The meeting lasted three hours. Heritage Union agreed to bring on a chief financial officer with a strong life insurance background and likewise add life insurance experience to its board. Then it was back to Richmond, to amend the application with more than a hundred pages of new paperwork. That was dispatched to Hartford on December 10th. Public hearings began in Hartford on January 31, 2008, with the clock ticking on the purchase agreement, which was set to expire on February 29. On February 14, the Connecticut department of insurance approved the acquisition, and Heritage Union closed the deal on Leap Day. Finally, 15 months after shaking hands with Annuity & Life Reassurance America, Heritage Union was empowered to sell the product it had readied for market so long ago.
Explaining the rationale behind SalaryShield to the Parsonex execs brings Walker to the conference room whiteboard, where he draws a graph with a curve rising from left to right, representing the increasing chance of death as the policyholder ages, and a second curve sloping downward, tracking the present value of the customer's income replacement need. "Originally we called it adjustable term insurance," he says, "because it self-adjusts."
"Can I draw a picture on the board, too?" asks Ballard, who's already out of his seat. He draws two analogous curves, explaining that when you're young, you need a lot of insurance, and as you get older that need should go down (Curve One). You need life insurance because you have little money saved, but with sound investment strategy, you accumulate the savings over time (Curve Two). "This product is a mirror of the way the investment curve goes up," he says. Parsonex has about 180 agents in five states; they specialize in retirement planning. SalaryShield, Ballard says, offers a fitting front-end financial protection for clients. Just as important, it has a pitch-perfect name and a concept he feels his agents will embrace, what with term insurance becoming more and more of a commodity, bought solely on price. "It's got an energy to create some momentum."
He and Miller are equally keen on SalaryShield's switch from a lump sum payout to monthly payments. "People don't live in lump sums," Ballard says. "None of us gets paid in lump sums. Nobody gets $400,000 and is told, 'You need to live on that for the next 10 years.' Nobody's programmed that way. We're all used to getting a monthly paycheck, making our house payment, our car payment, paying our bills, tithing, whatever we do, and what's left, we survive on that. So this product is matching the way people live."
Less than a week later, after ironing out such particulars as commissions and operational procedures, Heritage Union and Parsonex strike a three-month test deal, and within days, the first Parsonex-sold policy is underwritten -- for Miller's wife.
This deal (which has since been extended through 2010) gives Heritage Union a third sales platform for the fourth quarter of 2009, adding a traditional sales component to a second generation of direct-response TV ads and a fledgling arrangement with Wells Fargo Bank and a major insurance company that thus far prefers not to be named.
Reality check: None of these sales channels is proved. With policies sold to date still in the hundreds, 2009 projections call for a loss of $4 million. The wish, of course, is that one or more of the selling methods will gain traction and start streaming applications into Heritage Union. "2010 is our go-to market year, where we should see the numbers start to turn around," says Walker.
Heritage Union is certainly dreaming big. It hopes, by taking advantage of emerging technology that peruses pharmacy records, to substitute an applicant's prescription history for the need to draw blood, taking the poke out of the process for many. "We're pushing out the limit on how far we can go with nonmedical underwriting, by using some pretty sophisticated technology to both present the application and interpret it on the back end," Walker says. "Our hope is that 70 to 80 percent of the people who apply for the product will get an answer while they're on the phone or the website. Simple as that.
"Ultimately we want to get SalaryShield, either issued by us or by us and somebody else, in the hands of one million families," Walker says, "because that will mean that each year, at least a thousand of those families will not have to change their neighborhoods, will not have to change to different schools, will not have to give up their plans of a future education. I've never heard any life insurance company talk of it this way, but we're in the claims payment business -- everything we do, we're fighting for the right, the privilege, to pay claims."
Fighting, indeed. Asked if he feels a bit like a boxer who has gone 10 rounds in a tough bout, Walker ponders a moment, then subtly tweaks the metaphor. "I see it," he says, "as 10 one-round fights, nine of which I've won."
John Grossmann is a longtime contributor to Inc. and the co-author, with Gordon Hempton, of One Square Inch of Silence, a book about the need to preserve America's few remaining quiet places.
