Strategies To Boost Sales For Life Insurance Products

Life insurance is a contract between an insurance company and a policyholder, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person. The policyholder pays a premium, either as a regular payment or a one-off lump sum.

Starting a life insurance business requires a good understanding of the industry, a solid business plan, and the necessary licenses and certifications. It is also important to choose the right legal structure, protect your intellectual property, and have the right financing in place.

Marketing and sales strategies are crucial for attracting and retaining clients, and it is essential to stay up-to-date with technology to streamline workflows and improve the customer experience.

By following these steps and continuously prospecting for new clients, you can build a successful life insurance business.

Understand the industry and the different types of life insurance products

Understanding the life insurance industry and the range of products available is essential for anyone looking to generate business in this sector. Here is a detailed overview:

History and Evolution

Life insurance was introduced in the 17th century to provide financial protection for seafaring traders and their families in the event of an accident. The sale of life insurance began in the United States in the late 1760s. Over time, the industry has evolved, and today it offers a range of products to meet diverse needs.

Major Categories of Life Insurance Contracts

The life insurance industry primarily consists of two main categories: protection policies and investment policies.

Protection Policies

Protection policies, also known as term life insurance, provide a lump-sum payment to the beneficiary upon the death of the insured during a specified term. This type of insurance is designed to offer death protection for a stated period, typically ranging from 10 to 30 years. Term life insurance can be further classified into level term, decreasing term, convertible term, and term-to-age policies.

Investment Policies

Investment policies, on the other hand, focus on facilitating the growth of capital. Common forms of investment policies include whole life, universal life, and variable life insurance. These policies usually come with higher premiums but offer a cash value component that builds over time and can be paid to the policyholder or beneficiary upon maturity or death.

Understanding the Market

It is crucial to recognize that the life insurance industry is mature, with limited growth opportunities. The key growth strategies lie in expanding the geographic footprint and developing new product offerings. The industry is highly competitive, especially in the term life segment, where price and convenience are the main differentiating factors.

Understanding Customer Needs

Misunderstandings about life insurance needs and usage are prevalent. However, life insurance has evolved to cater to a diverse range of individuals and life situations. Single parents, stay-at-home parents, individuals with co-signed loans, and high-net-worth individuals are among those who can benefit from life insurance products.

Major Competitors

When entering the life insurance industry, it is essential to be aware of the major players in the market. Some of the well-known life insurance companies include North-western Mutual, New York Life Insurance Group, Lincoln National Corp., Prudential Financial Inc., MassMutual Life Insurance Co., and ManuLife Financial Corp.

Understanding the Business Model

Life insurance companies generate stable income streams due to the long-term contractual nature of life policies. The composition of an insurer's book of business, including the types of policies offered, plays a significant role in determining their earnings performance. High-risk policies may suggest richer returns but can also lead to volatile earnings or losses if not managed effectively.

Regulatory Requirements

Starting a life insurance business requires a thorough understanding of the legal and regulatory landscape. In the United States, obtaining licensing from the National Association of Insurance Commissioners is essential, and the process involves passing examinations and obtaining licenses for each state and type of insurance you intend to sell. Additionally, separate coursework and testing are needed for selling annuities or variable life insurance.

Develop a marketing strategy to attract and retain clients

Developing a marketing strategy to attract and retain clients is a vital part of building a successful life insurance business. Here are some key steps and considerations to help you develop an effective marketing strategy:

