Life Insurance on TV, Oh My!

Lately I’ve been noticing a couple new life insurance commercials on TV. I don’t know if these are running nationally — perhaps so; they’re on national cable channels — but they’re certainly running at least in the Northeast. First, there is a new SelectQuote ad — these guys’ve been running TV commercials for years now, so nothing really out of the ordinary here — but I’ve also been seeing a new and different spot from MetLife. This is not the Peanuts characters ads that you saw MetLife run during football (not futbol) season. Actually, this is very much like the traditional SelectQuote TV ad. In fact, you could easily drop in either company’s ID info over the soundtrack and they’d be virtually indistinguishable. (Unfortunately neither company has uploaded these yet to YouTube, and no one else has hijacked them to the site, but I’m sure they’ll show up there eventually — what doesn’t?)

The point? Well, it’s an important one, I think. They’re all about price — not so much how inexpensive (cheap) the coverage is, although that is certainly emphasized, but price as such. That is to say, both ads are meant to educate the couch potato about the size of the breadbox, which, not too surprisingly, is the single biggest mystery about life insurance and thus the single biggest reason that so many are leery of talking with agents about the product. Yes, there are quite a few reasons — or excuses, as the industry likes to say — why people are hesitant to buy these products. But the #1 reason is simply ignorance about price: What is this going to cost me? People really don’t know and, when cajoled to offer an estimate, routinely peg it at three times the actual cost, or so says LIMRA.

There’s a reason why price quote/aggregator sites (like SelectQuote, IntelliQuote, NetQuote, etc.) were first out of the gate in the early days of Internet commercialization, and why they still dominate PPC life insurance search results (often along with Allstate, Progressive, Geico, and State Farm!). They’re opening the kimono on cost, indubitably the single-most secretive aspect of the life insurance buying process, at least as that process has been dictated by the big agency companies. Of course, the stated reason behind the big guys’ reluctance to offer price quotes, or to talk about cost at all, is to prevent product commoditization: These products are simply too important to be sullied in discussion by talk of dollars and cents. A noble intention, I’m sure, but I also think the process also reflects a lack of real belief in the value of the products themselves, given that they are virtually undistinguishable feature-wise within their categories and, of course actually differ very little in price. In other words, they’ve already been commoditized and we don’t want to people to know that. Not to mention the cold-shiver-and–hot-sweat-inducing fear that providing price quotes would eventually, inevitably, open the door to, God forbid, direct sales.

When I was at New York Life, we went so far as to feature an advisory on the front page of our site: “Looking for a Quote? Not at New York Life!” Hell, I wrote the thing, so I guess it was actually my mea culpa for failing to convince my superiors that we should grasp the opportunity to educate the public about price; it was simply the best I could make of a bad, and stupid, situation. Quite stupid, in fact, as this particular piece of purple prose, I’m reliably informed, was one of the major factors leading MetLife to accept the implied challenge and begin offering, first, sample quotes, then actual individual quotes and, finally, sell the damn product online. (So, yeah, the execs were right: Give these Internet guys an inch and they’ll take a country mile…)

I remember sitting at a presentation at the New York Yacht Club — BTW, never turn down an invite to see the Yacht Club! — unveiling MetLife’s then brand-new “If” TV commercial campaign. Our host, MetLife’s CMO at the time, took a question, undoubtedly planted, about, of all things, price quotes, and answered — I will never forget these exact words, even if she certainly has by now: You’d be surprised how much life insurance you can sell if you tell people how much it costs.

To say that I was more than flabbergasted to hear this from a MetLife bigwig is to significantly understate the case, even if I had been endlessly promoting the sentiment (and prediction!) internally for a good long time. Certainly this was something our brethren in the P&C business had known and acted on for years already, but it was not a sentiment you’d likely hear — publicly, anyway — from the big agency carriers. Looking for a quote? Not at New York Life (or the Met, or Pru, or Northwestern, or MassMutual, or Guardian, or Hancock…)

So, back to the SelectQuote and MetLife TV commercials: Nothing revolutionary, perhaps, certainly not today, but still very important because, you guessed it, this is the age of taking action — oops, wrong product — no, it’s because you shouldn’t be at all surprised by how much life insurance you can sell when you tell people what it costs.

