I found your article (“It Doesn’t Have to Be This Way,” 3/7) to be reflective of your lack of information and knowledge. Why, you say? Well, first you visit one hospital and see one doctor and make the generalization that providers don’t take their own health seriously and that a hospital would serve a diabetic white bread and soda. You also claim the insurance industry is hawking pharmaceutical ads instead of promoting preventative care on T.V. Sir, all of the major health insurers have and sponsor wellness programs through their websites and to their own customer base. You seem to want to place the blame for the high cost of healthcare on insurers and providers. Your overall projected attitude in your editorial tells me that you really don’t understand the issue here. Answer me this question sir, “Why doesn’t the federal government promote the wellness and preventative benefits covered by Medicare?” Could it be it’s too expensive to advertise such on T.V. and other media outlets? I’ll answer for you sir, yes! It’s the same predicament insurers face. You asked the question in your last sentence, how does the industry get them right side up again? What did the late Milton Friedman say? It’s individual responsibility! Insurers did not promote that when they introduced HMO and rich benefit plans, employers did not promote individuality when they embraced those plans. Lastly, the federal government has done very little to promote individual responsibility. To the contrary, the federal government, and yes, our legislators, have promoted more government dependence. You say in your last paragraph, it didn’t have to be this way. You are exactly right sir! Who was it that said, “I have met the enemy and it is I?”

Dan Hosfield

WHAT AN INSIGHTFUL EDITORIAL you have written. I have thought this way for many years. I am 67. I go to the YWCA three times a week and do cardio for 30 minutes and weights. I eat reasonable food, an occasional drink, and eat pizza and chocolate. Life just keeps getting better. My husband does about the same and is 73. When we go to the Y, I see very few people there working out. It’s a choice thing and many chose to complain about everything. The cup always has water in it–you choose how to see it. Either it is half empty or its half full. Mine is half full. I think as long as people can continue to be lazy, doctors keep smoking and are overweight and hospitals make cheese sandwiches on white bread. There isn’t much hope. I would love to see an insurance company offer a supplement for healthy people. They would need to qualify for this type of policy. So, thank you for taking the time to share your experiences with us. Let’s hope that a few more eyes will be opened.

Nola Leuthner

IN THE EDITORIAL YOU STATED “What I can’t figure out is why the health insurance industry plays along. Where are the industry’s public awareness campaigns to promote good health and reduce future claims?” I strongly urge that you become better informed about what the industry is doing to encourage “wellness.” Every group case I service has a wellness promotion benefit. In one company the employer even pays a bonus to employees who comply with the wellness benefit, and the employer charges an additional premium to employees who refuse to avail themselves of the free wellness benefit. Even plans with a high deductible waive the annual deductible for an annual physical. With all of the continuous public promotion to encourage cessation of smoking and eating habits that cause obesity, what more can the health insurance do? The problem is very clearly the refusal of people to monitor their own health practices! Meanwhile I suggest that you accuse those responsible for our collective health problems.

John J. Long

I READ YOUR MESSAGE. It is quite incredible, however it seem to be very common among seniors. I am surprised however about the doctor.

James W. Respess

Not Worth the Effort

In his article, “Splitting the Difference With Split-Dollar Life Insurance Plans,” 2/21, Warren Hersch laments the life insurance industry’s failure to meet the needs of middle income Americans. Today almost everyone under age 45 can buy a 10 year term policy with a face amount equal to 15 times their annual earnings for a premium cost less than 1% of what they earn. Even with sloppy planning an insurance benefit 15 times annual earnings will provide all the financial security families need to raise and educate children and provide replacement income for a surviving spouse. How much less expensive does life insurance have to get before Americans will buy it? The reason Americans are not buying life insurance has nothing to do with its cost. They’re not buying because it is not being sold to them. And the reason it is not being sold to them is that agents can’t afford to sell the inexpensive term policies that are now available. At today’s low prices and commissions agents must sell 200 to 400 policies a year to make a reasonable living. Very few agents are capable of doing that and those that are won’t do it for very long. And working at that pace they certainly don’t have time to service what they have sold. If the industry is really serious about servicing the needs of middle income families, new compensation models for agents must be developed.

