If TD Life Insurance Co. could be the Amazon.ca of Canadian life insurance sales, that would suit its president.

Like the online book retailer, Sean Kilburn says the company’s strategy is to contact middle- to lower-income Canadians via the Internet, telephone and direct mail and to make the sale on simple life insurance products with which clients are familiar.

“We tend to focus on the under-served mass market,” says Kilburn. “These are simple, fast, easy sales processes with products that are easy to understand and buy.”

So far, it’s a strategy that’s working for Toronto-based TD Life. Although it’s not something the TD Bank Financial Group subsidiary shouts about, TD Life owns the largest book of critical illness insurance in the country.

“The product has more appeal here than in the U.S. so it wouldn’t be a stretch to say it’s the largest in North America,” Kilburn says.

TD Life sold 200,000 CI policies in 2006, according to Kilburn. This represents 23% of the total policies sold through group and individual channels in the year, according to data from the Canadian Life and Health Insurance Association.

Although this is the niche in which the company has made its biggest impact in the overall life insurance marketplace, Kilburn says, it was never the firm’s strategy to go after the CI market specifically.

“We didn’t approach it like that,” Kilburn says. “We found a gap between what was offered among employer benefits programs and among life insurance and disability insurance. In these types of plans, they rarely cover critical illness. But you talk to Canadians, which is what our research shows, and you’ll find that about 50% of Canadians don’t have a financial plan that deals with the prospect of a family member living through a critical illness.”

Yet, Canadians understand how cancer, heart attacks and strokes can affect lives because 90% of them have seen relatives, or close family members, live through one of these major life events, he adds.

The sales process usually starts in the branches as a loan protection on mortgages or other lines of credit.

Overall, TD Life underwrites up to 90,000 policies a year, while the Big Three traditional manufacturers approach 150,000 each, says Kilburn. “So, we’re sizeable in terms of the number of the policies,” he says. He concedes that policy sizes tend to be quite a bit smaller.

About 75% of sales in all product lines, including CI, disability, job-loss insurance and life insurance, are credit-protection products. The other 25% of sales are standalone insurance products that include other varieties of critical illness, accidental death, disability and 10-year term life insurance.

“Once we enter into an insurance relationship as TD Life group, we can look at the client’s total need and look at some of the insurance gaps that he or she may have in the insurance plan,” Kilburn says.

About 75% of sales happen in branches on the credit products, with the remaining 25% via Internet, telephone and, to some extent, direct mail. Of the direct channel, about 50% of the business arrives via Internet. The firm can easily gather most of the information it needs to underwrite basic products through this channel.

distill to essence

“If I had my ‘druthers’, we would distill the products down to their essence,” Kilburn says. “Strip off the bells and whistles that don’t get used. The phone and Web are very well suited for needs like that. I don’t see a day when we sell complex tax-advantaged insurance sales over the telephone.”

TD Life has seen double-digit growth for the past decade or more. Direct sales growth, moreover, leads the way with 20% to 25% growth, over the same long-term period. Kilburn sees no reason why TD Life can’t maintain that pace.

A Forrester Research Inc. report shows that although advisor-based life insurance sales are still by far the dominant channel, accounting for 59% of sales, 20% of Canadians applying for life insurance do so over the phone, 16% by mail and another 5% online. The Massachusetts-based researcher’s report, published in November, is based on a 2006 survey of more than 6,000 Canadians.

The research also shows that 23% of Canadians use the Internet to research life insurance. Another 29% complete research over the phone, while 15% do so by mail. The implication is that once the technology is available to underwrite through these channels, sales will follow.

@page_break@All the major Canadian banks own life insurance subsidiaries, each of them focusing first on insuring their consumers’ credit. Each of them pursues the same middle market of underinsured Canadians, they say. RBC Life Insurance Co. , based in Mississauga, Ont., is the only one with a career sales force and a large independent distribution system through the managing general agents.

TD Life will continue to aim for that target without relationships with independent advisors, a career sales force and the MGA channels because that market is well served by other firms with both product and distribution, says Kilburn.

“The high-end of the market is well assisted by the brokerage community, but a lot of the product is tax-driven or tax-assisted sales, as well as for insurance protection,” he says.

Parent TD Bank specializes in the direct-sales strategy. TD Insurance Co., the unit under which TD Life operates, includes TD Meloche Monnex, the largest underwriter of direct auto and home insurance in Canada. TD Bank’s direct brokerage unit, TD Waterhouse Discount Brokerage, is the largest discount brokerage in North America based on its client base. The banking group does not concern itself with channel conflict.

“We are complementary to [advisors’] offering in the market place,” he says. “We’re not trying to go after wealthy Canadians, because the advisors are looking after them. We’re asking what that leaves behind for us.”

TD Life can refer clients with more complex insurance needs to financial advisors at TD Waterhouse Private Investment Advice or TD Canada Trust bank branches, according to Kilburn. Any branch or direct insurance rep will take a client through an insurance-needs analyzer.

“There’s a very clear delineation about who is best served at what level of insurance,” he says. “It gets around channel conflict. If the person has developed assets, he or she will always want to protect them with higher-end solutions.” IE