Update News for June 2007
Here is a quick run-down on what you will find in this bulletin:
These topics will be dealt with in more detail throughout this bulletin.
In conjunction with the 3 new premium categories introduced into Compulife:
Term4Sale and Compulife issued a press release. A copy of the press release is available at:
Please take a minute to read the press release. It will review what Compulife is attempting to accomplish with these new categories.
We have initially filled the 3 new categories with one company's new products. AIG has introduced a new product called "Select-a-Term" which allows the buyer to select a level premium period from 10 to 30 years. Compulife has gone to the trouble of manually selecting level premium periods to correspond to the age and level to retire category for all scenarios.
For example, for level to 65 we have chosen the following Select-a-Term level periods for the following issue ages:
We have had a handful of calls from agents who are wondering if Compulife will be adding the Select-A-Term products for the in-between periods; in other words for periods other than 10, 15, 20, 25 and 30. In discussing this with those agents I have challenged them to explain to me where the demand will be for these in-between periods. I tell the agent that I can't imagine a consumer looking at a 20 year term product, and saying "Gee I don't think this is giving me long enough coverage" and then looking at a 25 year product and saying, "Gee I think this is too long". In each case the agents have responded that the reason they want these in-between periods is for replacement scenarios. For example, imagine a person that has a 20 year term plan that is 4 years old. The agent now wants the ability to compare it to a 16 year term policy.
While Compulife can't do that yet, please take a look at another close scenario: a 20 year term product that is now 5 years old. To do a theoretical replacement let's run a comparison in Compulife for a 45 year old for a 20 year term plan. We will base this on $500,000 for a preferred plus non-smoker in California. Running a comparison we find the lowest premium is $615.
Now pretend that our sample client has become 50 years old, 5 years later. We are now looking for a 15 year term. The lowest premium in Compulife is $725. $725 is $110 more than the 20 year term on the 45 year old. It would appear the 45 year old will be hanging on to their 20 year product.
Why is there such a difference in premium even though both policies cover to age 65?
The reason is that in pricing the 20 year product for the 45 year old, versus pricing the 15 year product for the 50 year old, the life insurance company has 5 more years (between ages 45 and 50) to collect extra money over and above the real cost to insure the client.
When we are talking about a coverage period for age 45 to 65, the least expensive period of time to insure the client is age 45 to 50. This period has the least actually mortality expense because it covers the youngest period. That means that any extra money collected during that time can be invested and assist with insurance costs between ages 50 and 65. That is why the 15 year term can't beat the 20 year product 5 years later.
It is my belief that agents planning to use the Select-A-Term product for replacements may find that if the previous product has been in force for any time at all, and the product was relatively competitive to start with, the product may have a premium that can't be beat.
Having explained that Compulife would still be happy to add the in-between categories providing that we see a multi-company trend established. Our promise to subscribers is that if there are two other companies (a total of 3 companies) who introduce similar products with in-between coverage periods, Compulife will create categories for those in-between level periods.
By contrast Compulife is out front on the level to 65, 70 and 75 categories. Why? Because there is a natural, non-replacement need for those coverage periods. The idea of buying "term to retire" is a natural need scenario and will be a concept that most financial gurus, particularly those who recommend that consumers buy term and only term, will seize upon.
With the introduction of Select-A-Term, we now know what prices for older people, for those scenarios, would be. But what would prices for younger people be?
To understand that let's turn our attention back to the example that I just gave you. We found that a 20 year $500,000 policy for a 45 year old cost $615 per year, and that a 15 year policy for a 50 year old was $725. Even though both products provide coverage to 65, the 50 year old pays a higher premium. As I explained, it's because the 45 year old is chipping in money for 5 years longer.
The same logic can and will apply to level to 65 products for younger people. Consider the AIG product. A 35 year old male, in preferred plus health, can buy $500,000 of 30 year Select-A-Term for $505 per year. If AIG offered a 40 year version for a 25 year old, what would it cost? I believe the premium would be considerably less than $505 per year. Why?
There are two ways to see the basis of my belief:
First, look at the cost of level to 65 for AIG's Select-A-Term for the 35 year old. The premium is the same $505 because the price that Compulife is quoting is for a 30 year Select-A-Term product. Now we make the sample client age 36 and check the premium for level to 65. In this case the premium is $525 which is the cost for a 29 year Select-A-Term product. Note that the premium is $20 higher.
