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5 Reasons Financial Institutions Offer Group Insurance Products

by Cheryl Ahmad on February 15, 2018

Life is full of unexpected events. Today, many banks and credit unions prepare their customers or members for these unexpected situations by offering group insurance products. These solutions offer value to members or customers and their families, can increase overall satisfaction and loyalty to their financial institution and provide a lucrative income stream. Below, leaders at banks, credit unions, and other financial institutions will discover five reasons to explore group insurance opportunities for their members and customers.

Group Insurance Products

1. Increase Retention and Revenue

Want to increase revenue and retain customers with one program? Offering group insurance products may be just the ticket. While convenience, low interest rates and minimal fees may initially attract new customers or members, differentiation is key to keeping them.

Understanding clients’ needs and concerns is essential to acquisition and retention. Did you know that 62 percent of middle income consumers worry daily about achieving and maintaining financial stability? By making group products available to your clients, you can address this fear and contribute to improved financial stability.

Group products also add a revenue stream not subject to market swings affecting interest income from assets on deposit. Both revenue and customer increases are served when group products are offered. Product administration and marketing can be outsourced, simplifying a program that increases value to customers while fortifying the bottom line.

2. Fill the Protection Gap

Almost half, 49.3 percent, of American workers are employed by small businesses that historically offer fewer benefits than large employers, if they offer them at all. In fact, 34 percent of workers do not have an employer-sponsored retirement plan and 43 percent do not have life insurance. Even fewer packages include long-term disability insurance. These products, and other basic financial security safety nets, may be out of reach for workers without comprehensive benefit packages. When you offer products such as group life, accident death and dismemberment (AD&D) and disability income insurance, you can fill the gap and make a difference to the financial health of a family facing an unexpected injury, illness, or death.

True Story from Ken, a Selman & Company customer:

"When my dad died, he had plenty of life insurance that went to my mom. The only problem is he didn't tell any of us is that he financed three vehicles in his name. His debt was transferred to my mom leaving her with over $140,000 of debt. To this day, she wishes they would have planned a little better for the future because you never know what is going to happen."

3. Provide Unexpected Affordability and Access While Blocking Competitors

Some members assume the cost of insurance protection is beyond their budgets. Others may believe that insurability and eligibility are impediments to insurance coverage. A group insurance platform eliminates both concerns. Benefits can be significantly more affordable than when purchased through a group and usually have fewer underwriting requirements. Educating members on the value, importance, and affordability of insurance coverage is one more way to engage your members. Many Americans have little knowledge of insurance products, how they work, and why they are needed. Your bank or credit union can provide true value while increasing client trust and satisfaction.

While offering these affordable, accessible group insurance products, you may also block potential competitors from getting a foot in the door with your clients. If clients need insurance coverage, they’ll seek advice from other financial advisers who can potentially guide them away from your institution. By offering insurance, you add a new revenue stream while keeping your clients’ banking and investments in house.

4. Achieve Greater Customer Lifetime Value

Cross-selling equals improved profitability. Members with multiple products become more valuable to the business over time. For example, when you invest $1 into customer retention, you can generate more profit than by investing $5 to acquire a new customer. Did you know that the probability of selling to an existing customer is 60 to 70 percent?

Customer-facing employees are perfectly positioned to recognize clients’ insurance needs. They often form relationships with customers, and are aware of life changes such as a marriage, divorce, new home, new baby, or grandchild. Those conversations can easily lead to an inquiry about additional insurance needs that may be solved by group insurance products.

Cross-selling isn’t about product pushing. It is about introducing a product aligned with a life event or life stage. Selman & Company offers more than 15 group products designed to complement customer segments and demographics.

5. Reduce Acquisition Costs

Acquiring new customers is expensive. In fact, many experts estimate that it costs 6 to 7 times more to attract a new customer than it does to retain a current customer. Compared to new customers, current customers are twice as likely to buy additional products and typically spend 31 percent more. (See this infographic.) According to Gartner Group, 80 percent of future profits will be attributed to 20 percent of current customers. Statistic after statistic confirms the wisdom (and profitability) of offering your customers many ways to do business with you.

A Partnership with Selman & Company

Group insurance products may not be your area of expertise, and that’s OK because it is our area of specialization. For more than 35 years, we have helped banks and credit unions grow their businesses and build client loyalty with group products. We’d like to help you, too. Learn more about the group products and program support provided through Selman & Company.

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Topics: Voluntary Benefits, Financial Institutions