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Life Health > Life Insurance

Essential Guide: Life Insurance

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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.

What’s selling
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.’”

Given the flux in estate tax policy, it’s also vital to build flexibility into a policy purchased to execute an estate plan, so that it can be tweaked if tax laws change, adds Harris. Advisors looking to broaden their life insurance sales horizons might also consider targeting African-Americans. According to recent findings from LIMRA, African-Americans are twice as likely to consider purchasing life insurance for themselves or for someone else in the household compared to the total U.S. population.

“Our findings indicate that African-Americans are more receptive to buying life insurance today than in the past and that they have a more positive attitude toward life insurance companies and their field representative than the general population,” says Nilufer Ahmed, a senior research director at LIMRA.

Channels worth watching
“As far as upside for life insurance sales, the bank channel is among the most promising,” says Ashley V. Durham, a LIMRA senior analyst. “That’s where we saw the biggest percentage growth in the first quarter [of 2010].” “And,” she adds, “simplified-issue life insurance products are leading the way.”

Indications are that life insurance carriers are increasingly emphasizing the bank channel to bolster sales. But companies such as The Hartford are looking to other avenues as well. In February 2010, The Hartford’s individual life insurance division launched a campaign designed to grow sales in the independent channel in order to build on its already strong positioning in the broker-dealer and bank channels. Its goal: to make the company one of the top five biggest producers in the independent channel within five years.

The program, dubbed “Monarch,” thus far has been “a breakaway success,” according to The Hartford’s Robert DeMallie. The thrust of the campaign is relationship-building between the company?s internal sales force and some of the most successful life professionals in the business, he explains. “Our goal for the full year is to affiliate with 400 of these high-performing life producers. However, as of June, we already had agreements with more than 300.”

The appeal of the Monarch program? Producers like it, he says, because they are afforded direct access to their own underwriter and the Hartford’s advanced marketing team, plus extra support from local account executives.

Hot products: Established and emerging
Success in the life insurance market is as much about new products as it is about traditional ones. So if you want to beat your competitors to the punch, get up to speed on emerging products such as hybrid-term UL, indexed UL and permanent policies with a long-term care component. Indexed UL products are gaining appeal because they’re less risky than pure VUL offerings, while still providing upside potential.

Carriers lately have been dedicating more marketing resources not only to indexed UL products but to permanent products that cover long-term care needs, including those with accelerated death benefit riders that allow the policyholder to access cash value to cover LTC costs as well as so-called linked policies that package permanent life insurance with long-term care benefits that can be drawn independently of the underlying insurance contract.

One of the newest entrants in the field is The Hartford’s “Life Access” mortality rider, an indemnity-based option that provides income to cover the cost of care for specific conditions. Unlike other riders in the class, it doesn’t specify the types of care that are covered, thus making it appealing for people who prefer to receive care at home from family members, explains Dr. Robert Pokorski, chief medical strategist at The Hartford. “Care at home, by one’s family, is the new model” for long-term care.

Other new spins on the traditional UL policy are also finding a foothold. A handful of carriers, including Genworth, now offer a hybrid-term UL policy. Introduced in late 2009, Genworth’s Colony TermUL includes a guaranteed term period of either 10, 15, 20 or 30 years. Once the term expires, the policyholder can elect to continue paying a new, higher-but-level premium to build cash value in the policy to keep it in force until age 105.

As a lower-cost alternative to permanent life insurance, it’s a product that is finding traction with business owners as well as wealth-transfer-minded families, says Rowray, adding that the Genworth offering now represents close to 50 percent of the total term production that funnels through his firm. “It really started to take off in early 2010.”

For life insurance producers, there’s still time to get a piece of the action.


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