As we look ahead, many people are wondering what this New Year will bring. In all 2010 should be a very good year for some companies and producers — and for others, it may be one of their worst. What separates the first group from the second is a fundamental, yet simple, difference.
For those companies and producers who have reached out to their clients and said, “This is a tough economy; this has been a tough year, but let’s roll up our sleeves, review your problems and concerns, and see what we can do,” very strong production numbers have been the norm. This year, we should be seeing more of the same type of approach.
Those who went into a defensive, wait-and-see posture when the markets began freefalling and sat back, afraid to contact their clients because their portfolios were down or included programs that were not performing well — these agents are not doing well, either. That won’t change in 2010 for this reason: Their clients are upset because they are not getting the service they expect. So when these consumers are approached by another producer who offers them assistance, their response is, and will be, “Yes, I need your help.”
Neither individual companies nor producers can control the market, but they can control their interaction with their clients. The key difference between those who will continue to do well and those who will not can be summed up with one word: service. The first group has been reaching out to their clients and offering guidance, trying to determine their clients’ needs and then addressing them. You should be in that group.
LTCI and CI on the rise
As the new decade begins, we are also going to see an increased focus on products that address specific needs. Long term care insurance (LTCI) is one of those products. As boomers move into the next phase of their financial lives — either retirement or preretirement — they need to be educated on the importance of conserving their assets.
According to AARP, the lifetime probability of becoming disabled in at least two activities of daily living or of becoming cognitively impaired is 68 percent for those 65 and older. That means a large number of boomers will need assistance, at home or in a care facility — assistance that can be extremely expensive and can quickly deplete assets. One of the best ways to preserve those assets is to plan early with LTCI. The key word is “early.” And that’s where you come in. Most people don’t realize they need LTCI until it’s too late. Your message to clients needs to be, “You can’t wait until you need it because once you need it, you can’t get it.”
Another up-and-coming product is critical illness insurance (CI). Early CI products were not well-designed; they were expensive and had no cash value accumulation — it was either use it or lose it. CI products in the United States, however, are starting to catch up with those being sold in England, Australia, and Canada, where CI has much wider acceptance and is in its third or fourth generation of product design. And while CI still doesn’t have a cash value accumulation feature, it may have a return-of-premium option, which makes it much more palatable to clients.
Producers will need to bring themselves up to speed on CI and become knowledgeable on the product — even if they are not going to sell it — so they can speak intelligently to their clients. That’s the hallmark of a good insurance professional: You don’t need to be an expert in everything, you just need to know whom to tap or where to go to obtain the information you need.
A return to the foundation
It’s also fitting to bring the discussion of future trends back to the foundation of this industry: life insurance.
It’s interesting to see that whole life insurance is coming back into favor. There’s a very good reason for that: People are looking for safety, security, and guarantees. While we don’t usually think of whole life as an investment product, in today’s market, it can have similar returns to other safe, long-term investments such as long-term Treasuries.
Additionally, term insurance can help clients safeguard their families’ financial futures as they rebuild their portfolios after the losses of the past few years. If a client is working to rebuild $500,000 in investment or pension losses, a term insurance policy for that amount can fill in the gap until the portfolio can be rebuilt, protecting the family should the policyholder die before being able to accomplish that goal.
If you’re looking for success in 2010, the key is twofold: Communicate, and get back to basics. Know what’s up-and-coming, but also stay true to your foundation. Soon, the wheat will be separated from the chaff and the true winners will be revealed. Be one of them.
Marvin H. Feldman is president and CEO of the LIFE Foundation. He can be reached at mfeldman@lifehappens.org.