As we approach 2020, an important deadline nears. No, it’s not the presidential election. It’s the complete transition to the 2017 CSOs.
Commissioners Standard Ordinary Mortality Tables (CSOs) are actuarial tables developed by the Society of Actuaries (SOA) and the American Academy of Actuaries on behalf of NAIC. These calculations have been used to develop underwriting guidelines and reserve targets for insurance companies for almost 80 years now. While client-focused advisors may not delve too deep into the actuarial aspects of our industry, CSOs can have a significant impact on products, pricing, and procedures. Which for the smart advisor, means sales opportunities.
First a little background. CSOs were originally implemented in 1941. The first CSOs were based on the experience of sixteen life insurance companies in the United States and Canada, drawing on policy information from years 1931 to 1940. Since this, there have been four major iterations of CSOs, in years 1958, 1980, 2001, and 2017. Like the first CSOs, subsequent versions were based on industry experience from a set period of time preceding their development. The idea is to provide a base standard for carriers while accounting for changes over the decades. With each CSO, more carriers participated, more data was provided, and more analysis prepared.
Why you should care about 2017 figures in 2019
Each CSO has a three-year transitional period, at the end of which all carriers are required to implement the new tables in reserve values and underwriting. The deadline for full implementation of the 2017 tables is January 1, 2020. While every company will have their own specific underwriting process, the CSOs are used as a common base.
The adjustment of reserve values impacts how carriers price their products. Additionally, features such as guaranteed cash values and other non-forfeiture benefits see a relationship to reserves (which again, has a key relationship with the most current CSOs).
Amongst insurance carriers, you will find a variation of who has already adopted the new CSOs and who is waiting until the deadline. The main difference between the 2017 tables and the 2001 version—the most recent—are the mortality rates. As life expectancies have generally improved in the sixteen years between the versions, new mortality rates will generally be lower. Consider that since 2001, tables have been calculated to age attained of 120 years. This has led to some surprising developments, like 35- and 40-year term life insurance policies available with a few carriers.
With the 2017 tables, there is also the creation of a new reserves calculation method called the Principle-Based Reserve formula (PBR). This formula seeks parity on reserves requirements; under current methods carriers can carry an excess of reserves on one group of products while maintaining inadequate reserves on another.
In general, the new CSOs will likely result in lower premiums on term life and GUL policies. For cash value products target premiums will likely stay static, while cash value growth accounts may see diminished accumulation.
With cheaper insurance on the market, a client who was previously priced out of a product may be better positioned after the CSO adoption. Or there may be alternatives to their current coverage which not only incurs lower premiums but possibly additional features. As we near the CSO implementation deadline, policy reviews will become an even more valuable prospecting and sales technique.
September is Life Insurance Awareness Month. Request our complimentary 2019 LIAM Sales Kit today.
When it comes to life insurance, many agents and advisors focus most of their efforts on consumers. This can be a wide-open market that consists of young families, those nearing retirement, and everyone in between. However, it would be a mistake to overlook the equally-open territory of small businesses. Many business owners may not be aware of how life insurance can be used to enhance their operations. Marketing to these entrepreneurs often requires a different approach than you would take with the average consumer.
Use the following tips to enhance your B2B life insurance marketing efforts.
Credibility and trustworthiness are two crucial elements of any relationship. When targeting consumers, agents and advisors often rely on various content marketing tactics (educational materials, articles, etc.) to establish a sense of trust. However, converting a business owner might require extra effort on your part. Don’t be afraid to get out there, shake some hands, and do a little schmoozing. Face-to-face networking is one of the most effective B2B marketing tactics an agent or advisor can put to use.
Chamber of Commerce
Joining your local Chamber of Commerce can be a good way to get face time with a wide variety of business owners, non-profits, and economic development entities. Attend chamber meetings on a regular to build relationships with other members. Doing so will also show you have a vested interest in the local economy. This can go a long way with other entrepreneurs.
