What’s the most lucrative market segment to sell life insurance to?
The middle market is definitely a segment you want to target, and this guide shows you how to approach these prospects.
Editor’s note: This post was originally published on 6/1/16 and has been updated for accuracy and comprehension.
When you’re prospecting for your next life sale, you can’t afford to be picky about who you’ll be talking to.
To cast the widest net – and sell policies – you can’t be too selective.
However, there are certain facts you shouldn’t ignore to get the biggest bang for your buck.
Here’s how to zero in on the most lucrative life insurance marketing segment.
Who is your next life insurance client?
Generally, the most lucrative sale to be made is one that involves permanent coverage.
Historically, this type of sale – more often than not – has been made to the affluent person as opposed to the middle-market.
This is no longer the case.
Pursuing the wealthier market to the neglect of the middle may be ignoring your best possible chance for your next sale.
In fact, the middle-market may be the most lucrative market segment you can pursue.
Facts about the middle market
Today, middle-market households own a majority of permanent life insurance (57% of the total).
- The middle-market wealth segment is defined as households with assets from $100,000 to $249,000.
- This group contains 13 million households or 11% of total U.S. households.
- More than 80% of these middle-market households also have assets in a retirement plan or an IRA.
- 3 in 10 currently own cash-value life insurance.
- Collectively, these middle-market households own $2.1 trillion in financial assets, with an average net worth of $447,000 and financial assets averaging $460,900.
Where’s the money?
It’s obvious that this group represents a huge opportunity, especially when you consider that most of these households are 10 or more years away from retirement.
Also, the barriers to the middle-market are few.
Most financial firms and advisers do not actively cultivate this market, relying on the belief that sales to this segment will be insignificant.
This results in far less competition for those willing to venture into it.
Baby boomers – who make up a significant portion of this group – are in their peak earning years.
They need advice for retirement saving and managing cash flow.
Add to this the fact that most of these families feel strongly about the issues that may impact them and that could be easily solved with permanent life insurance.
Pursuing the lucrative life insurance marketing segment
Here’s some info to you approach prospects in this economic group.
- No matter what type of coverage members of this group have, the majority rate “income replacement” as a key reason for having coverage.
- When asked why they own life insurance, “covering lost wages” and “income” is second only to “paying burial expenses.”
- Across all income groups, the average U.S. household that has life insurance owns only enough to replace 3.5 years of income.
- 50% of the middle-market say they would feel the impact from the loss of a primary wage earner within 1 year or less. More than 40% say that they would feel the impact within 6 months.
- Research shows that Americans (as a group) believe in the value of life insurance, with the majority of middle-market households agreeing that the insurance protects their families and is the responsible thing to do.
- Most of the individuals in this middle-market group have 20 or more years of saving ahead of them.
- Many are likely to elevate to “affluent” or “high-net worth” status over that 20-year period.
Put a spotlight on the middle
Developing a relationship with the middle-market and targeting them NOW means profitable, long-term business growth for you.
Because you can effectively serve this segment now with simpler planning techniques and strategies, you can satisfy the needs of the middle-market without complicated, time-consuming efforts.
Don’t ignore this most lucrative life insurance marketing segment. It can be a win-win for you and your clients.
What is your strategy for reaching the middle-income earners you come into contact with?