This is a guest blog written by Justin W. Smith, founder of the insurance consulting firm, Balanced Strategies, LLC. Smith is a guest blogger for The Cavalier Strategy that focuses his research on using life insurance to guard against the biggest threats to wealth preservation. Smith is also a general agent at Cavalier Associates.
Opportunities abound as it relates to the sale of life insurance. The economic climate is causing many to reevaluate their portfolios and seek the unique attributes that life insurance affords.
Consumer demand continues to trend upwards, however, that does not necessarily mean our industry is effectively connecting with customers. Consider these amazing data points from a recent LIMRA study, Trillion Dollar Baby:
- 14 million households indicated the reason that they had not yet purchased the insurance they believe they require is that they had not been approached by any advisor about life insurance
- 8 million U.S. Households indicate that they “don’t have enough life insurance”
- 29 million households say they were likely to buy life insurance in the upcoming 12 months
- The 44% of households who feel they do not have enough life insurance, on average, say they need enough insurance to replace 6 years of income
And the U.S. Census provides the following key statistics about retirement in America:
- Out of 100 people who start working at the age of 25, by age 65, 29% are dead
- Of the same 100 people, 63% are dependent on Social Security, friends, relatives or charity
- 80% of people ages 30-54 believe they will not have enough money put away for retirement
- 36% of Americans don’t save anything for retirement
Of course, simply being aware of these statistics is really the consolation prize. The real question is how can the data drive prospecting and sales practices?
The answer requires a more rigorous analysis in an effort to identify life insurance sales opportunities on a state-by-state basis. While on the surface it may seem that there are too few sales opportunities, they are actually abound, and there are more reasons than ever to get in front of new prospects.
state-by-state sales opportunities
Rather than generalize about this information, I have chosen instead to take a deeper dive into life insurance sales opportunities on a state-by-state basis.
The LIMRA and Census numbers have been on my mind for a while, so I decided to take a deeper dive to assess where in the U.S. the opportunities are the brightest. I have compiled a significant mix of relevant data that should give advisors reason to get excited, regardless of where you find clients.
I evaluated eight key factors that help quantify life insurance opportunities by state. They are:
- State Income Taxes (taxfoundation.org)
- Median Household Income (U.S. Census)
- The Retirement Savings Need (ING Retirement Research Institute)
- Life Expectancy (measureofamerica.org)
- Debt Cancellation Need (Lending Tree & ACLI)
- Income Replacement Need (U.S. Census & ACLI)
- Average Number of In-Force Policies per Household
- America’s Health Rankings’ Health Score – Potential Insurability
What does the data tell us? Each region, and even each state, has unique needs that require a unique perspective and approach with prospective clients. Consider the following:
Hawaii: Who wouldn’t want to work in the sands of Hawaii? After all, aside from the sun and perfect beaches, it has the second highest state income tax rates in the country and expensive real estate, which translates into high average mortgage amounts for which there is not enough life insurance in-force, on average, to cover.
Washington D.C. : The nation’s capital may just have an argument as the best place in the country to sell life insurance these days. With high taxes, high median household income, low average face amounts, expensive real estate and low retirement savings scores, D.C. and its neighboring states represent a golden opportunity for life insurance sales of all types.
New Jersey: New Jersey’s high taxes, incomes, and expensive real estate mean there are significant planning opportunities there. They also rank high in terms of health score and life expectancy.
Every state has particular opportunities to pursue. There is no shortage, and the numbers show enormous market potential. LIMRA’s Trillion Dollar Baby report expressed that the opportunity exceeds $7 trillion. Find out where you can get your piece of it!
Other states that rank high on the list of great places to sell insurance include Vermont, Maryland, New York, Massachusetts and California. Where does your state rank? What specific points can a skilled life insurance producer help clients address?