Let's try it again. This time we make the client age 37 and check the premium for level to 65. In this case the premium is $550, which is again higher, this time by $25. So the pattern appears consistent. The older the starting age of the client, the higher the premium for level coverage to age 65. You would expect that the younger the client, the lower the premium for level coverage to 65.
Therefore, you would expect, if there was a 31 year term product, and you quoted the price for a 34 year old, that the premium would be less than $505.
This brings us to the second way to look at this. Suppose our 25 year old purchased a 10 year term policy from AIG. The cost of the policy would be $185 per year. Now assume the same client purchased the 30 year version, 10 years later. We know that the premium at that point would be $505 per year. The difference in premium is $320 per year. Let's assume our client, who knows that, budgets $505 per year from ages 25 to 35. He would accumulate $3200 by the end of 10 years (no interest). The client now has $3200 to assist him in paying the $505 premium for the next 30 years. That would have the impact of lowering his net cost for that insurance.
Of course this is precisely what the life company could do itself. Instead of the client accumulating the difference, the company can and would. In exchange for that, the company would be able to offer a lower price than $505 for the entire 40 year period.
And our client would secure his insurability. The problem with buying the 10 year product at 25 is that the client is taking a serious chance his insurability could change between age 25 and 35. That would create a serious problem at 35. But the life company can average that risk out over a large group of people, just as it does now when it sells 30 year term products to 35 year old people (versus selling the same group 10 year term).
Finally, we look at the price for 30 year term for a 25 year old. In that example we find the premium for Select-A-Term is $400 per year. We know that a 40 year term product for the same person would be higher. The premium would be something between $400 and $505 per year.
Therefore, it is reasonable to guess the cost for a $500,000 40 year term plan for a 25 year old to be between $450 to $500 per year, with the premium being much closer to $450. That was the premium guesstimate that I used in the press release:
Now my question to you is what would you prefer to sell to the 25 year old, the 10 year product for $185 per year, or a 40 year product for $450 per year? I can tell you which one I would tell my son or daughter to buy - GO LONG! You could argue that you could sell the 30 year plan for $400 but that ends at age 55, and the argument that they need level insurance coverage to retirement identifies a need that makes sense to the client.
Oh, did I mention the commission difference?
As we pointed out last month, there is a new generation of Windows Mobile phones which have been recently hitting the market. Compulife has completed work on a version of our program which works perfectly on these new phones. We made some additional improvements to that software last month and we believe the new program is running quite well.
Just like the PDA software that we have introduced to this point, the new phone program is included FREE with your subscription. And just like the PDA software we have introduced, the new phone software is transferred to your SD memory card when you use the Master Menu option:
Once you update your card, and place it into the Windows Mobile phone, the new program will show up on the SD file list as:
When you select and run the program you will be asked by Windows Mobile to confirm that you want to run the program - go ahead and do that. At that point the first page of the two page client screen appears. All the client screen questions are entered using the 5 way navigation button.
IMPORTANT: The new generation of phones have no stylus input and you don't need it with Compulife. Compulife's entire program is operated with just the 5 way navigation button. Think of it as the Compulife video game.
Once the first page of the client screen is entered, the right button takes you to the second page of the client screen. When that is completed a right button does the comparison. You move from field to field using the up and down arrows, and you select choices with the center button.
We have tested the new software on the following 3 phones. NOTE: Click on any of the phones listed below for more information about the phone:
These phones all run Compulife perfectly.
We have recently seen price offers on these phone below $100 in combination with phone and date package programs. As we suspected, this market is likely to continue to heat up. We also expect more versions of these phones moving forward. In this case, we are happy to be on the leading edge of the technology.
IMPORTANT: You don't have to have this data service to use the phone as a phone or as a Windows PDA. You can still have your daytimer functions, contact lists, etc - all the things you expect from a PDA.
MORE IMPORTANT: You can quote Compulife on these phones without having the more expensive data package.
NOTE: All of the above phones use the newer, smaller SD cards. The Motorola Q used a MINI SD card whereas the Dash and Blackjack use MICRO SD cards. Compulife can talk directly to any and all of these cards once they have been placed into USB adapters and plugged into the computer.
Remember, Compulife's new phone software is FREE with your subscription.
Insurance Squared customers, using Compulife's on-line term quote engine, are now allowed to host QuickerQuoter updates for FREE.
And if you use Insurance Squared to host your QuickerQuoter updates, Compulife will maintain those updates on the Insurance Squared server for FREE.
