Coupon Policies

  • The other approach to building your own sales force, in contrast to this full-scale approach, would be the specialized approach.
  • This could be specializing either by product line or by geographical area.
    • By product line, we mean basically what we all have called "special policies."
    • Here you can teach the newly recruited man a simple sales presentation that he can learn quickly and give him a product that he can master and go out and sell; hopefully it will be a product that generates enough commission dollars for him to make a living rather quickly.
  • This is an area in which coupon policies were used in many instances in the past.
    • We all know that there were abuses at times with these, but I think that we should also be aware that there are many companies now of substantial size which at one point in their growth used this approach.

--  C. David Stilletto

1967 - SOA - New-Company Problems, Society of Actuaries - 38p

  • The vanishing-premium concept has been with us since the beginning of the century.
  • I've seen illustrations of policies in companies that were formed about that time and had things that we sometimes call charter policies, and coupon policies, for example.
  • One company I know routinely sold a coupon policy, 20-pay, with the coupons cancelled, which made it a 14-pay.
    • That's a vanishing premium.
  • This was brought out, I think, in 1914, so it's not a new concept, but I'd like to point out one other real problem, and that's that most of these illustrations are not made up in the home office--they're produced on laptops in the field.
  • Regardless of how disciplined the scale is that you put into the agent's laptop, if he can change it or, as in one instance that I have seen, if he is trying to show a loan-supported policy and doesn't recognize that with a variable loan rate when the interest rate changes on the loan, it's also going to change on the dividends, somebody is in trouble. As a matter of fact, somebody was in trouble and they lost a lawsuit on that.

--  W. Keith Sloan

1995 - SOA - Practical Illustrations and Nonforfeiture Values, Society of Actuaries - 14p