Selling to the Middle Market — What to Keep in Mind
The “middle market” — who are they and what do they need? Or what do they believe they need, when it comes to life insurance?
These are key questions for producers to consider when they are reaching out to this demographic. In terms of defining by income level, the middle market falls within the $50,000 to $200,000 category. And when you consider the “10 times income” rule of thumb for life insurance coverage, they represent a significant market opportunity.
Even more important, this is a demographic that may be under- or even uninsured. According to the 2012 Barometer Report from LIMRA, while 83% of consumers believe most people need life insurance, only 65% believe they need it personally — and only 59% actually own a life insurance policy. Even more significantly, about one-third believe they need more coverage than they already have. This demonstrates a definite gap between what they think and what they do — a gap that can have a detrimental impact on their lives and the lives of their loved ones.
Why the gap?
Why do members of the middle market hold back from purchasing adequate coverage? In some cases, especially for the younger members of the group, life insurance may seem unnecessary given their lifestyle. Single and without dependents, they may consider it less important than those items that have shifted from “luxury” to “necessity” status: cell phones, cable TV and the Internet, to name a few.
They overlook two important facts about insurance: the younger you are when you purchase the policy, the less expensive the premium is. There’s a very real possibility an unexpected health condition could eventually result in making them an undesirable risk. It falls to insurance producers to educate this demographic about the role life insurance plays in taking personal financial responsibility for their lives. Resources available on the LIFE website, www.lifehappens.org, can help.
How to reach the market
Don’t assume that “if you have it, they will come.” Like the old real estate line — “Location, location, location” — producers need to market, market, market. Traditional methods — phone calls and mailings — can be supplemented by social media (depending on your company’s compliance issues), personal meetings and group presentations. The LIMRA study also showed that, while almost two-thirds prefer face-to-face meetings, people 45 years old and younger are significantly more likely to purchase life insurance online.
Education is one aspect, since, according to the LIMRA study, knowledge about the product is the first or second most important factor for almost half of consumers. Worse, one-third hold back from purchasing because they didn’t know what or how much to buy.
Misconceptions about cost may be another hurdle, especially since research has shown most younger buyers overestimated premium cost by three to seven times. But money may not be the only factor, since another 2010 LIMRA study, Household Trends in U.S. Life Insurance Ownership, showed life insurance coverage has declined across the board for all income levels — low, middle and affluent — when comparing 2004 and 2010 figures.
The bottom line? The middle market needs to be educated about life insurance — what it does, what it costs, and how it fits into their overall financial planning — before they will buy it. During Life Insurance Awareness Month this September, producers have a golden opportunity to utilize the tools and resources available through LIFE to reach out to this market.
by Marvin Feldman, CLU, ChFC, RFC for LifeHealthPro.com Marvin H. Feldman, CLU, ChFC, RFC, is president and CEO of the LIFE Foundation.