Managing Your Agency to High Quality and High Profitability

1. Managing Your Agency to High Quality and High Profitability Section 2 Understanding Areas of Business Loss David Cohen & Micah Cohen American Income Life 2012 Section 2-Business Loss

2. Quality after issue (Dec 2011) • To increase 4 month retention, you must first correct your Net to Gross. • Company Net to Gross 82% • Company 4 month retention 72.8% • Average Loss during first 4 months is 9.2% • Company 13 month retention 53.5% • Average Loss during first 13 months is 46.5% Section 2-Business Loss

3. Why Conserve? @ 75% N/G Section 2-Business Loss

4. Why Conserve? @ 80% N/G Section 2-Business Loss

5. Why Conserve? @ 85% N/G Section 2-Business Loss

6. Why Conserve? @ 85% N/G Section 2-Business Loss

7. Areas of Business Loss 5 + 1 Areas of Loss • Declines • Withdrawn • Incomplete • Not Taken Out • Cancellation and • Lapses Section 2-Business Loss

8. Acceptable Levels of Lost Business • Goal: To be at 85 to 90% Net to Gross Section 2-Business Loss

9. Be proactive, not reactive Let’s examine why business is lost and how to prevent and correct it. Section 2-Business Loss

10. Declines--Why • Agents/Managers not knowing or understanding underwriting guidelines • Agents under pressure to write business • Selling wrong product to senior members • Not getting complete information on current medical conditions upfront • Selling plan to wrong person in household Section 2-Business Loss

11. Declines--Prevention • Teach underwriting guidelines up-front and review continuously • Use the Flash Sheet and Field Underwriting Manual • When in Doubt, check with Underwriter or do a trial app • Senior 10 application if member is over 60 Section 2-Business Loss

12. Declines--Prevention • Remember—Large face amounts will lead to more inspection and more active underwriting • Prepare client for possibility of a decline and leave door open. • Do not sell healthy and unhealthy person in household at same time • If case is postponed, keep a log to follow up in 6 or 12 months Section 2-Business Loss

13. Withdrawn--Why • Bounced Check • Policy is oversold • Buyer’s remorse • The presentation is too short Section 2-Business Loss

14. Withdrawn—No Production • With the seven day hold, some policies are withdrawn before they are applied for production • No impact on gross or net • Does not affect quality However • This is a silent killer . . . . • Agent did the work, sold the policy, but does not receive anything Section 2-Business Loss

15. Withdrawn—No Production Section 2-Business Loss

16. Withdrawn--Prevention • Verify all large application and money orders • Close down rather than up • “Give the check back” • One week call back • Time your presentation • Third-party bank account verification (e.g., Giact) Section 2-Business Loss

17. Incomplete--Why • Missing information on application • Oral Exam—not done up front • HIPPA or other special release forms are missing (ex: VA, Kaiser, etc) • APS—Some facilities take a long time • Paramedical Exam—client difficult to schedule or not prepared at point of sale Section 2-Business Loss

18. Incomplete--Prevention • Inspect applications before transmitting • Do not submit applications without oral exam when needed • Check for any special medical release forms • Prepare client to help with APS • Always prepare client for the possibility of an exam and/or contact from home office • Get 2 or more phone numbers and e-mail address for member Section 2-Business Loss

19. NTO--Why • Lack of preparation for the possibility of Amendments and Ratings • Affordability of rating • Taking too long to deliver policy • Client received letter from home office saying policy approved but hasn’t received the policy Section 2-Business Loss

20. NTO--Prevention • Prepare the member for the possibility of a rating, especially when health conditions are disclosed up front • Collect extra money to be applied towards rating • Keep track of all rated and amended policies in your office • Deliver amended and rated policies quickly or re-assign to another agent • Due within 10 day • Present rated policies in a positive light Section 2-Business Loss

21. Cancellation--Why • Oversell/Bounced Check • Lack of Solidification • Too long to deliver policy • Policy mailed to member without contact from agent Section 2-Business Loss

22. Cancellation--Prevention • Solidify the sale with sample policy • Use Summary Sheet at point of sale and during policy delivery with it • One week callback • Deliver the policies in person • If you must mail, call member, and highlight policy. Section 2-Business Loss

23. Lapses--Why • Lack of Contact • Replacements by other company • Affordability • Direct Billing • Change of Bank Account Section 2-Business Loss

24. Lapses--Prevention • Initiate regular contact with clients • Immediate follow up on call from client • Follow up on all notices in a timely manner • Have a system in place to monitor service • Prevention systems in Session 4 Section 2-Business Loss

25. Preventing Loss: Application Review • E-app makes it easier to review applications • Prevent DCL: Review medication conditions • Prevent INC: Check for complete questionnaires and doctor information • Prevent WTH: Bank information correct • Add notes to e-App Review • Get input from Underwriting using the .pdf of application Section 2-Business Loss

26. Section 2-Business Loss

27. Areas of Business Loss • Review and Questions Section 2-Business Loss