Patrick Pegram, also known as “Skipper”, is a 30 year life insurance industry veteran and has to be one of the most experience mortgage protection experts out there.
There’s a lot of hype around the mortgage protection life insurance market and Patrick gives us the truth on what you can actually expect and how to best work this market.
2:35 MetLife and Century 21 partnership in the mid-80’s
14:50 Sell to their immediate need, don’t do a full needs analysis.
27:00 Current mortgage protection data and lead discussion
35:40 Data examples – Statistically why NAA (and other MP outfits) can’t realistically work. NAA is in the lead business, not the life insurance business.
43:05 Cost per lead and what seasoned mortgage protection agents are doing.
50:15 Why it’s difficult to sell mortgage protection over the phone.
53:00 Many mortgage protection sales are final expense products. Top agent that does $500k+ does a lot of final expense.
55:30 Live search of mortgages in 1 state and how many leads can actually be generated. (great perspective)
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Jeff Root: All right, let’s get to it. Today we have Patrick Pegram, from Legacy Insurance Group. Welcome to the podcast, Patrick.
Patrick Pegram: Thank you for having me, Jeff. Glad to be here.
Jeff Root: Yup, great. Why don’t we start with some background about yourself. You’ve been in the industry for, what, 20-plus years, right?
Patrick Pegram: Yeah, actually, this is my 30th year in the business. When you start measuring in decades versus every other year, it starts to get real real quick, but actually I started young in the insurance business, only a couple years out of college, so I then joined Metropolitan Life, a career agency, as you all know, every familiar with that name. A couple of things happened there right when I had joined. They actually had bought a real estate company we all know, Century 21, and they had envisioned a insurance agent in every Century 21 office. At the time, they had a big property and [inaudible 00:03:03] division at Metropolitan, and they wanted to sell homeowners insurance, because in the mid-’80’s also with [inaudible 00:03:11] came a deregulation where brokers, banks, could start having an insurance license. Their vision was to basically have a split commission with an agent to the broker, so we could sell homeowners policies and eventually, again, the mortgage protection, as it was termed. They called it mortgage insurance back then.
It worked out really well. They had a very good system of training life guys as P&C guys, so we were extremely well trained on the P&C side, and did pretty well. Myself, I was in the Detroit/Toledo, Ohio, Detroit, Michigan area, in between the two cities, and I had three real estate offices, oh, within probably a five-mile radius, maybe six, of each other. It was a nice area south of Detroit, and as a young man, I was still in my early, mid-20’s, and it gave me an opportunity to get a high volume of insurance. Yes, I had to split a whopping 50% life commission with a broker at 70/30, and the same thing with P&C, but it in turn gave us a lot of volume at the time of business. We walk around today of, “How are we going to get leads, how are we going to get leads?” Well, each office generated about 50 to 70 closings a month, and I had three of them, so I had 200 new prospects a month to sell homeowners and life insurance to. That kept me extremely busy, obviously.
I was very typical, six days a week, typically worked on Saturdays because that’s when real estate sold a lot, and on Sundays. I usually took a Monday off, and lived, breathed, and did everything with Century 21 Insurance Services, as they called themselves, which was a division of MetLife. Had a wonderful career there, I was the number one producing agent in the company, and also at the top five Metropolitan nationally for life insurance. The whole system was, I was a very organized individual, and I had a way of basically endearing myself to the broker, because it still had to build on relationship building. An agent couldn’t just get thrown in the office and they had to do business with you. You still had to woo your way in, because what you were selling is not how they really make money.
Jeff Root: Right.
Patrick Pegram: They make money on that nice one percent, two percent they’re making on the closing of a $100,000 house. Their 30% on a $350 premium at 20% commission, being the whopping-
Jeff Root: 60 bucks, yeah.
