Download pdf - April 29 1.30pm Steve Worley

Steve Worley (Baby Boomer)

(Individual Life Agent in Group Life World)

(Voluntary Permanent Life is All I Know)

Stepping off the Financial Cliff

Why Employees Need Permanent Life Insurance

2

Create new thinking?

Change beliefs?

3

Employer Provided Benefit Plans

• In firms with 50 or more employees, over 50% have access

• In firms with 500 or more employees, 85% or more have access

• In all firms where there is access, there is a 95% or more acceptance rate

Full-time and part-time workers; U.S. Bureau of Labor Statistics, Economic News Release, National Compensation Survey, March 2011, Life Insurance Benefits

Civilian Private Industry State and Local Government

# of

Employees

Access Participation Take-up Rate Access Participation Take-up

Rate

Access Participation Take-up Rate

1-49 38% 36% 95% 37% 35% 95% 63% 61% 96%

50 to 99 55% 54% 97% 55% 53% 97% 66% 64% 98%

100 to 499 70% 68% 96% 70% 67% 96% 73% 72% 98%

500 or more 85% 84% 98% 86% 84% 99% 85% 83% 97%

Group Life - 2011

4

5

Life Insurance Needs

How do we normally sell our products?

Verbal Persuasion

6

Learn to use a story

“The Boy Who Cried Wolf”

“Goldilocks and the Three Bears”

“Little Red Riding Hood”

7

• Create a vicarious experience • How to handle problems

• Examine real life issues

• Common language

• Universal appeal

• Imagination

• Teach critical thinking

• Teach lessons

Learn to use a story

8

Create new thinking?

Change beliefs?

Change the story!

9

Whoo has planned

ahead for their life

insurance needs

during retirement?

10

Whoo will have life

insurance in force

when they die?

11

Whoo knows what the

conversion rates for

their group term life

insurance will be?

12

Whoo can afford to

convert their group

term life insurance?

13

Whoo can help

the employees

plan ahead?

14

Whoo can solve

the problem?

15

A new story for

Group Life

Insurance

16

1911 Equitable Life Assurance Society of New York

121 employees Pantasote Leather, employer paid

Whoo sold the first Group Life certificate?

17

Whoo knows how many Group Life

certificates there were in 2011?

112 Million Certificates

$8.1 Trillion in Face

American Council of Life Insurers, 2012 Life Insurers Fact Book

There are 12 zeros in 1 trillion (using the "short scale")

1 million = 1,000,000 = 106

1 billion - 1,000,000,000 = 109

1 trillion 1,000,000,000,000 = 1012

18

• Widespread adoption

Group Life has . . . .

19

Benefit Cost

Employee Benefit Research Institute, “Finances of the Employee Benefit System” (Updated November 2010) 20

Group Life Cost

Employee Benefit Research Institute, “Finances of the Employee Benefit System” (Updated November 2010)

(As percentage of all benefit cost)

21


• Less than 1% of all benefit expenses


22

2011

917,000

$19.8 Billion Group Life Insurance Payments to Insurance Beneficiaries

Whoo knows what amount was paid to

beneficiaries from the group life insurance?

American Council of Life Insurers, 2012 Life Insurers Fact Book

Group Life

23


• Less than 1% of all benefit expenses

• Significant economic impact - $19.8B


24

So, what’s the

problem?

25

Group Life Pricing

Table I – Uniform Premiums for $1,000 of Group-Term Life Insurance Protection

• Age rated

• Increases as the

insured ages

• Dramatic increase

after age 50

Age Per $1,000 Monthly % Increase

Under 25 $0.05

25 to 29 $0.06 20%

30 to 34 $0.08 33%

35 to 39 $0.09 13%

40 to 44 $0.10 11%

45 to 49 $0.15 50%

50 to 54 $0.23 53%

55 to 59 $0.43 87%

60 to 64 $0.66 53%

65 to 69 $1.27 92%

70 and above $2.06 62%

26

National Vital Statistics Report, Vol. 59, No. 10, December 7, 2011

Group Life Pricing

27

Aging Population

Boomers getting older “Beginning January 1st, 2011 every single day

more than 10,000 Baby Boomers will reach the age

of 65. That is going to keep happening every single

day for the next 19 years.” (The Boomer Stats,

www.BBHQ.com)

Headed for retirement “In 1950, each retiree's Social Security benefit

was paid for by 16 U.S. workers. In 2010, each

retiree's Social Security benefit is paid for by

approximately 3.3 U.S. workers. By 2025, it is

projected that there will be approximately two U. S.

workers for each retiree.” (The Boomer Stats,

www.BBHQ.com)

28

“For slightly more than half of all full-time employees in

medium and large private establishments who have employer-

provided life insurance while working, such coverage ceases at

retirement.”

(Monthly Labor Review, “Life Insurance Benefits for Retired Workers,” 1990) 29

“I didn’t

know!”

SPD (Sorry, People Die)

Section 1.

In the event that you live past retirement, things will

change. You can’t keep the coverage you have because

it gets too expensive. But that’s OK because you

probably won’t need life insurance after you retire.

Section 2.

If you do, you can convert your group term to an

individual policy without having to prove that you are

insurable as long as you can afford to pay the premiums.