Additional Business Networks
Most communities have loosely-knit groups that exist for this exact purpose. These are usually established by other local business owners looking to establish B2B relationships of their own. In many cases, these groups consist of business owners who don’t belong to their local Chamber of Commerce but still seek networking opportunities. These casual get-togethers are great chances to exchange marketing ideas, meet local media personalities, and make new B2B connections.
Knock and Talk
There’s something to be said about the straight-forward approach. Keep an eye on new businesses opening up in your area. News outlets and your chamber of commerce can be a good resource for this. Attending ribbon-cutting ceremonies can be a great opportunity to show support and introduce yourself to the owner(s). If the business is located near your office, make it a point to stop by on occasion. Simply popping your head in the door to see how things are going can lead to a productive, professional relationship.
Small business owners know how important it is to make a first impression with customers. From physical location to digital presence, successful entrepreneurs will pore over even the smallest details to make sure they come across as professional as possible. Why would they expect any less from you?
Be Organized and Professional
It doesn’t matter who the prospect is, or what they do for a living, your overall presentation is a crucial part of the sales process. That said, you should expect a higher level of scrutiny from business owners than the average consumer. In other words, professionals expect professionalism from other professionals. Assume you will be under a microscope from the start. Even the slightest hint of disorganization or poor etiquette can hinder a potential B2B relationship. When approaching business owners, it’s crucial that you put your best foot forward and strive to make a flawless impression at every point of contact.
Bring the Right Materials
Consumer-facing materials are a necessity when presenting life insurance information. Giving the prospect a brochure, pamphlet, or one-sheet to take home will give them the chance to go over details without feeling pressured by your presence. When pitching to a business owner, make sure you have materials that pertain to their business needs. Don’t overload them with extra brochures that aren’t relevant to the business applications of life insurance. Keep things on topic until they decide they’re interested in additional products, such as a personal policy.
Request our Life Insurance Overview guide, which includes sections on:
- Types of Life Insurance
- Benefits Beyond a Death Benefit
- Business Application of Life Insurance
- Life Insurance at a Glance
Happy Valentine’s Day! Over the last few weeks, most of you have probably come across the latest “Insure Your Love” life insurance awareness ads. This year’s LifeHappens.org Valentine’s Day campaign features a heartstring-pulling video of a young girl and her father reading a bedtime story titled “Life is for Living” (one of the central themes of the campaign). We won’t spoil the ending for those who haven’t seen it yet. But those who have already seen this example of emotional marketing know this one is a real tear-jerker.
Watch the video here:
There are two ways of looking at an ad like this. One is to question why anyone would want to put their audience through the emotional wringer with a video this sad? The other answers that question – because it works.
Marketing efforts that tap into real human emotions can be one of the most effective ways to capture consumer attention and leave a lasting impression. Do you remember the movie “Old Yeller?” Of course, you do. And you also know why you’ll never forget watching the film. A boy and his dog. Love and loss. Life and death. These are all very real themes that every one of us can relate to in some way. And when we, as viewers, see these experiences unfold in front of us, we can’t help but internalize them.
What Makes Emotional Marketing So Powerful?
Content aimed at eliciting an emotional reaction – be it sadness, happiness, fear, anger, nostalgia, etc. – can inspire people to take action. Often times, the more impactful the content, the more significant the action. We see this play out all the time on social media every time someone shares a meme, story, or video. Whether the content is funny, political, sad, or motivational in nature, it impacted that person enough that they wanted to share it with friends and family. If they hear a song or watch a show that hits close to home, they buy the album or binge watch the series. The point is, they take action.
Consumers favor content that connects with them on an emotional level. It gives them a reason to remember your brand. follow your social media channels, and take the time to look into your services. All of these are forms of engagement that can ultimately lead to you shaking hands with a new client.
Going back to the “Insure Your Love” ad, it’s easy to see why and how this type of content can be such an effective vehicle to promote the importance of life insurance. It puts us in front of a very real, and likely familiar, scenario. The endearing parent/child moment draws us in before the heartbreaking surprise at the end. The emotional reaction is genuine, the impression left is long-lasting, and the message is powerful enough to inspire action.
