How to capitalize on ancillary benefits
There are numerous reasons to move the sale of ancillary products to the forefront of your sales strategy, not the least of which is a significant increase in your revenue.
For most group insurance agents ancillary benefits are more of an afterthought than an active component of their sales strategy. That's too bad.
In my world, ancillary benefits consist of dental, short-term and long-term disability income, vision and group term life insurance. These can be either employer-paid, employee-paid or paid by a combination of employee and employer contributions. Ancillary benefits are distinct from the strictly voluntary benefits of cancer, accident, hospital indemnity and cash value life insurance products in that they are typically found in most benefit plans, while voluntary benefits are not.
The typical group insurance agent is focused on sales of group major medical and only quotes ancillary benefits when they are already in place or when an employer requests a quote for one of them. That's a mistake. These benefits can open a back door that can lead to group major medical as a secondary sale.
In addition, the sale of an ancillary benefit can also open a door to other, more profitable sales within the group - thus increasing the per-group revenue.
Perhaps of even more value, the sale of ancillary benefits can also result in significantly increased per-enrollment revenue, which is extremely important.
Let's take a quick look at how the sale of ancillary benefits can accomplish these objectives.
As a door opener
Ancillary benefits provide significant value to an employer:
* disability income can reduce presenteeism
* dental insurance can increase employee morale and productivity and in some cases can also result in reduced medical spend, thus lowering premiums
* vision insurance is a great preventative health product
* group term life, while very inexpensive, is highly valued by employees
And of course, let's not forget that all of these benefits can lead to reduced employee pressure for increased wages.
Knowing these and other benefits that are derived from them can become the basis of your approach to employers. In my October 2010 column, I wrote about a unique design in dental insurance that eliminates the annual $50 deductible in dental insurance and replaces it with either a per-visit copay and/or a lifetime deductible. This significantly lowers the premiums and results in increased employee appreciation of the dental benefit.
Here's a sample door opener: "Ms. Employer, I've found a revolutionary design in dental insurance that lowers premiums, eliminates the annual deductible and increases employee appreciation of the dental benefit. I don't know if you have an interest, but if you do, may I ask a couple of quick questions to see if this would work for you?"
Once you close an account with this approach, you significantly increase your chances of getting the major medical at renewal.
Increasing per-enrollment revenue
In my opinion, increasing your per-enrollment revenue should be your No. 1 objective. Unlike cross-selling a new product at a later date, you are already present at the enrollment of your major medical plan. Since you are already enrolling the group, wouldn't it be wonderful if you could increase your revenue by 50% or more?
A simple change in your approach will easily set this strategy in motion. Here are two easy options for your per-enrollment strategy:
1) The dental upsell. For this strategy to work, you must work with a dental plan that allows for a vision plan or a group term life plan to be attached. Ideally your carrier provides a discount on either the dental or the attached additional benefit.
When there is an employer-paid plan in place, the upsell simply requires a statement such as: "Mr. Employer, this carrier also provides an option for employees to elect to add a voluntary group term life (or vision) plan to their dental insurance. The rates are amazing - so will you have any issue with that?" One hundred percent of the time the employer will agree to allow the upsell.
2)The group term life upsell. This is a strategy that I offer to brokers who are interested in increasing their per-enrollment revenue by 50% or more.
I work with a carrier that will try their best to beat any existing group life plan on premium and/or guarantees. With permission in hand to enroll either an employer-paid or a voluntary group term life policy, the broker simply informs the employer that the carrier offers employees a dual option on the voluntary group term. The employee can take the group term life or choose to enroll in a term to age 100 with a lifetime level guaranteed premium. Permission is almost always granted - resulting in significant first year revenue.
Increased per-account revenue
There are numerous cross-selling strategies that will make every account significantly more profitable.
From my perspective it makes much more sense to actively seek cross-selling opportunities among existing clients than seek to add new clients. It takes less effort to open the sales conversation, and it can generate significant amounts of new revenue. Here are three ideas:
1)Disability income. If you have already enrolled your group in either a long-term or short-term disability income plan, you already know the opportunities for executive disability income. If you are not well versed on this topic and have no desire to learn how to sell executive disability income, team up with a disability income specialist. You can generate more commission on a few executive policies than on the entire group benefit plan.
2) Voluntary critical illness coverage. Critical illness can not only be used to increase per group revenue; it can also be a great door opener. This is a highly desirable coverage that can be very affordable.
One of my carriers offers a stand-alone critical illness policy that will pay three times the policy face amount. As an example of affordability, a 45-year-old non-smoker can purchase a $25,000 policy that will actually pay out up to $75,000 total: $25,000 for heart attack, $25,000 for cancer and $25,000 for Alzheimer's. The total premium is $26.12 a month.
3) Medicare supplements. Every month, most large groups have employees who are turning 65. These employees are purchasing their Medicare supplements from other agents because they do not know that they can call your office for help.
I know of one agent who writes new policies every week on employees who call his office, and those commissions are becoming substantial. It is a simple matter of obtaining permission to hold regular meetings with employees nearing age 65 to inform them about your services.
This same logic also works for annuities. Every time an employee terminates employment there is an opportunity to roll the 401(k) money into an annuity. One of my coaching clients recently rolled an ex-employee's $100,000 401(k) balance into an annuity that paid him a 6% commission. This was in a 37-life group.
Two of these rollovers a year will pay more than the group health plan does. While not technically an ancillary benefit, this is still a huge opportunity.
Schlesinger has more than 26 years of insurance sales experience, with more than 20 of those in employee benefits. He works as both a sales and marketing coach to benefit professionals and as a managing general agent for several ancillary benefit carriers. Visit his website at getmoregroupclients.com or call him at (336) 777-3938.