Survey Shows VL Sales By Brokers Have A Big Upside Potential

However, the statements that "tax advantages make life insurance a very competitive product" and "life insurance is an important part of most clients investment strategy" drew strong agreement from only 30% of the brokers. "These factors tell a less compelling story," he said.

Yet, when brokers were asked how useful it might be for their clients to get the possibility of avoiding estate and income tax on large death benefits from VL, 79% said it would be very useful. Lesser percentages saw the usefulness of VL in its ability to achieve tax-advantaged gains on equity investments and the range of options available in its investment account.

Another result the survey showed is that the more involved a broker is in selling variable annuities, the more likely he is to see the benefits of VL in terms of: better meeting client needs, increasing his income through high commission sales and gaining control of a greater proportion of clients assets.

When asked what is the most important thing life insurers could do to encourage VL sales, education and training overwhelmed every other response, including simplifying or streamlining the process.

Simplification in terms of underwriting or products with fewer loads did score highly, however, when brokers were asked how useful these measures would be in making VL sales more appealing.

The survey showed that the average number of life sales is higher for brokers who are new and less experienced ("they are looking for ways to make money"), who have sold more VAs, and who have more clients and younger clients.

Greenwald said there were a number of implications to be drawn from the survey. First, he said, it shows there is an opportunity to distribute more VL through the broker channel. "These are the brokers with clients who have needs, who see increased income from the product and who believe the product can strengthen their relationships with their clients," he said.

Second, he said, is that effective training and education are imperative. "This is really the impediment," Greenwald said. "They need to get launched, so that once they start selling it theyll get more comfortable."

Third, he said, the survey shows that simplifying products for the channel will be useful. "This will increase the comfort level."

A fourth implication is that targeting approaches by type of firm and type of broker within the firm is important. This means not only targeting the most receptive brokers in the firm, but also differentiating between wirehouse, super-regional and regional brokers.

Fifth, Greenwald said, is that reinforcing how life insurance can help many clients with estate planning and death protection needs would be useful. "They know it and are receptive, but are not doing it," he said. "They need to be reminded to bring it forward."

Sixth, helping brokers analyze their client base to identify those with strong life insurance needs will stimulate sales. "Many brokers underestimate their clients need for life insurance protection," Greenwald said.

And, finally, he said many brokers appear uncomfortable discussing life insurance with clients until they have established a strong relationship with that client. "They dont have enough confidence in the relationship to maximize it," he said. "So, it would be useful for them to plant seeds to talk about it later."

Reproduced from National Underwriter Life & Health/Financial Services Edition, November 25, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.