Patrick Pegram: -nothing, so you can’t jeopardize … You had to find your way to endear them, and one of the ways back then was Metropolitan came up with a good way of doing a homeowners policy with instant issue, where I could provide a death page for the mortgage company to accept and close. That wasn’t really available a lot back then, instant issue. It was a lot of handwritten binders and stuff. This was an instant issue setup, which was unique. Now it’s commonplace, today, but my laptop was an old 200 … What’s it called, a 286 from IBM. The battery was the size of a car battery. It had a six-inch screen. This was big technology back then, and we were able to do a lot of policy issues right inside the real estate office. I had a routine where I was just bouncing from one office to the other, making sure they got their closings, and we basically did about one out of every three homes closed, or sales done, in that office. I was able to bring on board with Metropolitan, which is a huge percentage, roughly about 60, 70 new homeowners policies per month.
Jeff Root: Wow.
Patrick Pegram: Mind you, an agent is usually going to do simple, small office that’s your mom-and-pop agency, like a State Farm, they’re lucky to do that many in a month, of themselves, and for a big office, most of the time it’s between 20 and 30 of them. Here I am, just one little guy, bouncing between three real estate offices, doing about 70 a month. I was really cranking it out, and basically that’s all I did, is to get in the door, meet them, get them a policy, put a little bug in their ear about mortgage protection, covering themselves, and basically let the mortgage close. Let everybody make their money, they gave me the relationship, and then I just basically worked the book of business afterwards, and would see these folks at night a lot of times. Obviously, most of them were just home buyers in their 20’s, 30’s, and 40’s, so you had to see them at night. It was really all about covering their mortgage at that time.
Now, that was an easy sale because I’ve already established a relationship with them, and they let me in, and I was basically the first one to talk to them about it. Over time, I’ve learned that that is the key to mortgage protection. The first person to talk to them about it usually wins. Out of all those homeowners policies I sold, at least 75% of them bought mortgage protection from me.
Jeff Root: Wow.
Patrick Pegram: That means I was first in the door, and they all bought. Now, back then, mortgage protection is like what [inaudible 00:09:13] fully underwritten, decreasing term, and I think the biggest term level was five-year term, on a level based. Most of the time, it was a decreasing term program, or whole life with a five-year term rider. You’re looking at that type of program that you were selling, and it was very easy to sell. Now, mind you, mortgages where I was at were a lot of first and second time home buyers back in the day, where you had a starter home of $50,000, so I was writing a lot of small policies; but then I’d talk to the people, and I ended up converting a lot of those policies a few years later, when I was still at MetLife, into UL’s because they needed additional coverage; or I’d talk people into buying a UL right off the bat. Again, $100 a month was always the simple asked. It depends how young they were. I had a simple rule, I had a 90/10 rule. If they were in their 20’s or 30’s, 10% had to be maybe permanent, and 90% had to be term insurance, just because of affordability and to make sure they had the coverage.
I learned that early in my career, that it’s more important to have the coverage they need at a young age than what they want. Everybody wants to save for retirement at 20 bucks … I mean, at age 25, rather. That person could put 40 years into a UL at 12% interest rate, or 10% at the time that they were getting, and those illustrations look fantastic. Obviously, they didn’t stick around that long; obviously, the rates went down to four percent 20 years later, but that’s what you did back in the ’80’s. I never did, I always did it at a smaller percentage rate to illustrate, but the main point is it was easy to convince somebody to put 100 bucks away to save for retirement back then. They would do that at the … probably at detriment of covering themselves for what they really needed. I learned that early in my career, to make sure somebody was covered properly, rather than selling a high-priced, high-commission product like UL, making sure they at least had a five-year term policy that covered their basic needs of replacing income.
Four months into my career, I had somebody buy a policy from me. They loved the idea of I used to do an old story called the “hundred man story,” and I’d sell somebody on the idea of putting $100 a month away. They loved it, went over their budget. They really could only afford 60 bucks at the time, but that only bought the guy about $70,000 worth of insurance, and he was a young man with three kids and the wife was at home. Realistically, $60 could buy him $400,000 of coverage. Now, as a new trainee, you have your mana