While the “Insure Your Love” campaign is exclusive to February, the concept is evergreen. So, next time you’re brainstorming for your next marketing effort, think about those things that would inspire action on your behalf. Chances are, your prospects feel the same way.
Keeping up with the latest trends and evolving digital landscape—and implementing them into your existing marketing strategy—can be a time consuming, but necessary endeavor for advisors trying to stay ahead of their competition. While the time you spend looking for the next big marketing opportunity is certainly not wasted, sometimes it can be more efficient to stick with your existing resources.
For instance, we are now halfway through Life Insurance Awareness Month. With only a couple of weeks left to take advantage of the top-of-mind momentum created by this educational initiative, now might not be the best time to launch an untested marketing plan. This is one of those situations where the most effective and practical solutions might be those resources already at your disposal.
The old saying, “dance with the one who brung ya,” can be words to live by. Especially if time is a factor. For advisors, this means leveraging your current book of business to create new opportunities. Much like you would for milestone occasions (birthdays, anniversaries, holidays, etc.), email clients about life insurance coverage. This can be a reminder about a policy review or update, information about new products, or a simple invitation for an in-person appointment.
Wherever the prospect is in your marketing funnel, an event such as LIAM presents an opportunity to move them one step closer to conversion. Consider this an extension of your ongoing drip campaign and make contact through your regular newsletter or a lead nurturing email.
As the most popular social network Facebook is the typically the “go-to” platform for lead generation and advertising. However, LinkedIn is also a great marketing resource, especially for advisors trying to make professional connections. Like Facebook, LinkedIn allows you to post relevant content, share it with your connections, and participate in groups. Additionally, LinkedIn offers a wide range of targeting options for ad campaigns and sponsored posts.
Printed Promotional Materials
In the digital age, the value of printed materials is often overlooked. According to the 2017 Direct Marketing Association Response Rate Report, direct mail response rates once again outranked digital. According to studies, that’s 5.1% for house lists and 2.9% for prospect lists versus 2% for all digital channels combined. While effective, a direct mail campaign might not get off the ground quick enough to capitalize on the remaining LIAM momentum. This is when flyers might be a good alternative to consider. Use a well-designed flyer that directs åpeople to your website to promote your brand and services. Just make sure they’re in a well-trafficked area and posted with permission.
Ideal spots might include:
- Public Library
- Coffee Shops
- Book Stores
- Grocery Stores
- Gyms/Fitness Centers
Request our Life Insurance Awareness Month Kit to make the most out of your life insurance prospecting efforts.
What You’ll Get:
- Customizable Prospecting Letters
- Email Drip Templates
- Life Insurance Prospecting Ideas
- Concept and Presentation Pieces
- Consumer Facing Life Insurance Overview Powerpoint and more!
Depending on which study you read, anywhere between 30 – 60% of American adults do not have life insurance. However, 90% of consumers think a “family’s primary wage earner needs to own life insurance,” according to 2018 Insurance Barometer Study, from Life Happens and LIMRA. So, we have a product that nearly everyone sees a need for, but few actually purchase.
There are several common reasons people give for going without coverage, most can be traced back to one overarching issue – misconception. In today’s marketplace, factors such as affordability and health-related qualifications are not nearly as much of an issue as they have been in the past.
That said, there is still a large portion of consumers who don’t seem to be fully aware of the options available to them. The first step in educating these consumers is to understand their apprehensions and misconceptions. The next step is to use that insight to address their objections and guide them toward a solution that meets their specific needs.
Below are the three most common life insurance objections agents and advisors hear from clients, along with some responses that could help overcome them:
“I can’t afford life insurance.”
Looking at some of the key findings from Life Happens and LIMRA’s 2018 Insurance Barometer Study, you can see why this is among the most common objection to life insurance. According to that study, 44% of Millennials overestimate the cost of life insurance by as much as five times the actual amount.
- “When was the last time you looked at insurance prices?”
- “Did you know that most people overestimate the cost of life insurance?”
