchase leads from a third-party vendor. He pays $15 per contact–a manageable commitment, he says, in comparison to lead-sharing programs that often charge fees of $1,000 or more for leads sold in bulk. Of the 3 to 6 leads he receives monthly, he typically closes one or two, he says.
Philip Harriman, the immediate past president of the Million Dollar Round Table and a principal of Lebel & Harriman, Falmouth, Me., observes that his practice has compensated for lost life sales in the past year by adding a credentialed human resources staffer. The rep handles HR functions–complying with government regulations, developing employee policy manuals, conducting pay scale analyses, etc.–for small business clients that don’t have an internal HR staff person.