• Understand your target audience: Identify your ideal clients and create buyer personas to tailor your marketing efforts effectively. Consider factors such as age, gender, income, family status, and financial needs when creating these personas.
• Develop a strong online presence: Build a professional and user-friendly website that showcases your products, services, and unique selling points. Utilise search engine optimisation (SEO) techniques to improve your website's visibility and make it easier for potential clients to find you online.
• Leverage social media: Establish a solid social media presence on platforms such as LinkedIn, Facebook, and Twitter. Share valuable content, engage with your audience, and use targeted advertising to reach your desired demographic.
• Content marketing: Create informative blog posts, articles, and videos that educate your audience about life insurance. Address common concerns, dispel myths, and provide valuable insights to establish yourself as a trusted advisor.
• Utilise email marketing: Build an email list and send targeted newsletters and promotional campaigns to your subscribers. Offer valuable information, exclusive deals, and personalised recommendations to engage and retain your clients.
• Network and build relationships: Attend industry events, join relevant groups and associations, and collaborate with influencers or experts in the field. Building relationships with potential referral partners, such as accountants, financial advisors, and estate planners, can also expand your reach.
• Offer exceptional customer service: Prioritise customer satisfaction and build long-term relationships with your clients. Be responsive to their queries, provide personalised advice, and go the extra mile to meet their needs.
• Stay in touch: Regularly communicate with your clients through newsletters, email campaigns, or personalised notes. Keep them updated about new products, services, or changes in the industry that may impact them.
• Leverage customer testimonials: Encourage satisfied clients to share their positive experiences through testimonials and online reviews. Showcase these testimonials on your website and marketing collateral to build trust and credibility.
• Offer incentives: Provide incentives such as discounts, loyalty programs, or referral bonuses to attract new clients and retain existing ones.
• Personalise your approach: Understand the unique needs and preferences of your clients and tailor your products or services accordingly. This could include customising coverage options, payment plans, or additional benefits to meet their specific requirements.

Learn about the sales process and how to convert prospects into clients

Learning about the sales process and how to convert prospects into clients is a crucial aspect of generating business for life insurance products. Here are some detailed instructions to help you master this process:

Understand the Sales Process

Firstly, it's important to understand the steps involved in the sales process for life insurance. While different sources may suggest variations, a common structure includes the following:

• Prospecting: Identifying potential customers who might be interested in your life insurance products. This involves creating buyer personas, using customer relationship management (CRM) platforms, and leveraging social media and current customers as lead sources.
• Connect and Qualify: Reaching out to leads through various channels such as telephone, email, or social media. During this step, it's essential to gather information about their needs, budget, and authority to make decisions.
• Pitch/Demo/Present: Crafting a well-prepared presentation that addresses the client's needs, budget, and pain points. Demonstrate your expertise and show that you have listened to their concerns.
• Quote and Handle Objections: Providing a custom quote/proposal and addressing any objections or concerns they may have. Explain how your product meets their specific needs and be prepared to adjust your approach if needed.
• Seal the Deal/Close: Finalising the agreement and closing the sale. If the client doesn't agree, make notes on what worked and what didn't, and move on to the next lead.
• Follow Up/Nurture the Relationship/Get Referrals: Maintaining contact after the sale is crucial. Regularly check in to ensure your clients are satisfied and nurture the relationship to earn more business and referrals in the future.

Convert Prospects into Clients

Now, let's focus on converting those prospects into clients:

• Build a Relationship: Focus on building a rapport and becoming a trusted advisor. Be honest, upfront, and respectful. Show genuine interest in their lives and find common ground to create a friendly connection.
• Understand Their Needs: Conduct a thorough needs analysis to determine the appropriate amount of life insurance for each prospect. Use tools like needs-analysis questionnaires or online life insurance calculators to ensure an objective assessment.
• Address Objections: Anticipate and address common objections related to pricing, coverage, or other concerns. Provide clear and informative responses, and offer flexible solutions to address their worries.
• Provide Value: Educate your prospects about life insurance and share valuable insights. Demonstrate your expertise and show that you have their best interests at heart. Go beyond the sales pitch and provide ongoing valuable content.
• Follow Up: Consistency and persistence are key. Follow up with prospects regularly, but not excessively. Use multiple channels like email, phone calls, and social media to stay in touch and provide valuable touchpoints.
• Tailor Your Approach: Customise your pitch and recommendations to each prospect's unique situation. Ask questions to understand their needs, constraints, and priorities. This will allow you to tailor your message effectively.
• Build Trust: Transparency and trust are essential. Be real with your prospects and provide them with accurate information. Show that you are committed to finding solutions that fit their budget and addressing their concerns.
• Leverage Technology: Utilise technology tools like CRM software and analytics to streamline your sales process and follow-up activities. This will help you stay organised and efficient in your sales efforts.

Gain access to insurance carriers and build relationships with them

Gaining access to insurance carriers and building relationships with them is a crucial step in starting your own insurance business. Here are some strategies to achieve this:

Direct Contract

You can contact a carrier directly and establish a relationship through a 'direct contract'. However, this option has become more challenging in recent years, and you usually start at the bottom with sales quotas. It can be difficult to retain access as you need to constantly feed new business to the carriers. Additionally, you will have little chance of earning carrier bonuses until you reach a premium threshold with each carrier.