- “We don’t really know what the price of insurance is because it’s based on underwriting. So let’s get you medically underwritten and then we can talk about what the actual numbers will be.”
Additionally, 61% of people don’t buy life insurance, or more than they already have, because of other financial priorities.
- “Did you know premiums increase with age. You’re never going to be any younger than you are today.”
- “Most people don’t get healthier as they age.”
“I don’t need life insurance.”
Even though this sounds like a hard “NO,” chances are it’s rooted in a lack of understanding about how life insurance works, and/or the benefits a policy could provide for them and their family. Also consider the possibility that, while one member of the household feels that way, others disagree. In fact, 90% of those who took part in the Insurance Barometer Study think a family’s primary wage earner needs life insurance. Roughly 35% of them say that if the primary wage earner died, the survivors would feel the financial impact within one month.
- “Why do you feel that way?”
- “How does the rest of your family feel about that?”
- “What about your final expenses?”
- “What plans have you made to make sure your family is taken care of after you’re gone?”
“I don’t qualify because of health issues”
While health issues, certain lifestyles, and occupational hazards can disqualify people from certain policies, most of them probably don’t realize they have options that don’t require medical underwriting.
- “You’re not the only one who has run into this problem. While you might not qualify for certain types of policies, there are other solutions. Would you like some information about guaranteed issue life insurance?”
- “Just about anybody can qualify for a life insurance policy, regardless of health issues. There are many different types that account for many different situations.”
- “Many people may have misconceptions about the underwriting process, what is prompting you to say that?”
Beyond the “Big 3” listed above, there are numerous reasons a person might give for turning away from life insurance coverage. However, because most objections stem from misconception, the solution is simple – education.
Request our Life Insurance Awareness Month Kit to make the most out of your life insurance prospecting efforts.
What You’ll Get:
- Customizable Prospecting Letters
- Email Drip Templates
- Life Insurance Prospecting Ideas
- Concept and Presentation Pieces
- Consumer Facing Life Insurance Overview Powerpoint and more!
Consumers often cite cost and convenience (or the lack of) as reasons for not having life insurance. Any agent worth their salt should be able to counter excuses they hear from the uninsured, but convincing people to part with their time and money can be challenging. Rather than trying to convince a hesitant consumer otherwise, a better approach might be to show that you’re saving them money and time.
How? You can employ Table Shaving to help save them money and Simplified Issue to save them time. We discuss both life insurance concepts below.
If everyone who wanted life insurance could qualify for the cheapest rates available, perhaps cost wouldn’t be as much of an issue. Unfortunately, consumers find that any number of health conditions (be it their own or related to their family history) and/or lifestyle factors can result in high monthly premiums.
For many, looking at the difference between what others might be paying and what they’re being forced to pay can be frustrating enough to walk away without a policy. This is why you should become familiar with the various table shave programs offered by insurance companies.
A table shave program is a way for applicants with certain health conditions to save money on life insurance premiums by meeting specific criteria and/or wellness targets. Not all carriers offer table shave programs and those that do have their own set of specific limitations, exceptions, and criteria. They’re typically used more for permanent life insurance policies, but a select few carriers also allow table shaving on term coverage as well.
A table rating can be triggered by anything (medical or non-medical) that increases the likelihood that an applicant will die prematurely. Those triggers can vary from carrier to carrier, but a few general examples are:
High blood pressure, cancer, diabetes, combined height/weight (obesity), poor family health history, sleep apnea, asthma
Mental illness, hazardous occupation, adventurous lifestyle, criminal record
Underwriting is more formulaic than fluid, which means an applicant with these, or other, impairments can be automatically rated up several tables. Table shaving offers a little more flexibility in the underwriting process for eligible applicants. Again, specifics differ from carrier to carrier, but there are a number of favorable health and lifestyle characteristics that can offset those impairments and improve an applicant’s rating.
Ideal Candidate for a Table Shave Program
Let’s say an applicant is overweight and works in a hazardous occupation.
