Insurance Agent Forum

[Markingriffin]

I was talking with some agents about which companies still offer a monthly direct bill on life insurance. I didn’t know of very many that still did because of most of them will lapse.

But I had a lot of agents tell me that they will not even write a Quarterly direct bill.

I can understand the monthly direct bill and not doing this, but I don’t understand the Quarterly Direct Bill. If my clients want to pay this way, I give them all the options and tell them it is much easier to do a monthly eft, but I don’t refuse them if they do a quarterly direct bill.

I love annual premiums also.

Do any of you still do a monthly direct bill?
Will you still do a quarterly direct bill for your clients? Do you still give this option if they ask for it?

[Dave020]

One thing I have learned over the years from all life carriers and GAs I have worked with (majors and term houses):

Quarterly-billed life policies have the highest lapse ratio.

[Jeff]

Originally Posted by Dave020

One thing I have learned over the years from all life carriers and GAs I have worked with (majors and term houses):

Quarterly-billed life policies have the highest lapse ratio.

Same here.... I don't even show Qrtly or Semi-annual. It's either monthly draft or Annual. Now if they specifically ask, I'll tell them but I haven't had anyone ask yet.

[dgoldenz]

They may have the highest lapse ratio, but if they aren't lapsing in the first year, what's the difference? You've already been paid by the time it falls off the books. I look at it as an opportunity to call the client back and review their coverage and possibly sell them a new policy to extend the period of guarantee. We always get lapse notices from certain companies and many of them turn into new sales. Other than the lapse ratio, if a client wants to pay quarterly, let them have their way.

[DJAdam]

Originally Posted by dgoldenz

They may have the highest lapse ratio, but if they aren't lapsing in the first year, what's the difference? ...

But they DO lapse in the first year, which is the problem. I stopped writing quarterly direct many years ago because of the lapse issues.

[briko3]

I have a guy right now that just signed up to pay quarterly because he doesn't have a checking account.

[dgoldenz]

Originally Posted by DJAdam

But they DO lapse in the first year, which is the problem. I stopped writing quarterly direct many years ago because of the lapse issues.

Can't say we've had the same experience in first-year lapses....but if that's the case and it happens to you frequently, maybe there is a reason.

[DJAdam]

Originally Posted by dgoldenz

Can't say we've had the same experience in first-year lapses....but if that's the case and it happens to you frequently, maybe there is a reason.

It is Industry wide.

[Oldtimer]

He's gonna lapse. I don't care what his "intentions" are. He'll lapse. Quarterlys stink.

[somarco]

On life insurance, I always quote annual premiums and usually collect it annually. No one on bank draft, almost no one on anything other than annual billing.

Health insurance is different. I have quite a few on quarterly bill, no problems.

[somarco]

On life insurance, I always quote annual premiums and usually collect it annually. No one on bank draft, almost no one on anything other than annual billing.

Health insurance is different. I have quite a few on quarterly bill, no problems.

[somarco]

On life insurance, I always quote annual premiums and usually collect it annually. No one on bank draft, almost no one on anything other than annual billing.

Health insurance is different. I have quite a few on quarterly bill, no problems.

[somarco]

On life insurance, I always quote annual premiums and usually collect it annually. No one on bank draft, almost no one on anything other than annual billing.

Health insurance is different. I have quite a few on quarterly bill, no problems.

[Frank Stastny]

I have never written an app quarterly or semi-annually, nor will I for the following reasons.

Paying quarterly usually is the most expensive way for the client to pay their premiums, at leas for Med Supp companies. Aside from the fact that they are terrible about renewing why would an agent suggest to a client that they pay so much extra by setting payments quarterly? Sounds like a way to make more commission to me.

I'm looking at a rate sheet and the multiplier for Annual is 1.0; for Semi-Annual the multiplier is 0.52; Quarterly it is 0.265 and Monthly it is 0.0833.

If the annual premium is $2,185.00 the cost of paying Semi-Annually would be $2,272.40 per year. The client would pay a total of $2316.10 per year if they choose to pay quarterly.

Using the Monthly multiplier of 0.0833 the client would pay a total of $2,184.126 annually. (I'm sure the insurance company would "round" that to the same as the annual cost of $2,185.)

In this example the client will pay an additional $131.11 more per year paying quarterly than by paying either monthly or annually.

[jdeasy]

I will write quarterly, semi annual or monthly direct when there is a need to do so.

I know the industry average is bad for lapses on direct bill, but, that has not been my experience. I just got a statement from one company yesterday that shows my 13 month persistancy. For the ones from a checking account, it was 91%. From savings accounts it was 87% for the monthly direct, it was 88%.

I've only done about 10 quarterly life policies over the last 2 or 3 years and every single one of them is still on the books. I've done even less semi annual, but, every one of them that I have ever done is still on the books.

My clients that are on direct bill even call me when they feel the bill from the insurance company is late.

For me, the only drawback to direct bill is paid as earned, but, since I now don't have very many companies where I still get advanced, it's a non issue.

When I was writing LH, they cut your commission by 40 points on monthly direct, so, that was a huge hindrance. I had one guy with them that paid $210/mo. direct bill. He has had that policy almost 3 years now and has never missed a payment. I was on a 95% contract when I wrote it, but, they only paid me 55% because of direct bill. But, he wouldn't do it any other way, so, 55% of something is better than 95% of nothing. He has a checking account, but, will not use it for auto drafts under any circumstance. I've told him that I can save him $80/mo for the same coverage if he would pay by autodraft. He will not change to anything that comes out of his checking account no matter what the savings.

[Markingriffin]

So if you had a client that was 72 years old and that have a checking or saving acct, you would only offer them annual or you would not do it at all.

You would get up and leave and not offer a quarterly or any other method?

It looks like the poll is half and half right now.

[Norwayguy]

Right before I quote my clients I tell them most companies offer a 7-8 percent discount by paying annually and ask if they want me to quote it both ways monthly/annually some say yes some say no....the vast majority that get quoted annually still pay monthly...I do not quote quarterly but will offer it if specifically asked...I explain that it is more costly etc but some people won't pay annual and hate eft so quarterly it is.

[dgoldenz]

Clients with large annual premiums also may not want to pay annually if it's around Christmas season, had that mentioned to us by more than a few clients....so they went quarterly or semi-annual. Some people don't like writing a $5k+ check for insurance when they also have to drop $xxx on gifts.

[SydRogers]

Unless someone is a high income lawyer, doctor, etc. I always go for Monthly EFT. It stays on the books better than any other mode, in my experience.

However, since I never try to high pressure people, I often sell Quarterly or Monthly direct bill (with the few companies that offer Monthly direct bill) when the client adamantly refuses Monthly EFT. My retention is still 90% or better into the 2nd year on Monthly or Quarterly direct bill, but Monthly EFT is still the best.

Another reason I like Monthly EFT better than Annual is that I get commissions annualized...and clients don't get hit with a big $1,200 Annual second year renewal vs. $105.00 Monthly EFT. The fact that I get small renewal commissions is another factor, plus the fact that I want them to partially or fully convert to No Lapse UL sometime in the near future.

[haugman]

I think bank draft is the way to go to lower premium and service charges. Thats what my company does. They dont offer anythign but annual and bank draft.