Or, you can continue your group term by buying some

portable coverage which is reasonably priced, but

increases in cost as you age.

Section 3.

In simple terms, you should have planned better. Don’t

blame the plan for your failures.

30

Losing coverage options myths

“Things I’ve Heard,” S. Worley

1. “They are purchasing individual policies

through their agent.”

31

“They’re buying their own coverage.”

LIMRA, “Household Trends in U. S. Life Insurance Ownership,” 2010

• “Life insurance ownership in the U. S. has hit a 50-

year low. Three in 10 households carry no life

insurance on anyone in the household, and half of U.

S. households now believe they are underinsured.”

• “Ownership of individual life insurance declined

among all markets—low-, middle-, and high-income

households.”

• “Despite high unemployment, the study reveals a

continuing increase in the proportion of insured

households having only group term life

insurance—37 percent in 2010, up from 32 percent

in 2004 and 29 percent in 1998. This is primarily due

to households with group coverage not buying

individual life insurance.”

Do you have

enough life

insurance

coverage?

32





2. “They don’t need life insurance after they

retire.”

33

Percent of US workers with savings of less than

$1,000:

30% Percent of people who believe they will have

adequate retirement savings at 65:

14% Percent who retire with less than $25,000 in

savings and investments:

60%

Percent of private sector employees age 25-64

who have no retirement plan in their current job:

58%

“They don’t need life insurance.”

17 Frightening Facts About Retirement Savings in America, 2012

They are NOT

planning ahead!

34

Increase in senior households with credit card and installment debt:

1998: 4.2% / 2001: 18.4% and rising Average age of a US home buyer:

45 years old Length of time in a house:

6.2 years Age at mortgage maturity:

74 (not counting re-financing)

National Association of Realtors, 2011

Financial Services Review, 2005, MasterFiles, 2002


They are NOT

planning ahead!

35

aarp.com

• Medical or funeral bills

• Mortgage loans or other

debts you may leave

behind

• Everyday living expenses


36

LIMRA, LIC/LIMRA Final Expense Insurance Survey 2009

Final Expense • Of 18 companies…new

premium increased by 72%

from $63M in 2006 to

$108M in 2009

• Companies providing

information increased from

25 to 32, new premium

and in-force more than

tripled from $290M to

$885M


2,500,000 in 0.15 seconds

37






retire.”

3. “They can convert to an individual policy if they

really need coverage.”

38

“They can convert to an individual policy.”

• Large school district in Texas

• Conversion premiums for non-

participating whole life policy

• Guaranteed issue

They CAN’T

afford group

conversion!

39

Age

Monthly

premium

per

$1,000

$100,000

60 $4.30 $430.00

65 $5.55 $555.00

70 $7.23 $723.00





retire.”

3. “They can convert to an individual policy if they

really need coverage.”

Losing coverage options Myths

40

X

Whoo believes there is a problem?

• Elephant keepers in India have an interesting

way of keeping their elephants from running

away. They tie them to a wooden peg with a

rope.

• It doesn’t make sense on the surface, since a

rope like that has no hope of holding a grown

elephant. But ask any elephant keeper and he

will chuckle and explain:

• When a baby elephant is born, the herder ties it

to a peg with a rope. At this point, the rope is

strong enough to hold the elephant.

• The baby elephant quickly learns that trying to

escape the rope is futile. And he keeps that

learning with him, even as he grows up and the

rope becomes far too weak to hold him.

• And like that rope, we often form beliefs that

might be useful at first, but then hold us back in

life, long after the original reasons are gone.

Did someone tie a rope to your leg?

41

Do most people need life insurance

when they die?

• 50% of U.S. households have unmet life insurance needs

• 58 million say they do not have enough life insurance

• 29 million household heads think they will purchase life

insurance…in the next 12 months

LIMRA – “Household Trends in U.S. Life Insurance Ownership” 2010


42

What is the best way to provide

employees access to competitive

permanent life insurance products?

• 51% of working Americans obtain most of their financial and

retirement products where they work

• Nearly 70% of employees say non-health benefits are a

strong influence on their workplace loyalty—which is up from

51% in 2008

9th Annual MetLife Study of Employee Benefit Trends, 2011


43

If you provide access to

permanent life insurance,

what will happen?


Employees will

take advantage

of the

opportunity!

44

When verbal persuasion doesn’t work?

How do you change strongly held beliefs? 45

1. Use fact-based value statements in the

introduction to the product

• Experience the benefit of having your

product without actually owning it

2. Use real-life, personal (yours) stories

• Tell the whole story

• Including credible and vivid solutions (they

have to recognize what they need to do to be

the hero)

• Solution needs to provide hope

Vicarious Experience

46

3. Give them an opportunity to create their own

personal experience

Personal Experience

47

To Change Beliefs

1. Review optional permanent life plans that are available in

the market

2. Read an SPD for one of your group life plans

3. Meet with one of your best employers to review the

company’s group life SPD; review conversion cost or

portable coverage costs

4. Then meet with a 55+ year-old employee, making less than

$50,000 annually, who has 10 or more years of tenure,

explain the SPD, conversion options and cost to convert

5. Review your findings with the employer

6. Ask the employer to take action

48

To Change Beliefs

Change the Story

49

Thank you!

For more information, please stop by booth 702 to discuss. 50