A resurgence in life insurance sales in 2009 and the first part of 2010 presents advisors with a pleasant problem: How to get in on the action, now.
Capitalizing on the current positive momentum in the life insurance market means identifying and marketing the types of products and features–both new and well-established–that will resonate most with prospects and clients, then moving methodically but decisively to uncover and fill their needs.
It isn’t rocket science. But nor is life insurance a product that sells itself. You need to bring a high degree of creativity, objectivity, transparency and due diligence to the table, along with a strong grasp of what’s happening in today’s marketplace. Which products are selling and which aren’t? What marketing tactics are working best given today’s client mindset? Which types of clients and prospects should you be targeting? Armed with answers to these questions, you’ll be well on your way to generating momentum for your own life insurance book of business for the remainder of 2010 and beyond. So, read on.
Individual life insurance sales increased 10 percent in the first quarter of this year compared to the same period of 2009, according to LIMRA. Universal life led the way, jumping 17 percent in the first quarter versus the first quarter of 2009, when sales were bottoming out. Overall, policy count improved along with premium, jumping 21 percent over first quarter 2009, the largest increase in UL policy sales since the third quarter of 2002. Meanwhile, death benefit guarantee (DBG) UL sales increased by about 10 percent, while non-DBG UL sales rose 30 percent.
Seeking new product niches to fortify life insurance sales? Then indexed UL products might be the ticket. Indexed UL premium increased about 50 percent in the first quarter of 2010, according to LIMRA.
Whole life, the only life insurance product to show a sales increase in 2009, also posted gains in the first quarter of 2010, jumping 15 percent, according to LIMRA.
Variable universal life policies also gained ground in the first quarter, with a 10 percent sales increase from a year ago. Nearly 40 percent of VUL writers posted gains, including six of the top 10 companies, LIMRA indicated.
The only blemish for the quarter came with term life, quarterly sales of which were down 4 percent on an annualized premium basis. The decline was attributed largely to price increases on longer-duration term and return-of-premium term products as a result of increased reserve requirements.
Anticipated increases in reserve requirements for guaranteed UL products could have a similar impact on UL prices and sales going forward, noted Karen Terry, manager of product research at LIMRA.
Markets and marketing: What’s working
When it comes to unearthing new life insurance prospects, advisors need look no further than their own client bases. Not only is it worth tapping existing clients for referrals to friends, families and business owners, says Scott L. Harris, CLTC, a wealth preservation specialist at Sagemark Private Wealth Services in Syracuse, N.Y., it’s also worth revisiting and potentially reopening their life insurance portfolios to address any gaps or opportunities that have arisen due to changing circumstances.
As a life insurance marketing organization, National Benefit Corp. has made a concerted effort of late to get advisors/producers to focus on life insurance portfolio review, having recently unveiled a life insurance review kit to do just that, says Randy Rowray, the firm’s vice president of marketing. “We’re trying to show our reps what they stand to gain, and what their customers stand to gain, from life insurance reviews,” he explains.
There’s a growing emphasis on estate and legacy planning among older clients, according to life insurance producers who serve that segment of the market. “Wealth replacement, especially, has been a big topic in the senior marketplace lately,” observes Rowray.
But there’s a disconnect: The benefits of using permanent life insurance for wealth transfer and wealth replacement are well documented, yet they are not necessarily well known to clients. Says Rowray: “There are a lot of people who have been focused on accumulating wealth but not on distributing it and leaving a legacy.”
That disconnect presents an opportunity for advisors/producers who can articulate to prospects and clients how life insurance can help accomplish their wealth transfer goals. Usually the dialogue starts with a review of wills and other estate documents, where the advisor can begin uncovering the need. “We have a whole lot of business owners and families that need to hear about things like survivorship universal life and traditional UL, especially because of the uncertainty with [federal] estate tax policy.”
Selling life insurance in an estate/legacy planning context is more about process than product, asserts Rowray. “It helps if you first explain to a client the things they can do to minimize estate taxes, such as with trusts and family limited partnerships, then bring life insurance into the discussion later. You’re helping them understand the process and the value of life insurance first, because if you lead with the product, then clients are like, ‘I don’t understand why I need this.’”