We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!

wscdsdc

media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us

855.ask.wink

Close [x]
pattern

Industry News

Categories

  • Industry Articles (16,526)
  • Industry Conferences (3)
  • Industry Job Openings (38)
  • Negative Media (138)
  • Positive Media (73)
  • Sheryl's Articles (617)
  • Sheryl's Blogs (175)
  • Wink's Articles (241)
  • Wink's Blogs (255)
  • Wink's Press Releases (93)
  • Blog Archives

  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • May 2008
  • February 2008
  • August 2006
  • Eight Predictions For Life Insurance

    February 23, 2010 by Timothy Pfeifer

    Published 2/15/2010 

    Economic, demographic and regulatory forces have traditionally shaped the direction of life insurance offerings. This will continue in at least eight areas. First, let’s consider what has already happened:

    –The business saw the rise, fall, and rise again of term wars in the last decade, in an environment of improving mortality and overly-conservative reserve standards.

    –Survivorship products enjoyed solid success until the fate of estate taxes became a guessing game.

    –A rising equities market supported a steady rise in variable life sales, but a plummeting market with low interest rates torpedoed this since VLs couldn’t deliver the guarantees of their variable annuity cousins. 

    –A surge of interest in indexed life insurance followed, with its theme of index participation without downside risk.

    –A lower interest rate environment has led to a transformation of universal life, from a tax-efficient accumulation sale to an extended death benefit guarantee sale, where lapses may be a good thing for the carrier and where the typical customer is over 55 (and even 65) years old.

    –In the same low interest environment, whole life has held its own, and even picked up market share in recent years.

    Meanwhile, regulatory activities have steered the life insurance industry towards more analyses, greater disclosure, and a strong focus on suitability.

    Technology has enabled insurers to know more about their business than ever. Those capabilities will be needed as more sophisticated financial analyses will be required going forward.

    The tax treatment of life insurance has come under almost constant threat, but the fundamental tax rules have withstood these threats. Most tax activity has been in clarifying treatment of existing elements.

    Distribution of life insurance is still dominated by captive and independent producer specialists. Banks, wirehouses and direct marketers have picked up some volume, but are still minor players. 

    Sales compensation is still heavily heaped, maybe increasingly so in the independent agent space.

    Underwriting is becoming more sophisticated and more reliant on technology, with heavy focus on large policies and risk assessment innovation for older applicants (e.g., prescription databases and cognitive testing).

    What is on the doorstep now? Here are eight thoughts.

    1)           Interest rates. It’s hard to envision a large rise in interest rates in the next few years, though modest increases are likely. Subdued rates will pressure fixed accumulation and UL secondary guarantee (ULSG) products, but have less impact on indexed UL. A meaningful, steady upward rise, however, would be the biggest positive boost to life sales in the next few years. 

    2)           Estate taxes. Clarity around estate tax rules will re-engage survivorship sales.

    3)           Equities markets. The markets will generally move up, but with regular periods of choppiness. This favors indexed UL, but challenges VL sales.

    4)           Mortality. Improvements will continue, but at a slower pace than in the past. There is simply a limit to how quickly mortality can be underwritten out of life insurance. Reinsurers will play a vital role in keeping small and mid-sized carriers in the game.

    5)           Regulation. Regulatory activity will tighten requirements around sales practices and disclosure. Agent training and communication will be critical. Efforts to mandate more principle-based approaches to insurance liabilities will help some products (e.g., term) but have smaller or negative effects on others (ULSG). Core tax advantages of life insurance will remain.

    6)           Target markets. Boomers have money and have reasons to believe in the benefits of life insurance. Accordingly, carriers must develop messages and processes that appeal to the older age market. The growth markets for life insurance are female, Hispanic, Asian, and African-American. Distributors having affinity relationships with these growth markets will need to be developed.

    7)           Compensation. Commissions will be less heaped, not level, but more levelized. This seismic boost to life products needs to occur in order to move products to the next level. Strong leverage exists in product pricing if sales compensation is levelized—products can be cheaper, more attractive, and reps can sell more and may even increase their overall compensation.

    8)           Life settlements. Continued emergence here will require comparable offerings by life insurers and/or joint ventures. Disclosure of settlement options to policyholders will be broadly required. 

    Tighter profit margins, smaller product portfolios, and greater in-force management all lie ahead for insurers and producers. One thing is definite: The next 10 years will be very interesting and challenging for those in the life insurance business.

    Timothy Pfeifer, FSA, MAAA, is president of Pfeifer Advisory, LLC, Libertyville, Ill. His email address is tpfeifer@pfeiferadvisory.com.

    Originally Posted at National Underwriter on February 15, 2010 by Timothy Pfeifer.

    Categories: Industry Articles
    currency