Nov 242014

In most business situations, allowing a competing but different business model to chip away at your fringe would be cause for alarm. The reason you don’t see Rexall drug stores anymore, or any mom and pop retail establishment for that matter, is because of the predatory pricing of WalMart. Same with the neighborhood hardware store, thanks to the aggressive bigness of Home Depot and Lowe’s. In the world of online business and personal computer self-enablement, gone are travel agents, neighborhood print shops, yellow pages.

The life insurance business, whether conducted by a financial advisor or an insurance agent, is rather old fashioned, isn’t it? A personal meeting is requested, a presentation delivered and an application package (sometimes 40 pages or more!) is painstakingly completed. Once finished, the underwriting process can then burn up 40 days or more. No offense, my friends, but that entire methodology is as old world as a Rexall pharmacist knowing your name. We may long for the quaint and personal charm of the old days, but they are definitely the old days.

And don’t chalk it up to generational differences. Businesses from Amazon to SelectQuote are succeeding with Millennials and Baby Boomers alike. And most people arrange a weekend excursion to a big box store to take advantage of selection and price. Consumers like the idea of shopping online with privacy, choice and convenience. They may merely shop price or they may go all the way and execute to a purchase, but there’s no denying they’re smart shoppers, savvy about cost comparisons and cycle time from need identification to purchase. And price is king, as evidenced with any comparative term life display.

The anachronistic process that is the purchase of life insurance has two elements—the array or choice and the purchase decision, and then the underwriting cycle time. The life insurance business needs help with both elements, and some practitioners in the business more so than others. Financial advisors and insurance agents are losing both battles as they largely cling to traditional pitches and spreadsheets, and lengthy cycle times. SelectQuote and the other online engines appeal to choice, convenience and privacy. They are grabbing market at an alarming rate. They also generally restrict themselves to term life as a commodity product (although SelectQuote is now big time into the personal lines property and casualty business.) Their sites are attractive, accessible and bright, and they’re very customer friendly. Financial advisors and insurance professionals have to combat all of that through differentiation, impartial choices combined with recommendations and an abbreviated method if desired by the buyer. Term life isn’t a commodity even though the internet search engines profile it as such. –So do we, come to think of it, when we spreadsheet without appropriate commentary or recommendation.

Express Ticket processes (ours is the best as you would expect me to say) are excellent ways to hand off the rote of app completion and streamline much of the process. Further, an informed advisor or agent can guide the customer to the easiest, fastest and/or most forgiving of the express processes—something the internet providers don’t have a clue how to do.

Attacking the underwriting cycle time issue is a problem for all of us, but once again, human producers are more adept at finding work-arounds than internet providers. Once an advisor has a good discussion with the customer about any health factors (after all, how can you possibly offer a quote with no knowledge of the risk?) a good course can be set to navigate carriers and their attendant cycle times. We can deliver cycle times in the two-to-seven day area. Try getting that in the advice vacuum of the internet term providers.

Financial advisors and life insurance professionals need to step it up and modernize, or they’ll go the way of blacksmiths and buggy whips.

*Advisor Perspective (Click here for Consumer Perspective)

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