The underwriter will most likely see these as unfavorable or risky lifestyle factors and give them a lower health class rating. This can result in higher premiums rates. However, the same applicant also undergoes routine wellness checks, exercises, and has a healthy family history. These favorable lifestyle factors can earn the applicant wellness credits that improve their health rating. The improved rating could save them hundreds of dollars each year on premium costs.
Due to all of the carrier-specific variations in table shave programs, you might need to do a little digging to find one that matches your client’s individual situation. But the potential discounts they offer could go a long way toward converting a potential client.
Like money, time is a valuable commodity these days. When a person wants something, they want it now. Not six to eight weeks from now. A Simplified Issue policy is a quick and easy way to get coverage without the medical exam or waiting period.
Granted, this convenience does come at a cost. The carrier is providing coverage without a medical exam to provide a clear assessment of the policyholder’s mortality risk. As a result, the policy is going to be more expensive than a traditional plan. Premiums are based on the amount of coverage and can range anywhere from a few dollars more to twice as much as a traditional term life policy. And coverage for most Simplified Issue policies typically maxes out at $250k.
Not everyone will qualify for a Simplified Issue policy. This is because the carrier is essentially “going in blind” by waiving the medical exam. The applicant will have to answer a series of detailed questions and submit additional personal information. This information is used by the carrier to determine whether applicants are “low-risk” enough to be approved.
The Ideal Candidate for Simplified Issue
A Simplified Issue policy is typically ideal for young, healthy people who have not previously carried a life insurance policy. Another advantage to both the consumer and agent is the quick turnaround time for these policies. The application process is fairly simple and can often take place over the phone. Typically, the application is approved or denied in a matter of days. Death benefits are available immediately after the policy goes into effect.
A few situations where a Simplified Issue might be ideal include:
- Starting a new job in a hazardous or high-risk occupation
- Traveling abroad or to a dangerous location
- Medical issue or procedure that makes a person temporarily ineligible for traditional term life insurance
- Someone who takes part in dangerous or high-risk hobbies
A Simplified Issue policy is far from the most ideal product available. However, it can be a good solution for those clients who value time above all else.
Last week we looked at how the emergence and evolution of biometric technology are changing the face of the life insurance industry. Through wearable devices, facial recognition software, and other biometric-based developments, many carriers are embracing the future. However, biometric tech is only ONE of the many game changers that agents and advisors should keep on their radar. Two other factors—one technological, the other social— could also impact your business.
Blockchain and Life Insurance
Where the Internet was the portal that brought the industry from paper-based to automated processing, Blockchain technology looks to be the next “big thing” in the world of finance and life insurance.
Blockchain is a virtual series (or chain) of blocks containing data. It was initially developed as a way to keep track of Bitcoin transactions. Whenever a transaction is made, a new block containing a timestamped and encrypted record of that transaction is added to the chain. Anyone involved in the chain can view the data in each block. However, no single party can alter, or tamper with the records. The transparency and security of Blockchain could be the solution to many of the industry’s problems that bog down the life insurance and finance industries. Specifically, blockchain can help with longer turnaround times and fraudulent claims.
Streamlining The Death Claims Process
When a person dies, the hospital enters all relevant information about the deceased into the chain. That information is then immediately available to all involved parties. The death claims process can be streamlined into a unified system that drastically reduces the burden for the beneficiary. What takes anywhere from two weeks to six months could be done in a matter of days using Blockchain.
Blockchain technology can benefit carriers by significantly reducing fraud risk. An estimated 10% of claim costs are attributed to fraudulent claims. As a shared, yet secure ledger, everyone involved in the chain can view and audit any updates in real time, making it much more difficult to falsify information or otherwise commit fraud within the network.
Like the innovations in biometric tech we explored last week, Blockchain is still in its infancy. That said, more and more carriers continue to adopt a beneficiary/consumer-focused approach to their business. This sort of streamlined and modernized systemcould easily become the next industry standard.
Marijuana and Life Insurance
Another real-world revolution that is already leaving an imprint on the life insurance industry is not tech-based but rooted in social change.
As of this year, more than half of the United States has passed pro-marijuana legislation. Legal reforms at the state level have resulted in widespread changes for multiple industries. This includes life insurance.