John Hammond

It’s the Little Things

I MUST SAY, I have enjoyed the change of pace which you bring compared to your predecessor; I find the personal touches injected in your Gamut pieces to be refreshing. But today while idly searching for something to occupy my time while in a doctor’s office and having read your magazine from cover to cover, I resorted to reading the fine print on a subscribe today card inserted in the copy. It’s the little things which say a lot. The part that caught my eye was a survey asking: Which of the following products do you sell? There was one mainstay product omitted–whole life. A little thing.

A couple of years ago, your magazine reported that life insurance sales were slipping to new lows–virtually every company reported lower sales. In the very last paragraphs of the article was an interesting observation: There were a few companies that reported gains in new insurance sales…seem to be all around a “niche” product–whole life. A little thing.

Last year, your magazine reported insurance ownership at lows not seen since pre WWII. A little thing. NAIFA, as reported regularly by your magazine is experiencing lower and lower membership and the number of full-time agents is going south. Interestingly enough, those companies who are selling whole life insurance are increasing their field forces. Little things.

At the risk of sounding like an old man, let me offer a short but compelling rationale around why there are fewer agents selling less product to fewer people. Needless to say it is an amalgamation of little things.

Back in the 1970′s the industry fell victim to the early stages of consumerism and quickly went from an industry known for addressing life’s “needs” to life’s “wants.” In other words: there must be an easier way to sell this stuff. The industry in effect said: Make me a policy that is at the same time inexpensive, provides huge upside potential and gives me the ability to control my own destiny. And so universal life was born and then later on, variable universal life was born. Never mind the potential down side, interest rates will be high forever. These products removed the insurance industry from the risk business. To make matters worse, companies even encouraged agents to internally replace stodgy old WL policies with these new policies. Agents, being smart, went with the flow. The result was that an entire generation of agents lost the skill of “selling” and became replacers and twisters of contracts. Illustrations became the new “promises” even though they were not contractual. Thus began the practice of spreadsheet selling–which isn’t a real term and is mutually exclusive. If you use a spreadsheet, you are not selling.

Little thing number two. While this flight from “needs” to “wants” was gaining steam, dozens of companies made the great determination that because policies were not “sold” any longer but just “compared”, it wouldn’t be necessary to spend billions of dollars on training agents and teaching them to uncover actual needs any longer; they could just “manufacture product” and agents would sell theirs because it illustrated better.

Little thing number three. Because “product” became the Holy Grail, these super duper, interest-sensitive products needed to be super competitive in order to capture the imagination of a dwindling trained sales force. The “margins” on these policies became smaller and smaller and companies needed to invest in modernization, technology and computer systems which required huge cash influxes. Thus the rush by many companies to demutualize and become stock companies–so they could raise the capital to compete. The result is that there are now only a relative handful of companies still training career agents, and the overwhelming majority of them are mutual companies. An oversimplification is that a lot of the demutualized companies have vacated the “career system”–some gone altogether, some struggling to find a spot at the table.

At further risk of oversimplification…if one were to track those companies that have taken the opposite track of the companies that caved into the “little things” approach–namely interest-sensitive, spreadsheet selling and abandonment of a career sales force–one would find that those companies are growing both sales forces and product sales. It’s the big (and often more difficult) things that thriving companies have clung to: 1) recruiting, training and supporting career agents, 2) selling on need not price, and 3) remaining focused on long-term value for policy holders and not the next quarterly earnings.

You see, it is an amalgamation of the “little things” which have placed the industry in jeopardy with a shrinking sales force selling to a more and more skeptical populace. As a general agent with over 40 years of experience watching the ebb and flow of this industry, I have seen firsthand of which I write.

I fully expect that this letter will never see the light of day but I offer it in the hopes that you might re-examine a baseline philosophy which seems to be held by National Underwriter–which is, follow a disturbing trend which seems to be gaining strength: the lack of corporate courage. Lead a return to corporate courage. Don’t follow the lemmings off the cliff.

Craig D. Chambers

(Still) Reading
the Freaking Manual

GREAT COMMENTS, BILL. When the House Bill was passed, I downloaded it (yes, all my close friends thought I was nuts) and actually read 405 pages. That was sufficient for me to understand how incomprehensible the PPACA was, that it established a giant bureaucratic governmental agency (within other agencies) and that it was based on ignorance and politics rather than intellect. Good luck!

Gerry

HOW’S THE CRUEL AND UNUSUAL punishment going? Quite the endeavor you chose to take on with reading PPACA. You’re a good man. These are exciting times we are living through both in our industry and within the world of human rights.

Doug Stewart