A Life Insurance Producer’s Guide to 2014

Ushering in the new with a firm grip on the old

by Kenneth A. Shapiro

Mr. Shapiro is president of First American Insurance Underwriters, Inc., a national life insurance brokerage firm based in Needham, Mass. and specializing in coaching growth-oriented producers. He began his career with Northwestern Mutual Life and later worked for The Guardian Life Insurance Company. He can be contacted at 1-800-444-8715 or kshapiro@faiu.com.

It’s quite possible that discussing the future has little lasting value. Fortunately, whatever we say may soon be forgotten, never to come back and embarrass us. It that’s true, then why talk about the year ahead?

Nothing really changes when the calendar changes from one year to the next, suggesting that where we’re going is greatly influenced by where we’ve been. And that’s where the challenge comes in. The big question for everyone, including life insurance producers, is deciding how we’re going to look at what we encounter in the year ahead. With that in mind, here are some thoughts about 2014.

The work of Advisors

It may seem odd or even disingenuous to say it, but there are more opportunities in the life insurance industry for producers now than there have been in at least the last two decades. That’s not hype; just take a look at the facts:

  • First, there are far fewer life agents today than there were 20 years ago, and many agents are slowing down or getting ready to retire.
  • Second, there are far more life products available today than at any time in the past. Even more important, these new products provide an incredibly attractive array of options to fit today’s consumers.
  • Third, the population continues to grow. This is obvious, but often times producers ignore it.
  • Fourth, the consumer mindset is changing rapidly. In the past, life insurance customers were primarily concerned with the “death benefit.”

While that’s still important, there is a change in consumer focus. Recognizing that they will be living longer, they’re deeply concerned about outliving their financial resources, which is why they value the possibility of additional retirement income through cash value life insurance products. It’s time that producers communicate the good news that cash value life insurance policies are assets with value beyond the death benefit.

At the same time, advisors should remember that about 40% of life insurance policy sales are event driven. Getting married, having a baby and buying a home continue to top the list. These are ready-made opportunities that deserve the serious attention of every advisor. Taken together, the evidence points to unequalled opportunity for both existing and new advisors.

Trends that create new opportunities

Along with these opportunities are a number of trends that bode well for life insurance producers as they seek to meet the needs of more consumers and grow their practices.

  • The expectation of immediate gratification continues to spread. The idea of delaying gratification seems to be almost unpatriotic. Many among us want what they want when they want it and that means now. Life in a digital age has raised the bar so that only “instantly” is acceptable
    The insurance companies have responded to consumer expectations offering a surge of transactional products with simplified underwriting, some with no medical exam, higher face amounts, and issued in a matter of days. With much more sophisticated underwriting strategies, we can expect to see this “instant” trend become even more pervasive.
  • •Consumer interest in cash value life insurance products continues to grow. As every life producer knows, life insurance and “death benefit” have long been just about synonymous. While it’s still important for estate planning, a change is taking place.
    Even though far too many Americans seem blinded by the possibility that they will outlive their financial resources, more are recognizing that they must be better prepared by having supplemental cash available for their retirement years. Because of this, it’s not surprising that Index Universal Life is the fastest growing life product and we can expect this trend to continue.
  • Term life insurance sales are strong. And why not? With longevity continuing to increase, term rates are incredibly low. This puts these products in the reach of millions of consumers to the point that just about anyone can have coverage.
  • Growth in customized life insurance products. This is not new in any sense since “customized” policies have long been available for large face amounts. However, the industry is seizing the opportunity to deliver an increasing array of customized options involving various product lines.
Even though far too many Americans seem blinded by the possibility that they will outlive their financial resources, more are recognizing that they must be better prepared by having supplemental cash available for their retirement years

Consumer response is enormously positive for the innovative and flexible linked benefits products. It’s not surprising since they give clients the coverage that’s a much better fit for their situation. The sales of life insurance policies with long-term care riders strike the right chord with buyers. Annuities with LTC riders are also popular, along with life insurance with disability income and critical illness riders.

All this is just the beginning and we can expect the insurance companies to respond to data that continues to point out the need for new product possibilities.

The role of the brokerage agency

Producers who view brokerage agencies in transactional terms may want to take a closer look since many of these companies have greatly enhanced their services. Some have morphed into entities that would have seemed impossible 40 years ago.
An entrepreneurial spirit is one of a Brokerage General Agency’s (BGA) major strengths. It’s understandable since former advisors possessing a personal understanding of what it takes to be a successful life agent may run some of these companies. It starts with a sense of urgency that’s essential for obtaining the best offers and closing cases quickly and efficiently.

  • Working with a BGA can give advisors a competitive advantage, not only with one-stop shopping for life insurance, long-term care, disability income and annuities, but also with access to a broad selection of insurance carriers.
  • Even more pertinent for producers is being in a closer relationship with the people who have a personal and direct interest in the outcome of their cases.
  • All this points to a commitment on the part of BGAs to satisfy both advisors and their clients. The more sophisticated BGAs offer in depth medical and financial underwriting. Armed with this expertise, they are formidable advocates for producers with insurance companies.
  • BGAs recognize that producers do their best work with their clients, which is why case management is so important. Producers should not need to worry about making sure their cases are getting the attention they deserve to obtain the best offers in a timely way.
  • The goal is to provide a high level of service, which includes a combination of three critical capabilities. The first two are extensive experience and detailed knowledge. Then, there’s a third factor that’s essential for meeting advisor expectations and that’s in depth staffing. Telling an advisor that certain information isn’t available because a staffer is out sick, attending a seminar or on vacation is no longer acceptable. It sends the wrong message.
  • There’s one more role for a BGA and that’s providing advisors with what might be called “product coaching.” With the plethora of new products now available, as well as those that will come in the future, it’s incumbent upon a BGA to provide advisors with adequate guidance and direction so they can bring clients the best possible solutions.

Even though the year ahead for life insurance producers will be a continuation of the year past, there will be opportunities to serve both old and new clients, learn how to take advantage of the latest products and discover even more effective solutions, all of which can make the journey a success.