The Ingredients For Success With Index UL
January 9, 2010 by Sheryl J. Moore
- By SHERYL MOORE
This is an opportune time to launch index universal life (IUL) insurance. Of course, compared to total universal life sales, IUL is still just a baby, having been in existence for only a decade and with sales at less than 10% of total UL sales industrywide. By comparison, traditional UL has been around for nearly 30 years and is now a mature fixed-rate product.
But IUL sales have set records every year since the 2003 entry of a competitive no-lapse guarantee IUL into the brokerage market. In fact, the market that started with just over $64 million in sales back in 1998 nearly doubled sales from 2003 to 2005, and sales jumped 82% from 2005 to 2006.
Now, there are 24 carriers in the market and 6 more about to enter.
Three ingredients are needed to succeed is this emerging product line: training, sales support and marketing.
Training. The one thing that stops producers from selling IUL, as opposed to traditional UL or VUL, is that they don’t understand it. They’ve never been introduced to it, and they want the carrier to “hold their hand” when they start.
Feedback from producers and carriers indicates that once a producer has been successfully guided through their first IUL case—from product training through first illustration to new business and issue—they like IUL and keep selling it. The trick is getting producers through that first case.
To maximize success in this area, carriers should foster strong understanding of the market and its terminology. Failure here can lead to miscommunication at product launch as well as opening up a sale to replacement by competitors.
Sample problems: One carrier was using an asset fee/spread with its IUL without being aware that its “charge” was called an “asset fee” or “spread.” In another example, a rep improperly described the IUL’s minimum guarantee—a problem resulting from the rep not knowing the difference between a guaranteed annual return minimum and a minimum that is credited over the life of the contract (the newest trend in IUL minimum guarantees).
Training shouldn’t stop in the marketing department. When IUL launch is near, all departments need training for comprehension and support.
Sales materials. Use knowledge of the market and product expertise to provide in-depth sales materials. This can make the difference between recruiting the “big fish” and losing him/her.
Suggestions: Provide consumer brochures showing how IUL is different from traditional UL/VUL, but without being too technical on the product itself. For instance, don’t discuss how money is invested in bonds and purchase options to back the IUL’s index-linked gains. But do state that the product has minimum guarantees of x% and caps of y%.
Use visual aids to help explain IUL, including detailed agent guides that give thorough explanations of product mechanics, new business procedures and IUL market information/sales ideas.
Also provide a forum for discussion on why the producer should do business with the carrier, what makes the new IUL so competitive and what exactly IUL is.
Offer a 1-page quick reference guide with basic product specs. Knowledge is power, after all. Carriers that give clear and powerful producer references make an impression. That’s competitive prowess.
Offer frequent webcasts or teleconferences. These can be recorded at live events and then distributed cost-effectively via extranets to producers who couldn’t attend or who want to listen a second time. IULs are not necessarily complex, but they do have a few extra moving parts, because of their crediting structure, that require some extra interaction with the field. Some carriers even require mandatory training before producers can sell the IUL product.
Sales support. Producers can forgive a carrier that drops the ball on 1035 paperwork on a single case, but it is hard to forget if a carrier consistently provides poor support for the sales process itself.
Producers gravitate toward carriers that demonstrate they appreciate the producer. So, make certain a competent team of individuals is available to assist the sales force with the IUL launch. The team should be prepared to handle questions on IUL, competition, illustrations, sales ideas and advanced markets.
Illustration software can be a deal breaker. In fact, many producers say that if the software seems too complex, they simply won’t do business with that company. So, spend some extra time with the producers, showing them the “ins and outs” of the software and demonstrating how to maximize its efficiency. A competent sales support staff should also be able to tell an agent if the IUL can be used for education funding or retirement planning. Advanced markets staff should also be provided to handle questions about, say, trusts and tax issues.
Finally, carriers need to give producers a reason to leave their “comfort zone” of selling older products and give IUL a shot. A good way to do that is to get in the producer’s face. Advertise in insurance magazines, trade journals and on the internet. Don’t just launch the product and let it wither. Keep giving producers a reason to show interest.