Last March OneAmerica took its flagship individual permanent life policy, known as Legacy, and introduced it to its menu of voluntary employee benefits. As of mid-October, brokers had sold the product to 24 groups totaling nearly 7,800 eligible employees, producing estimated annual premiums of $416,000.

"The adoption rate of this product in the workplace by employers, employees and brokers has been beyond my expectations and predictions," says Jim McGovern, vice president, employee benefits division. "It's a significant opportunity for OneAmerica to meet the needs of the large number of employees who have little or no permanent life insurance."

According to LIMRA figures from 2012, an estimated 30% of Americans have no life insurance. A high percentage of this untapped market is made up of middle income and below middle income wage earners. There are definite advantages to permanent life insurance to discuss with these long-neglected consumers-cash values, protection from rate increases and the portability of the product when they leave their employer or retire.

Yet, it's hard to imagine the sales process being a slam dunk. "We're taking an individual product and marketing it through traditional benefits brokers, many of whom aren't used to selling individual products, let alone whole life," says McGovern.

One of the reasons it's working, he says, is that the buyers in the workplace can grasp the value of a permanent product which will follow them to their next employer or into retirement. "For many of these employees, if they do have life insurance, it is usually term insurance through their employer. They know there's a good chance they will change jobs at some point and lose that coverage, or they will lose it when they retire."

"Employers as well as employees are attracted to the idea of a product that serves employees in retirement," McGovern adds. "There has been some shift in focus among employers from the concerns over health insurance to concerns about their employees' financial well-being. Since few employers continue life insurance for their retirees, they see Legacy as a helpful post-retirement solution."

American United Life, rated A+ (Superior) by A.M. Best*, spent two years soliciting input from brokers, employers and employees before introducing Legacy to the workplace. They learned that it would be important to simplify the product presentation. One way to do so, the company decided, was to use a "defined contribution" approach, which many employees are familiar with from their retirement plans. For example, "How much can you afford to buy? This is what $5, $10 or $15 per paycheck will provide in face amount."

Alternatively, brokers might choose to use a "defined benefit" approach, performing a quick needs analysis to establish a desired face amount before calculating the premium.

The feedback before the launch also suggested that if brokers were allowed to conduct brief one-on-one meetings with employees, they could explain the policy's benefits clearly and enable employees to make an educated purchase decision.

That's what seems to be happening, according to Joe Jansen, OneAmerica's senior regional sales manager in Dallas. "The biggest successes with Legacy have come when an employer provides access to the employees to educate them on the coverage. Sometimes the broker may use their staff to educate employees; sometimes we may use ours."

Jansen recently oversaw the enrollment at a nursing home chain with 1,000 employees, where almost 250 employees signed up for the Legacy product. The broker on that case, Kyle Thiessen, associate general agent with Southwest Financial Advisory Group in Edmund, Oklahoma, describes the process.

"One of our agents had enrolled other benefits with that firm, but we didn't know what to expect with the Legacy product. Six of our agents met with each employee over a period of about a month. We were able to spend five or 10 minutes with each employee. Those who understood it appreciated what the product could do and were excited about it," says Thiessen.

Thiessen hopes to repeat the results with another firm he has lined up for quoting before the end of the year.
Jansen, who oversees benefits production for agents in several Southwestern states, says that property/casualty-based agencies are among those that have successfully introduced Legacy to their employee benefits clients. "One property/casualty agency that writes a lot of private school business has had good results presenting Legacy to school teachers," he notes.

McGovern explains that the features of the Legacy product in the workplace are virtually the same as Legacy outside of the workplace. That's important, he says, because "a lot of times when a product gets introduced to the masses, an insurer scales down its features. That's one thing we didn't do. Legacy is the best permanent life product that we offer to the most astute brokers and buyers. Our CEO insisted, 'This product belongs in the hands of all consumers.'"

The company does limit the face amount of its worksite Legacy product to $100,000. However, McGovern points out, "As a significant offsetting enhancement, we decided to issue the policy on a guaranteed issue basis. Underwriting is based solely on the worker's age, the male-female rate tables and tobacco status."

"The guaranteed issue feature simplifies the product presentation both for brokers and the employees," Jansen notes. "We don't have to spend our limited time with employees going over medical questions."

Another coverage feature permits a spouse (with minimal underwriting) to apply for coverage with or without coverage on the employee. Both employee and spouse can add term insurance coverage for dependents to their policy as well.

OneAmerica offers flat and heaped commission options to brokers on Legacy business generated through a benefits plan, providing brokers flexibility to choose an option that aligns with their financial goals and enrollment methods.

The company also provides enrollment support including employee education materials or on-site assistance with group or one-on-one enrollments.

"We are highly encouraged by the reception Legacy is receiving in the workplace," says McGovern. "It's our first introduction of an individual market product into the employee benefits space. It won't be our last."

*Rating as of May 15, 2014. A+ (Superior) is the second highest of 16 ratings assigned by the ratings agency.