Five Ways To Reach The Mid-Market In Life Insurance

By Linda Koco InsuranceNewsNet

NEW ORLEANS – Carriers are using five ways to reach the mid-market for life insurance, according to new research from LIMRA and the LIFE Foundation.

As may be expected in today’s Internet-savvy world, going online is one of those ways. But there are other approaches too, said LIMRA analyst Todd Silverhart. One of them includes the closely watched MetLife partnership with Wal-Mart, which entails selling life insurance at the check-out in Wal-Mart stores.

Silverhart and a MetLife executive will discuss some of those initiatives — including the MetLife/Wal-Mart partnership — during a panel this afternoon here at Life Insurance Conference. The annual conference is jointly sponsored by LIMRA, LOMA, Society of Actuaries and American Council of Life Insurers (ACLI).

Interest in reaching the middle market is “tremendous,” noted Silverhart in an interview in advance of the session. For instance, at least 160 people signed up to attend the middle-market panel, said the corporate vice president and director of market research at LIMRA. That number is quite high given that the panel is an early-bird session, and the conference does not formally begin until the next day.

The strong interest might have something to do with a point raised in the program highlights — that “reaching this large underinsured market has been a daunting challenge for the life insurance industry.” That message should resonate with a lot of readers of InsuranceNewsNet readers, who have repeatedly said they are encountering roadblocks to reaching mid-market buyers.

During his interview, Silverhart provided an overview of the types of initiatives that carriers are undertaking to address the problem. His remarks were based on ongoing LIMRA research as well as on data from the 2013 Life Insurance Barometer Survey, a research project that the research firm conducts annually with the LIFE Foundation.

Middle-market strategies

LIMRA defines middle market as households with $35,000 to $99,000 in annual income. Life carriers are approaching this market in five chief ways, Silverhart said. These are:

1. Reach out online. The companies are offering web-based opportunities to reach the middle-market, Silverhart says. Examples include Prudential’s MyTerm initiatives, a New York Life/AARP joint venture, and a MetLife invitation to consumers to buy term online in just a few minutes using its “Term Life and Disability Insurance Simplifier.”

2. Sell at strategic brick and mortar locations. The idea is to have a “presence” in a place where people are already going to shop, he said. One example is State Farm’s decision to provide a brick-and-mortar outlet in an upscale area. Consumers can go there to get customized coaching and classes. That’s in addition to the company’s traditional brick-and-mortar locations where it sells all kinds of insurance. Another example is Canada RBC’s decision to locate retail outlet right next to RBC banks, Silverhart said.

3. Tweak products to offer features and pricing that appeal to the middle market. One example is Phoenix Companies’ new Phoenix Remembrance Life, a whole life policy designed especially for the mid-market. It includes a flexible family income stream benefit plus education benefit and legacy rider options, Silverhart pointed out. (The company’s literature describes it as a product that is part of the “growing trend of carriers developing more affordable life insurance policies that can address multiple needs for middle market consumers.”)

Another example is The Standard’s new Protector Essential, an individual disability income policy which Silverhart said has also been tweaked in order to be middle-market affordable. The carrier said the target market includes individuals making $75,000 or less annually and in occupations such as hairstylists, electricians or administrative assistants, and medical occupations such as physical therapists, dental hygienists and registered nurses — “professions that are often underserved by the disability insurance market.”

4. Integrate multi-channel distribution strategies. This is being spurred along by companies on the property-casualty insurance side of the industry who are doing multi-channel distribution “like crazy,” Silverhart said. On the life and health side, multi-line companies are feeling pressured to keep up with what those carriers are doing, he said. The message is to interact with the customer wherever the customer wants.

A wrinkle on this is the effort by some companies to take advantage of the efficiencies and opportunities that can occur by integrating their silos, he adds. Examples include Western & Southern Life, which Silverhart said has been taking advantage of opportunities it has noticed coming out of conversations in the company’s call center. Other examples include Liberty Mutual and USAA, he said.

5. Find them where they shop. That includes warehouse stores and superstores, as well as drugstores, supermarkets and convenience stores. The MetLife partnership with the Wal-Mart superstore chain is one example, Silverhart said. Others include Manulife’s program to offer term life insurance through Costco (warehouse store), and Aetna’s sale of individual health policies, also through Costco.

The barometer survey found that 17 percent of consumers are willing to buy life insurance at retail outlets, noted Silverhart.

“That’s probably my favorite number,” he quipped. “If nearly one in five consumers are willing to buy in a retail outlet, this suggests there’s potential there if companies are looking for a niche market.”

The number doesn’t indicate a game-changer, he conceded. However, it might open up another source of revenue as well as another way to meet market need.

Simple, easy, convenient

In sum, he said, what the companies are trying to do is to find ways to reach this market that are “simple, easy and convenient.”

But there is one interesting twist in the data. This has to do with how consumers feel about having someone with whom to speak when buying life insurance in a superstore.

One-third of the consumers who said they are willing to buy life insurance at a superstore said told researchers that one of the reasons for their willingness is that they would be able to speak to someone, Silverhart pointed out. However, almost the same percentage — 28 percent — of consumers who indicated they are uninterested in buying at a superstore say that one of their reasons is having “no one to speak to.”

“That’s probably not surprising,” Silverhart said, explaining that buying life insurance in a superstore is still a new concept, so there is probably a lack of understanding about what to expect.

Still, the data show that at least a quarter of consumers in each group value having access to a person (“someone”) to speak with about their purchase. That’s not 50 percent, and it’s not 100 percent, but it’s enough to put contact with a (presumably knowledgeable) person on the radar screen for middle-market outreach.

During the panel, the MetLife executive —Manish Bhatt, senior vice president-global brand and digital marketing—will provide a glimpse into his company’s partnership with Wal-Mart to reach the middle market. The session starts at 4 p.m.

Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Linda can be reached at [email protected].

Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Linda can be reached at [email protected].