2011 life insurance trends: carriers will help producers increase volume, decrease hassle
By Janet Deskins
Some carriers are working hard to help independent producers succeed during these tough times. In 2011, look for leading carriers to become laser focused on targeting new groups of consumers, rolling out products and services that will appeal to them and making it easier for producers to sell them — and, thus, close more business.
This is a very challenging time for producers. Although the U.S. economy is slowly recovering from the financial crisis and ensuing recession, the business of selling life insurance remains a daunting task in many ways.
According to LIMRA’s “U.S. Individual Life Insurance Sales” survey, total new individual life annualized premium was flat in the third quarter of 2010. During the first nine months of 2010, sales grew just 6 percent. Nearly 60 percent of insurance executives feel that overall individual life insurance sales will remain flat in 2011, according to a survey of 70 industry leaders conducted by LIMRA in early December 2010 (Note: LIMRA did not name this survey).
So what is a producer to do? With American consumers still cautious about spending and the unemployment rate lingering near 10 percent, how can a producer get through to new audiences who need life insurance to help protect what they value most?
Some carriers are working hard to help independent producers succeed during these tough times. In 2011, look for leading carriers to become laser focused on targeting new groups of consumers, rolling out products and services that are more appealing and making it easier for producers to sell them — and, thus, close more business.
In particular, one huge group of Americans is uninsured or woefully underinsured: those with household income between $50,000 and $250,000. Nearly 60 percent of these middle-market households lack individual life insurance, according to a LIMRA study (“Is There Magic in the Middle Market?,” 2009). Moreover, 31 percent of middle-market households and 37 percent of those with dependent children say they don’t have enough life insurance to meet their needs.
Of course, many middle-market Americans are still caught in an economic squeeze. So what can producers offer to serve their needs as consumers make tough choices about how to spend and invest in 2011?
One product category that commands attention is universal life insurance that offers the death benefit of term life insurance and additional flexibility. Let’s call them term-UL products. Many of these products are a great fit for value-minded consumers who would normally choose term insurance for its low price and defined coverage periods. Like term life insurance, term-UL products offer affordability and the ability for the policyholder to choose how long they want to be covered. The planned premiums are generally competitive with term insurance premiums for the same periods. Consumers also have the flexibility to pay different premium amounts at different times as their financial situation changes.
Another type of term-UL product that producers should watch for is one that enables policyholders to step up over time. This strategy lets the policyholder pay affordable premiums and have lower face amounts for an initial period, and then allows the policyholder the option to increase coverage (and premiums) at a later date. The best part about this approach is all future premiums are locked in at the outset. Thus, middle-market consumers can effectively plan ahead for all their financial security needs.
Producers should also look to carriers for universal life products that allow middle-market consumers to lower their premiums by reducing the death benefit guarantee from "lifetime" — typically age 121 — to a more realistic level such as age 110. This gives policyholders more pricing flexibility and control at a time when they may need it most.
Better service and fulfillment
Offering innovative products is only one part of a business-building solution that producers should be looking for carriers to provide. Because even the most ground-breaking products are empty promises unless carriers also make life insurance easier to sell, apply for and deliver to policyholders. As many cost-conscious consumers look for lower-face-amount life insurance, carriers need to take more of the time burden off producers to enable them to work more efficiently, sell more, and increase their volume.
Fortunately, some carriers are indeed streamlining the application and fulfillment processes and making underwriting more holistic to enable more people to buy life insurance at more affordable rate classes.
Throughout 2011 and beyond, producers should look to carriers to provide cutting-edge technology to make the application process faster and more efficient. Leveraging the Web, some carriers are offering simpler online “tickets” that a producer and customer can complete in as little as 10 minutes.
Carriers are also revamping client phone interviews, using reflexive questions that speed the process even further by asking only information relevant to that applicant. As a result, some carriers are reducing cycle time by as much as two full weeks.
Leading carriers are also improving the underwriting process by refining their research and analysis of mortality and morbidity factors to focus on the most relevant ones.
For example, some carriers have learned that height and weight are no longer paramount, and pre-existing conditions such as asthma, if mild and well controlled, should not necessarily penalize a consumer who wants to obtain life insurance. Using this knowledge — and employing the right combination of data gathered through the application, medical exams, labs, APSs and consumer phone interviews — some carriers can provide better rate classes and more affordable premiums to the middle-market consumers.