The personal lines, corporate and employee benefits insurance industries are chock-full of products and programs with which many of you are very familiar and probably make your living selling on a daily basis. Most non-property and non-casualty insurances fall under the usual categories of life, health, annuities, disability, travel and long term care. And most brokers and agents will tend to gravitate toward one or two of those specialties, but may dabble from time to time in the others. Among those main risk divisions, one can find many niche sub-groupings of insurance products that are extremely useful to the consumer and can be very profitable to the producer when one knows how and why to properly market and prescribe them.
Although commonly considered inferior as outliers to rank-and-file brokers, those with “bigger picture” vision easily recognize that niche products serve a masterful purpose in the greater market. Most were designed to complement or fill coverage gaps in more mainstream product lines. They are used to supplement or even replace what can’t be found or acquired through the “traditional” insurance marketplaces, and they answer a serious need in this country.
It is true that niche products should rarely be a primary consideration for the basic coverage needs of your clientele, as the policies tend to be less robust in term length and hold more renewability limitations than standard insurances. But, when an obvious solution isn’t readily available or when additional coverage is needed but not allowed or at least heavily limited by your usual carriers, niche product lines can ultimately serve your clients very well and succinctly fill in the glaringly dangerous holes in their life and health benefits.
The products in question are seldom found through “usual” insurance channels. Most are administered through the surplus lines market in the U.S. from European carriers and large, established international insurance organizations like Lloyd’s of London. In the life/health industry, niche products began their slow and steady introduction into American circles almost a half-century ago, but the need for higher insurance limits in the physician and surgeon disability market of the 1980’s coaxed an onslaught of niche product development and refinement that has continued over the last 30 years. Interestingly and probably expected, the most recent of product surges have been an immediate result of the implementation of the Obama administration’s healthcare reform and the changes in regulation interpretation that has taken place over the last several years.
So the questions arise: Why make the effort in your business to market niche product lines? Why do your clients need these insurances that your domestic carriers don’t provide? The simple answer is that your clients are human beings, and nature and desire have made them fallible. Not everyone fits the pretentious mold set out by standard carrier underwriting and actuarial departments. I can bet that, at one time or another, you have come across a prospect that is too fat, too old, has too many health issues, makes too much money, makes too little money, works overseas, skydives too frequently or did cocaine the weekend before an insurance exam. I expect that you can identify with having to deal with some of those underwriting issues among your clientele, and I see those issues day in and day out. Millions of Americans, your prospects, face these common insurance roadblocks, and prejudicial companies keep them from purchasing the financial protection they need. And for that reason, the specialty, niche product markets exist and flourish to this day.
Your first step as an interested and dutiful insurance broker is to identify potential prospects for niche products. That part is easy. Any client that you have gotten quotes for or taken through underwriting that has been declined by an insurance company for basic or supplemental personal or corporate insurance of any kind is a ripe and ready candidate for a niche product. Those who are underinsured in life or disability coverage as well as those who have missed ACA major medical or Medicare enrollment windows are all perfect prospects. In the specialty markets, you will be able to find niche products for most lines including life, medical and disability cases.
So now you are finding solutions for cases you thought were “dead in the water” so to speak. The niche market will make you a hero and won’t send you back to your clients empty handed, even if your clients work on oil rigs, have severe depression, play professional basketball or have multiple sclerosis. The niche product market is the “yes man” in a room full of suspicious naysayers. It’s a very exciting aspect of the insurance industry, and can make you a fortune while helping your clients.
No matter how hard you work, no matter how many hours you put into a case, a declination of coverage doesn’t pay a commission. Niche products do provide commissions that, although modest on the front end, tend to be significant over a period of renewals, outperforming traditional group benefit commission schedules. You can also double-up on compensation when prescribing supplemental policies on top of fully-underwritten baseline coverage–two commissions while piggybacking the underwriting requirements of two carriers, simplifying the policy issuance and lessening your work. It’s a win-win situation.
Now let’s talk specifics. Excess or high-limit disability insurance is a prime example of what the niche markets have to offer. If you have a client making in excess of $300,000 annually, you know that you will be hard-pressed to find a carrier willing to insure at least 65 percent of that client’s income. The niche market is your answer and will be able to provide a supplemental layer of “own-occupation” high-limit disability coverage on top of existing individual or group long term disability insurance.
For your clients that have been declined by the disability market for their hazardous occupation, substandard health history, age or their preferences for a dangerous avocation, there are ample sources for impaired risk disability underwriting. Niche product companies have the unique ability to employ more lenient underwriting guidelines than the standard market, allowing your hard-to-place clients to acquire comprehensive income replacement insurance when your standard carriers say “no.”
Regarding the heavy-handed healthcare overhaul by the Affordable Care Act, the market has been forced to deal with great change which has required quick and substantial adaptation to remain profitable. Many marquee health insurance carriers have chosen to pull out of individual exchanges in states all over the country, ultimately leaving big cracks that Americans are falling through without the ability to secure coverage for periods of time. The niche market has answered with short term medical plans that are successfully plugging many of the enrollment holes found in the healthcare field at this time.
Other health care needs that the ACA doesn’t address like travel insurance have always been a staple of the niche product market. International travel medical policies provide those working in or visiting other countries with comprehensive major medical care anywhere in the world. They also provide robust ancillary benefits like trip cancellation reimbursement and emergency evacuation services back to the United States.
Life insurance is also represented in the non-traditional market with products like term life insurance for Americans living outside the U.S. Also, a newer line of life products that has taken the market by storm is contingent life insurance, more commonly known as Failure to Survive or Contract protection. This product provides a simplified-issue, quickly underwritten death benefit to indemnify short term business contracts including loans and buy/sell agreements. And like its niche market disability counterparts, the underwriting guidelines are more forgiving than those of U.S. life carriers.
Along the life insurance lines, war and terrorism insurance has remained important to Americans since 2001. Built upon an accidental death and dismemberment chassis, war and terrorism coverage provides high-limit benefits to U.S. residents living, traveling or working anywhere in the world. The best prospects include government contractors, missionaries, international business persons and tourists.
The aforementioned insurance products are just a glimpse of the worthwhile and exciting options available to your clients. You may not see a need for them every day, but I can guarantee you that the traditional U.S. insurance market is not always going to be able to assist every one of your clients every time they need insurance. The need for niche products is completely evident, and the secret to success in niche product marketing is to be prolific. Provide solutions to problems your clients didn’t think of previously.
Look to the outlying markets frequently and not only when you hit one of those roadblocks. If you have a client wanting personal life insurance, also show them a supplemental AD&D policy with war and terrorism coverage. If you have an individual disability client, make sure to provide a quote for excess personal coverage as well as key person insurance to help protect his business.
There are so many tools out there and they are all designed to help protect your clients’ families, their businesses and their financial well being. Don’t approach as a salesperson, approach as an advisor and perhaps even as a friend because you are providing more than a service for compensation, you are providing them with safety. Niche products have become more established and are regularly addressing the everyday insurance needs of all Americans. It will behoove you to think outside the box and look beyond the traditional insurance marketplaces.
