November 11, 2012

Life insurance in a box? Metlife, Walmart team up to test sales in stores

While waiting in line at Walmart to pick up your next prescription, why not purchase a little life insurance to take home with it?

While waiting in line at Walmart to pick up your next prescription, why not purchase a little life insurance to take home with it?

MetLife, the nation’s largest life insurer, is pilot-testing one-year term life insurance for sale on the shelves of the nation’s largest retailer at 200 Walmart stores in South Carolina and Georgia.

The coverage can be purchased on a pre-paid card starting at $69 and MetLife and Walmart say qualifying for the coverage could take as little as 10 minutes by phone after the purchase.

Just look to your left or right while standing in the pharmacy pick-up line and you’ll see the image of one of advertising’s most beloved icons, the cartoon character Snoopy, pitching end-of-life coverage to everyday shoppers.

It is an unusual business collaboration: life insurance in a box, on a shelf – not to mention on a pre-paid card – that started between the two companies in late September.

The aim is to get life insurance coverage into the hands – and heads – of an under-served population that normally may shun coverage due to the added expense that comes with it, New York-based MetLife said, as people choose to meet their daily living expenses first.

“It is a completely new marketing approach and it’s intended to certainly sell life insurance to a clientele that is under represented in terms of their life insurance purchases,” said Greg Niehaus, Finance and Insurance professor at the University of South Carolina’s Darla Moore School of Business.

Upper income individuals hold a disproportionate share of life insurance coverage in the United States as compared to middle and low-income individuals, Niehaus said. The MetLife-Walmart connection is an attempt to provide an important service to those groups, he said.

MetLife recently spoke about the new initiative to a group of USC students interested in risk management and insurance, Gamma Iota Sigma, which is faculty-advised by Niehaus.

“It’s new, it’s innovative, it’s an attempt to reach a different audience and it demonstrated an innovative way of marketing life insurance,” Niehaus said, without predicting whether he thought the new approach would succeed or fail.

MetLife says most people will qualify for the coverage. If they don’t qualify, they can get a refund at the Walmart checkout counter just as they currently do for other Walmart purchases, or they can use the pre-paid card to make other purchases anywhere Discover is accepted.

“Many Americans want and know they need life insurance – they don’t have it,” said Manish Bhatt, MetLife senior vice president and consumer-direct business head.

“Taking the first step can be difficult, but by providing this new product, MetLife is making that first step possible. It’s all about getting started.”

Three in 10 American households have no life insurance coverage, according to MetLife.

Here’s how the pre-paid program works:

The MetLife display in each store features color-coded packages for each of four levels of life insurance coverage, ranging by age from 18 to 65, with death benefits ranging from $10,000 to $25,000 for a year’s coverage.

For someone between 18-44 years old, the least expensive coverage is a one-year, $10,000 plan costing $69. The costliest coverage is a $25,000 plan for someone 60-65 years old, costing $429.

After purchasing a package, which contains a pre-paid card, the customer then calls a toll-free number where they speak with a licensed MetLife agent to answer several eligibility questions and six health questions. If the call is successful and the caller qualifies, they use the pre-paid card to purchase the year of coverage.

MetLife said applicants could be disqualified based on answers to questions about any recent or upcoming medical treatments requiring overnight stay in a hospital, any history of drug or alcohol abuse, if they’ve been diagnosed with a terminal illness, have HIV or AIDS, or have any upcoming chemotherapy or radiation treatments. They will not be disqualified for factors such as weight, cholesterol or employment status and will not have to take a physical or a blood test.

“We believe that customers want to buy in different ways and we want to (enable that),” said Jonathan Tsucalas, Brand Marketing director in Charlotte, who is helping MetLife with publicity. “More people want to be on sound financial footing, we believe, and there are too many barriers.”

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