For QuickerQuoter purchasers it means that all you will need to do is e-mail a link to the page and/or place a link to the page on your web site. Your page will look like either of these two samples:
NOTE: The www.compulife.us server used for the above examples is the server provided by Insurance Squared. Compulife rents space on that server, just as we rent space from 6 other Internet Providers for our services to Compulife subscribers.
In the next few months we would like to introduce a more automated update procedure for QuickerQuoter updates, but this would be in conjunction with the Insurance Squared update hosting. If we are able to do so, the QuickerQuoter program would be able to alert your agents that new updates are available, and the system can get those updates automatically.
NOTE: The decision to put automatic updates into our QuickerQuoter software will be dependent on the number of QuickerQuoter buyers who elect to use Insurance Squared to host those updates. If there is an insufficient number of agencies using Insurance Squared for those updates there is no point offering automatic updating. Updates will continue to be manual updates just as they are now.
If you do NOT use Insurance Squared as your on-line term quote provider, you can do so for ONLY $179 per year. Once you do your QuickerQuoter update web page and update hosting is FREE.
ALSO IMPORTANT: Insurance Squared now offers an on-line forms library option which can be added to that on-line term quote service for only $120 per year. Click Here to obtain full details.
QuickerQuoter is a Compulife-like comparison software program containing only the companies that the agency selects. The agency pays a single, low cost license fee and can then provide unlimited copies of the software to all its brokers for FREE.
Click Here for more information on QuickerQuoter. The web page contains a FREE sample of QuickerQuoter.
NOTE: The products and companies included in the FREE samples of QuickerQuoter are up-to-date and current. The companies we have selected are those companies which have provided Compulife with their forms for our Forms Library. If you are a life company, and would like to be added, please call Bob Barney at (888) 798-3488.
IMPORTANT: FREE software for your brokers.
THINK ABOUT IT: If you don't give this software to your brokers for FREE, then maybe your brokers will get it from your competitors for FREE. And then your brokers will be quoting the companies that your competitors want them to quote.
The agencies who act sooner will be the agencies to benefit the most. To date over a dozen agencies have acquired QuickerQuoter.
Just as FREE PDA software comes with Compulife, QuickerQuoter comes with FREE PDA software. So before you say, "But we already have on-line quoting software for our brokers for FREE", please pay attention to the fact that this software includes FREE PDA software.
Some agencies have told me they don't think that's important because their agents aren't using PDA's. There are some points I would like to make:
First, more and more agents are buying Palm and/or Windows Mobile phones. Those phones ARE PDA's and they can run QuickerQuoter. Do you want to be the one pointing that out to your agent, or do you want your competitor pointing it out?
Third, read some of the following testimonies that Compulife has received from subscribers using insurance comparisons on their PDA:
The point is this: Agents are going to find out about this capability - one way or the other. The sooner they do, the sooner they will make money with it. And that means they will not only be making money for themselves but for the agency they do business with. Do you think agents will appreciate the agency that was first to bring that to their attention?
Compulife incorporated in Canada in October 1982. That means we are now in our 25th year in business.
We note this to first and foremost express our thanks to our loyal subscribers (thousands of subscribers) many of whom have been with us for a majority of that time. It goes without saying that we could not have done it without you. Many, many thanks.
THIS MONTH'S HIDDEN SPECIAL: Get a 64meg SD card and an SD card adapter for only $10 - FREE shipping. The card and adapter is all you need to put Compulife on most PDA's. But it also gives you an inexpensive "Jump" or "Thumb" drive that lets you easily transfer up to 64 megabytes of files between computers. This special offer is over on June 29, 2007.
We are using these specials to help underline our longstanding commitment to this marketplace and our subscribers - a commitment that has never changed and a commitment that is as great today as it has ever been.
Two things are true about companies that have been around this long - they are either resting on their laurels or they are continuing to push forward aggressively. I think it is clear that the latter applies to Compulife.
Here are just three recent examples:
We have recently rolled out a Forms Library which introduces an innovative web library / local library system for automatically storing forms on your own computer - making retrieval fast and easy - regardless of web connection problems.
We have introduced QuickerQuoter for agencies, giving agencies our comparison technology (including PDA technology) which they can turn around and provide to their agents for FREE.
We draw this to your attention to underline that Compulife appreciates your business and we will continue to EARN your business, by improving and expanding our product offerings.