The way in which life insurance companies handle marijuana reforms is just as varied as the states that enacted them. Many carriers will still raise premiums or decline coverage for applicants who test positive for THC. Others are responding with more lenient policies of their own. However, nearly all still require applicants to undergo a medical exam that includes blood and/or urine tests.
More Options for Marijuana Users?
Regardless of why they use (medicinal or recreational), you should encourage your client to be honest when applying for coverage. This has less to do with the legal issues surrounding marijuana and more to do with health factors. According to a survey by Munich Re, only 29% of underwriters said their company classifies marijuana users as non-smokers. The majority of carriers out there do not differentiate between marijuana use and tobacco use when pricing policies. And despite alternate forms of use (edibles, vaping), there is little consideration given by carriers as to how the applicant consumes marijuana.
Frequency and reason for use can make a difference for some companies. How often does the applicant smoke? Is there a legitimate medical reason for their use? If an applicant admits to using for medicinal purposes or carries a prescription for medicinal cannabis, the carrier may base rates on the medical condition. For the recreational user, someone who uses a few times a month is going to get a much better rate than a heavy user. Either way, it’s likely that an applicant who admits to or tests positive for any use will pay the same rates as a tobacco user.
Life insurance carriers are individualistic in their reaction to the changing tide of marijuana regulations. Some are adjusting, while others still adhere to longstanding policies. Will pro-legalization lobbyists and changing attitudes see more carriers taking a relaxed stance on marijuana? That is a question only time can answer.
The Value of Lead Magnets
Every business needs a stream of qualified leads. For financial advisors this is a unique challenge. While a neighborhood bakery, autoshop, or boutique clothing store provides tangible goods and services, the benefits of working with a financial advisor may not be as instantly gratifying. Many consumers only seek out financial advisors when there’s a pressing need, meaning it’s often too late to properly address the issue. One way to address this is to incorporate lead magnets into your marketing plan.
What is a lead magnet?
A lead magnet is anything that drives a consumer to a specific action. You can think of it similar to a call-to-action or a give. What a lead magnet does is attract consumers with a tangible offer or unique experience. This is often thought of in terms of digital marketing. For example, a consumer responds to a digital ad, routing them to a landing page which has a form submittal to receive a complimentary kit, rate report, or retirement analysis. There are many different versions of this structure and advisors can implement a digital lead magnet system to reach many types of consumers.
While it’s good to focus on the digital, lead magnets can be very effective in traditional formats. For instance, we’ve seen success with agents offering a free round of golf or a free tennis lesson. Instead of (or in addition to) using digital ads to promote this offer, the agent places a high-quality, eye-catching ad at the target venue. This can, to an extent, pre-qualify the audience, based on the venue where the ad is placed . The consumer gets a unique experience of value and is able to learn more about you in a casual, low-pressure manner. Another benefit is that you can build a relationship with the venue, which can open you to business owners and advocates.
What Makes a Good Lead Magnet?
A good lead magnet:
Offers an experience or product of real value
A rate report or retirement analysis represents a real value for your time and expertise. For some consumers, this may be enough. But to really attract high-value consumers, offer something that is immediately gratifying.
Is pitched toward a specific target market
You can use a lead magnet any number of ways, which is why you should have a clear idea of the type of consumer you wish to attract.
Gives you an opportunity to interact with the consumer
Dangling out an Outback gift-card for an introductory phone call at best gives you an impersonal interaction with a consumer and at worse attracts plate-lickers. If your lead magnet involves an experience like a lesson with a golf pro, this is an event that you and the consumer can share together. This gives you opportunities to interact with the consumer and for them to get a sense of you.
Aligns you with businesses that support you and your efforts
Since you are likely to use another business’ products or services as a carrot to attract consumers, it’s important to develop a good relationship with the business. As mentioned above, this can gain you advocates and access to business planning opportunities. On a smaller level, however, having a good relationship ensures that you are able to continue to use the business for your lead magnet. Make sure that the relationship is mutually beneficial.