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OTHER DISTRIBUTION CHANNELS

Banks and Department Stores

Typically, producers sell either in their own office or in the prospect�s home or office. However, some sales are made, or at least begun, because a prospect visits an insurance facility. In these cases an individual salesperson is usually involved, although he or she may be salaried rather than paid a commission. For example, an insurance company or agent may install a producer behind a desk in a department store, in the lobby of a bank, or in the bank itself. Bank or savings and loan employees may hold agent contracts with a company and sell the insurer�s products, or an insurer may provide a bank with products, usually annuities, that the bank markets to its customers. Banks may also use independent marketing organizations to do their insurance marketing for them.

Direct Response Marketing

Although direct response marketing accounts for only one percent of new premium income, LIMRA estimates that 4 percent of households in the United States buy life insurance directly in a year�s time. Since there are over 90 million households in the United States, this small proportion still translates into a sizable market.

Direct response marketing is making sales to consumers through the mail, media advertising, or telemarketing. Standardized sales messages are made to consumers, orders are taken, products are delivered, and payments are remitted without the use of a salesperson. Some insurance companies rely completely on direct response systems to distribute their products while other companies use direct response as just one of several distribution methods.

As time progresses, direct response marketing is becoming more and more advanced technologically. Direct response firms engage heavily in market research and testing, and they maintain extensive computer-driven information-retrieval and telemarketing operations. The emphasis in such operations is instant access to customers� records to make sales or provide service. Most products distributed through direct response methods are designed to serve large market segments, are very affordable, and are uncomplicated in design and administration.

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