A Note: MetLife has more or less completed its latest Web site strategic evolution, existing now almost solely, from a business point of view, to facilitate direct sales. And New York Life now offers not only price quotes, but direct sales as well. (The latter is horribly done, by the way, but that’s a subject for another post.)

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6 Responses to Life Insurance on TV, Oh My!

  1. gweiss36 says:

    Priceline flipped an industry on its head and offered people to name their own price. Would be wild– and compeltely doable– if they did the same for insurance (or if insurance companies adopted the model. There’s probably something for everyone; Just name your price, and there’s probably *something* that can be sold.

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    • khittel says:

      I agree. This is actually not so far away from some current policies (like NYLIC’s Customer Whole Life), where you start from how much you want to spend for how long, as opposed to this is what you need from a face amount perspective. But Lucy still won’t be able to get her “five cents” a month premium, I don’t think…

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  2. Name your price is not a strange idea. MetLife and Nationwide both allow you to run the quote calculation not from your need but what you can pay.

    But here’s the question Ken, do Life insurers want to be in the life insurance business? Term life suits many people but insurers (and especially agents) want to sell longer term investment products. It is one of the reasons direct sales of life insurance will gain ground. Many consumers have come to distrust the life insurance agent who is perceived to “bait and switch” to higher cost products. This is far from the industry perception that the agent model will survive because consumers want to consult a trusted expert. There is nothing more intimidating than walking into the office (assuming anyone does this anymore) of a life insurance agent and having little or no knowledge of what you are buying and how much it might cost. We, as consumers, are far more educated on comparison buying, we like to know the cost BEFORE we speak to a salesman (and yes, an agent is a salesman). The industry bemoans the low rates of life insurance but falling sales in any other industry can usually be equated to poor products or marketing.

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    • khittel says:

      Great question, Terry: Do Life companies really want to be in the life insurance business? Like all great and pertinent questions, the answer is an unequivocal Yes and No! Yes, because at least for all the self-styled Life companies, life insurance is the profit engine that funds not only the life operation itself but most all the other product operations as well. (And that’s true of even the so-called Cheap Term sales, whether conducted by captive agents, brokers, online aggregators, or their own direct sales.)

      We start edging into the No territory quickly, though. While Term is profitable for the carriers, it’s not profitable for the Agent. Given the compensation — or lack of it — no agent can really make a decent living selling term products. Hence they gravitate to term + investment (basically Universal) or they’re already ideologically-dedicated to permanent products. And, of course, carriers will not support agents dedicated to growing a large clientele of term-mostly clients; they support chasing the 20% of relatively-wealthy Americans with 80% of the money.

      And there are the other factors you mention: Who wants to spend a few hours either at the classic kitchen table or at the agent’s well-appointed office conducting a Financial Analysis and then pouring over a half-dozen Illustrations and Hypotheticals, which certainly looks like bait-and-switch (but which, to be fair, usually isn’t)? Yes, I do want a trustworthy advisor, but I definitely don’t want sticker-shock, and, guess what?, I did go to that aggregator site and I KNOW that a couple hundred thousand of term would cost me only a fraction of what this guy is proposing now!

      So, yeah, direct sales will continue to gain ground. (In addition to what we’ve mentioned so far, there’s also the DIYers, the numbers of which will continue to grow as the most recent couple Generations come of life insurance-awareness age.) Carriers know that but can’t figure out how to balance current consumer realities with their own agent-based business models. Agents are stuck in the middle and the carriers de facto leave the field.

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  3. Good response Ken. The industry is struggling to make sense of the new realities but adapt it must and I suspect carriers will adapt faster than career agents. People are no longer willing to cede all control to a third party, especially one they do not know, the industry suffers from a lack of trust. You are right, people will go to the comparison quote engine before any agent meeting and agents will find it hard to justify the greater expense, albeit with stronger benefits. We have a one size fits all sales model and that will inevitably change as it has for every industry.

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    • khittel says:

      Yeah, agents are still True Believers, while the industry is only hoping and praying for the day when they can believe again — and, by the way, how’s progress on that direct sales site going, just in case, you know?

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