Master General Agent (MGA)

Master General Agents (MGAs) can provide instant access to markets, but they usually have commission splits, often starting at an 80/20 split without carrier bonuses. Another potential limitation is the lack of binding authority, which means you may need to submit business to a 'home office' for binding, causing delays.

Franchise

Franchising is a good option if you're looking for an 'agency in a box'. It offers a turnkey solution, especially for those new to the industry, as it provides training platforms and support. However, you will be promoting the franchise name instead of your own, and you'll have less freedom in running your business.

Cluster Group

Joining a cluster group means banding together with other agencies to gain access to carriers. This option provides more freedom to run your agency as you see fit, and you can qualify to work with larger and more elite insurance carriers. Cluster groups often allow for higher commission rates and participation in carrier bonuses. This option is particularly attractive for experienced owners and insurance experts but may not offer as much support for training new agents.

Regardless of the path you choose, it's essential to research your options and ask the right questions, such as understanding your true costs, ownership structure, and possibilities for carrier bonuses or profit sharing.

Building Relationships with Carriers

Once you've gained access to insurance carriers, focus on building strong relationships. Carriers value brokers who can bring in clients and help them find the right insurance policies. Here are some strategies to strengthen your partnerships:

• Add Value Beyond Competitive Pricing: Carriers should offer more than just competitive prices. They should act as risk management partners, helping insureds understand their exposures and offering solutions to mitigate risks.
• Follow Through on Commitments: Ensure you meet your commitments and communicate any changes promptly. Be responsive and easy to work with to strengthen relationships and attract more business.
• Invest in Relationship-Enhancing Technologies: Implement self-service technologies that allow insureds to get quotes or submit claims easily. While technology is essential, ensure it enhances rather than replaces personal relationships.
• Embrace Company Culture: Share your company's values, especially those related to giving back to the community. Agencies want to work with carriers that align with their values.
• Know Your Strengths: Highlight your coverages, underwriting expertise, and risk management programs. Make it easy for brokers to reach out to individual underwriters.

Choose the right legal structure for your business and obtain necessary licenses

Choosing the right legal structure for your business is a critical step in the process of generating business for life insurance products. The legal structure you select will have implications for various factors, including taxation, personal liability, and operational flexibility. Here are some common legal structures to consider:

• Sole Proprietorship: This is the simplest structure, where the business is owned and operated by a single individual. The owner has complete control over the business decisions and is solely responsible for its debts and liabilities. However, this structure offers no distinction between personal and business assets, which means your personal assets could be at risk in case of business-related lawsuits or debts.
• Partnership: In this structure, two or more individuals share ownership of the business. Partnerships can be general or limited. In a general partnership, all partners are involved in managing the business and share profits and liabilities equally. On the other hand, a limited partnership has both general and limited partners, with the latter having limited control over business operations and their liability is limited to their investment.
• Limited Liability Company (LLC): An LLC is a popular choice for small businesses as it offers a balance between the simplicity of a partnership and the personal asset protection of a corporation. Owners of an LLC are called members, and they can include individuals, corporations, or other LLCs. An LLC provides protection by distinguishing between personal and business assets, ensuring that the owners' personal assets are generally not at risk in case of business-related issues.
• Corporation: A corporation is a more complex structure that offers the strongest level of personal liability protection. The business is considered a separate legal entity, and owners' personal assets are typically protected from business debts and liabilities. Corporations can issue stock, have unlimited ownership, and enjoy easier transfer of ownership compared to other structures. However, they also come with higher setup and operational costs and more complex tax and regulatory requirements.

Once you've chosen the appropriate legal structure, it's important to obtain the necessary licenses and permits to comply with regulatory requirements. In the case of selling life insurance products, you will typically need to obtain an insurance license. The specific requirements and steps to obtain this license may vary depending on your location, so be sure to check with your local or state government. For example, in Kentucky, the process involves completing a prelicensing course, undergoing a background check, submitting an application, taking the licensing exam, and then monitoring the status of your application.

Frequently asked questions