Life Insurance: Operate on All Cylinders
By Craig D. Simms
Effective bank life insurance programs can be accurately compared to an efficient eight-cylinder engine. When all cylinders are clicking, the car moves with purpose, a coordinated series of mechanical events that smoothly propel the car forward. Conversely, if you pull spark plugs from some of these cylinders, the car labors to move ahead, losing power and never gaining enough momentum to keep up with the traffic.
Best-in-class bank life insurance programs are aware of the importance of these critical factors for success. When all of these components (cylinders) are operating together with the cooperation and support of management, fee income from life insurance is maximized. Unfortunately, many bank programs attempt to run a program utilizing only a few of the key factors, and the results are stunted performance, management frustration and often the premature demise or lasting mediocrity of a program.
Based on our 65 years of experience in the Connecticut bank channel, and now with an additional 10 bank relationships spanning 20 states, here are the eight critical cylinders that we have seen banks institute to maximize life insurance fee income:
1. Set goals for licensed bank employees (LBEs), branch management and regional vice presidents:
• Set minimum fee income or premium goals linked to the bonus grid. Without this link to the bonus, life insurance becomes a “third tier” product that simply will not be sold.
• Pay licensed reps per sale, and use contests to spike interest and attention to the products.
• Pay incentive cash for achieving milestones (number of approved cases, “on-track” to goals, etc.)
• Use “team compensation” to reward cross-department goal achievement, including branch management, regional vice presidents, etc.
• Avoid paying bonus compensation for simply achieving fee income goals. Reps will typically sell the “easiest” product in order to achieve goals, sometimes to the detriment of meeting customer needs.
2. Create an integrated referral program that generates steady life insurance activity:
• Align the HELOC and mortgage areas with LBEs on platform to create daily leads from new loan customers.
• Utilize licensed contact center reps to make outgoing sales calls to loan customers.
• Allow FDIC-approved teller referrals with give-ones, contests.
• Create a Series 7 “refer down” program to move investment clients to a licensed rep on the platform for the life insurance sale. Give bonus credit to the investment rep.
3. Use marketing to create and sustain awareness:
• Utilize in-branch FDIC-approved marketing pieces that promote the need for life insurance and its availability at your institution.
• Schedule regular “insurance days” in branches.
• Run periodic generic teller line marketing pieces (i.e., “Life is Good – Ask Me Why”)
• Use unique compliant promotions (Life cereal boxes)
• Allow reps to keep specific product information on their desk.
4. Use direct response marketing to maximize fee income:
• Most middle and upper-middle income customers are not approached by life insurers.
• Reach customers who rarely enter the branch.
• Use broad-based mail to age- and income-specific targets.
• Use targeted mail to loan customers.
• “Zero cost,” all-profit programs.
5. Use executive communication to raise awareness for customers and staff:
• Only 50 percent of customers in banks that sell life insurance know they sell it (Life Insurance Marketing Research Association research)!
• Send senior-level correspondence once per year to ALL customers of the bank, informing them of the availability of life products at the bank.
• Send senior-level internal note once per year to all employees to encourage cross-selling, referrals.
6. Use technology to make life product sales faster and easier for LBEs:
• Utilize an Internet-based quote and application submission process to speed the interview and close the sale faster.
• Insist on desktop approval of EZ-issue products.
• Offer the product for the reasons do it quickly and efficiently.
• Ensure the technological process is customer and LBE-friendly.
7. Allow controlled access of wholesalers to licensed reps:
Utilize your insurance partner wholesaling resources for:
• Training on quotation and application procedures,
• “One-on-one” sales skill development,
• Technology updates,
• New product introductions,
• “Insurance days” promotions and
• Staff morning meeting presentations.
8. Depend on internal and external resources for skill development:
Use partner resources and “train the trainer” formats for:
• Product training,
• Classroom technology training,
• Referral training,
• “How to begin a life insurance discussion,” and
• Referral program training.
Banks that are utilizing all eight cylinders of the life insurance fee income engine are able to maximize fee income and shorten the time it takes to develop a mature and effective program. If a bank makes a commitment to provide life insurance to add an additional product relationship and enhance fee income, a dedication to “maximum horsepower” via these eight components is critical to achieve success.
Craig D. Simms is senior vice president of The Savings Bank Life Insurance Co., based in East Hartford.