Are We Selling the Right Life Insurance Products? by Steve Shorrock, FLMI, CLTC, ChFC
FACTS:
• 9.3 million Life
Insurance policies were either lapsed or surrendered in 2008. This activity
represents 7.2% of all life policies.
• 88% of all Universal
Life and 83% of all term policies never pay a death claim. For seniors age 65+, only 25% of all UL
policies are held long enough for a death benefit to be paid.
• $11.7 Billion of Death
Benefits were sold to a third party investor as a life settlement for unwanted
or unneeded life policies in 2008.
• The life expectancy of a
70-year-old male in good health is 18.5 years and 20.5 years for a healthy
70-year-old female.
• US population continues
to age as individuals over age 65 will more than double and those 85 and over
will more than triple by mid century.
• 1 out of 2 seniors will
require some form of long term care in their lifetime.
• Asset portfolios and
almost all asset classes have declined in value a result of the current global
recession. The value of your life
insurance policy has not been impacted due to the product guaranteed components
and strong state regulation.
FINDINGS:
As
we understand the implications of the above statistics, one must question if we
are presenting and ultimately selling the right policies to our clients. These
statistics are alarming and should be a concern to all of us.
The
good news is that some new product designs are beginning to understand these
market trends and are bringing innovation to the marketplace. One of these new
and innovative designs is the Benefits for Living concept being marketed by
LifeVentures Producer Group.
The Benefits for Living concept pays a benefit when the client needs it most,
through the death benefit and/or significant living benefits through the
acceleration of the death benefit triggered by a chronic illness. It is a policy that is for the lifetime
of the insured and provides an additional benefit as policyholder’s tend to
value living benefits higher than policies with a death benefit only.
Benefits for Living versus Hybrid Products:
Unlike hybrid type products
that are in the marketplace, where a long-term care policy and a universal
policy are wrapped together,
Benefits for Living is a life policy only. Its design concept combines a competitive death benefit and provides for the acceleration of the
death benefit for a chronic illness all in one product. The below chart lays
out the major differences between hybrid products and our design:
