There he stood outside my door — a young man, fresh out of high school, trying to make his way in the world by selling… magazines? At least, I think that’s what he was selling. He told me he was trying to win a trip to a tropical island by getting points and that he was working on his communication skills. At that point, he asked me if I loved, liked or tolerated my job. Oh, and of course, I should buy from him because of karma.
What I heard was a lot of noise that reminded me of Charlie Brown’s teacher. This young man’s sales pitch was a confusing mess, but one thing I did glean from it was that it was focused on what he could get out of the sale. I didn’t understand what he was selling, and once I did understand, I didn’t see the need for it. This is often the problem we face with life insurance, especially permanent insurance like universal life (UL), and particularly when dealing with the middle market.
Who is the middle market? Depending on who you ask, it could be young adults or families. It could be young adults who have had a major life change, such as getting married, buying their first home or having young children. It could be those who earn between $35,000 and $125,000 per year. Or it could be those with unique views on making purchases.
This is a market that tries to be careful when making big purchases, cannot afford to make mistakes on big purchases, and thinks a universal life insurance purchase is a big purchase, possibly being sold by people looking out for themselves.
Those of us in the life insurance business understand the benefits of universal life insurance. We know it provides permanent life insurance protection as opposed to the limited protection offered by term insurance. We know UL is designed to be flexible. We know there are many different flavors of UL: no-lapse guarantee, current assumption, indexed, variable, death benefit-oriented, cash accumulation-focused, hybrid, etc. We know dialed-down, no-lapse guarantee UL can sometimes provide an alternative to term insurance. We know current assumption UL can be a good deal right now because interest rates are so low it seems they have nowhere to go but up. We know indexed UL is often touted as the hottest thing since sliced bread because of its upside potential and downside protection.
So how do we make UL understandable and attractive to the middle market? If there were a simple solution to that question, there would not be a problem with underinsured Americans. However, there are some simple actions we can take to create change.
Understand the needs
There are many reasons to purchase life insurance, but the basic needs many people are concerned about are taking care of their family when they die, paying funeral expenses and paying off outstanding debt. And all of these are concerns in the middle market. Take time to find out what your client is concerned about. Is it how to provide replacement of income? How to pay off the house? How to pay for the kids’ college tuition? It has been said we have two ears and one mouth to remind us to listen twice as much as we talk. Understand the needs.
Simplify the complex
I don’t understand the inner workings of an internal combustion engine. Dealing with a transmission problem is way beyond my knowledge of how a car works. I just want my car to meet my basic need of getting me and my family to and from our destination safely and speedily.
Life insurance is an inherently complex product that seeks to meet some basic needs. Universal life insurance can be difficult to understand, with its surrender values, internal charges, interest credited and loan provisions. Throw in an index or variable subaccount structure, and the average person starts getting glassy-eyed.