Financial Services

Life protecting more than ever before

Don and Vickie were excited about the upcoming birth of their second child, but Vickie’s colon cancer diagnosis during the pregnancy threw their lives into chaos. The couple decided that treatment could wait until their baby girl was born.

They never got that chance. Just 17 days after giving birth, Vickie died at the age of 36. The couple had recognized the importance of life insurance and made certain their family was protected with a life insurance policy through State Farm®. As a result Don was able to return to work full-time and set up college funds for his daughters.

State Farm made it a mission to educate more people about the critical need for life insurance protection during Life Insurance Awareness Month in September

More people like Don find themselves protected from financial ruin thanks to State Farm agents, who wrote more than 821,000 life applications during 2006, making it the highest life production year since 2002.

The Life Insurance and Market Research Association (LIMRA International), a cooperative research group, estimates one-third of Americans have no life insurance coverage.  

“Talk to any agent and they’ll tell you about the first time they delivered a death benefit check to a family,” said Susan Waring, Executive Vice President, Chief Administrative Officer-Life and Vice President-Health. “It’s a powerful experience.”

“During a time when there is such sadness, the delivery of that check brings a glimmer of hope,” Waring said. “As a family comes to grips about life without their loved one, immediate financial worries won’t be as much of a concern.”

Agents are having more conversations with customers about life insurance – increasing applications written by 5 percent over 2005. 

State Farm made it a mission to educate more people about the critical need for life insurance protection during Life Insurance Awareness Month in September.  As the sponsor of the third annual Embrace Life® Awards program, State Farm asked people (including agents and employees) to nominate women who persevered following the untimely deaths of their spouses.

Five such women were honored at a gala luncheon in New York City on September 15. Their stories were featured online and in national and regional media. 

“We hope this program encourages customers and non-customers to set aside time with their families to have the ‘difficult conversations’ about life insurance,” said Waring.

Health production dips slightly

Health application production declined slightly in 2006. Although the 2 percent dip from 2005 occurred across all lines, more people purchased disability income, medicare supplement and long-term care insurance products.

The State Farm Memory Wall Tour, in collaboration with The Leeza Gibbons Memory Foundation, aimed to build awareness about long-term care insurance. Throughout 2006, the tour traveled to 12 cities to honor, educate and support the caregivers and sufferers of memory disorders. 

Information about emotional and financial support for caregivers and those in need was available at each event. This included materials explaining how families can plan today to avoid adding financial stress should there be a need for long-term care in the future.  

“Our health products are important planning tools for families who face uncertain futures,” said Waring. “Just as we’re doing in Life, we will be talking to more people about health insurance in 2007 and at Corporate, we will be figuring out how we help agents market these products more effectively.”

Faster is better for Bank loan customers

In today’s earphone-wearing, multi-tasking, latte-dependent world, the phrase “faster is better” isn’t a wish – it’s a demand.

With an eye toward this ongoing consumer need for speed, State Farm Bank® made radical improvements to its vehicle loan process in 2006. On average, customers can now get a loan approval within six minutes.

As a result, 137,000 vehicle loans were closed in 2006, up from 129,000 loans in 2005.

“If we lead the nation in auto insurance, we have a tremendous opportunity to not just insure those cars, but finance them too.”
Stan Ommen – Bank Chief Executive Officer

“These were changes we had to make if we wanted to stay competitive in the vehicle loan market,” said Bank CEO Stan Ommen.  “If we lead the nation in auto insurance, we have a tremendous opportunity to not just insure those cars, but finance them too. And if we want to take advantage of our in-book strategy, we have to make the process easy for customers and agents.”

An upturn in vehicle loan production wasn’t the only good news in 2006. State Farm Bank also added 283,000 new deposit accounts, outpacing previous year totals.

Currently ranked in the top 1% of all U.S. banks based on total asset size, State Farm Bank is anticipating positive results in 2007. Its primary goal is to grow by meeting the needs of policyholders and finding more ways to complement State Farm’s insurance business.  

“State Farm® insured just over 4 million new cars in 2006. The Bank wants to significantly increase its loans on these autos, reports newly named President Mike Smith. “To do so, we need to continue to simplify the loan process. A new application process will help but just as important, we need to encourage agents to incorporate a marketing routine that integrates loan and deposit products into their insurance conversations with clients.”

Plugging the holes

Retirement plans said to be like Swiss cheese

Like a piece of Swiss cheese, American retirement expectations are full of holes according to the 2006 Retirement Confidence Survey. Most people do not have realistic expectations of how much money they will need in retirement and many have not set aside the appropriate amount of money to live comfortably. State Farm® is filling in the gaps with a variety of securities products.

In only its fifth year of operation, State Farm’s retail mutual funds celebrated a growth milestone by ending 2006 with nearly $3.9 billion in assets under management – a gain of more than $1 billion in assets in 2006 alone.

“There is an enormous opportunity to help our customers realize their financial dreams,” said Phillip Hawkins, Vice President – Securities Products. “The customers we serve are often overlooked by other financial services companies. But State Farm agents are positioned to meet a broad range of needs and can help customers invest in manageable amounts that have the potential to grow into a healthy nest egg over time.” 

When it comes to helping them understand the complexities of their financial lives, savvy companies know that customers want a collaborative partner. “They want someone they already know and have confidence in,” said Hawkins. “State Farm agents already have strong relationships with their customers, and this gives agents an edge in helping customers understand their financial lives and plan for their future.”

State Farm sees agent training and simplification of processes as critical for continued success. Agency field leadership is critical in helping agents achieve that success. Field leaders attended classes in 2006 centered on increasing their ability to coach and help agents build product knowledge. Training in 2007 will focus on serving customers planning for retirement.

"There is an enormous opportunity to help our customers realize their financial dreams."
Philip Hawkins - Vice President Securities Products

State Farm invested in technology to make processes and transactions simpler for agents and customers in 2006. Electronic delivery of customer quarterly statements to agents increased convenience, and enhancements to electronic applications help reduce the potential for errors. These enhancements provide greater efficiency and reduce shareholder expenses when doing business with State Farm. 

“Continued simplification of mutual fund processes remains a focus for Securities Products,” Hawkins states. “Our commitment is to offer competitive and reasonably priced products for our current and future customers.” 

Investment return and principal value will fluctuate and fund shares, when redeemed, may be worth more or less than their original cost.

Many products help a wide variety of people

Securities Products offers a variety of mutual fund products for State Farm® customers. The intent is to help agents leverage their existing customer relationships and educate customers on how to save, increase their wealth, and live a comfortable and secure life upon retirement.

Products State Farm agents focus on are:

Personal retirement accounts – these products meet the needs of many State Farm customers. Personal retirement accounts provide an opportunity for asset retention, as well as providing above average growth in assets per account. Customers who make regular contributions to their accounts through the Automatic Investment Plan (AIP) are a fit for this product. AIP benefits customers by allowing them to make regular contributions over the long term, which helps address fluctuations in the market. 

Personal retirement accounts provide an opportunity for asset retention

Small business retirement plans – the small business arena provides many opportunities – particularly in the 401(k) market.  Agents that help small business owners set up 401(k) accounts for their employees have an opportunity to discuss other products with those employees.

An automatic investment plan does not assure a profit and does not protect against loss in declining markets. An automatic investment plan involves continuous investment in securities regardless of fluctuating prices. You should consider your financial ability to continue purchases through periods of high or low price levels.