Major Trends Are Affecting the Life Insurance and Annuity Markets

RetiredCoupleMajor trends that are affecting the life insurance and annuity markets are the desire for financial security with flexibility, an evolving market for combination long-term care (LTC) products, risk managed strategies, and tax deferrals, according to a study by Lincoln Financial.

Mark Konen, president of Lincoln Financial Group’s Insurance and Retirement Solutions business said, “With today’s economic climate and our society’s evolving demographics, we see continued interest in financial solutions that offer a level of predictability — whether that’s in the form of a death benefit, a living benefit, asset protection, or the elimination of the use it or lose it risk of some products. As the industry works to deliver on these consumer demands, we believe 2013 is primed to see the development of many unique solutions while also seeing some once-popular products and features re-emerge.”

The following are some trends to expect in 2013:

Non-Traditional Life Insurance Solutions

Three in 10 American households are uninsured and half say they are underinsured. Consumers have various reasons for not purchasing policies, such as competing financial obligations, perceptions about life insurance costs, and a lack of understanding about the need for the coverage. In addition, the low interest rate climate has made many forms of insurance more expensive, making these products unattainable for the average American. To bridge this gap, expect to see innovative life insurance alternatives that balance financial planning needs, flexible coverage, and cost efficiencies with today’s economic climate.

Variable Universal Life Insurance

As a life insurance product of choice in the 1990s, variable universal life (VUL) is primed for a comeback. By balancing death benefits with market-driven cash value potential, VUL products can help consumers protect loved ones while providing a potential source of supplemental income to keep pace with life’s changes. This combination of features in a single solution can be very compelling during these uncertain times.

Life Combination Products

Life combination products continue to rise in popularity as alternatives to traditional standalone LTC solutions. Expect to see growing interest in linked-benefit products with LTC riders offering premiums that can be paid over several years. Linked-benefit products with LTC riders appeal to older clients with substantial savings and the ability to pay a lump sum. The option to spread premiums over time allows younger clients to accumulate assets while protecting against the financial effects of a long-term care event in their pre-retirement years. As the combination market evolves, also expect to see increasing demand for life insurance solutions with accelerated benefit riders (ABR). Linked-benefit products with LTC riders are for clients who are concerned primarily with long-term care. ABRs also serve a growing demand from clients who have a primary need for death benefit protection, but are also concerned about how a permanent chronic or terminal illness could affect their financial well-being.


Americans face the strong possibility of outliving their retirement assets, which will drive the popularity of guaranteed living benefit (GLB) riders with annuities. GLBs provide a minimum guaranteed lifetime income stream that doesn’t require clients to give up control of their assets. Providers will put more emphasis on risk management strategies that reduce equity risk during volatile markets and create more consistent returns. hese risk management strategies may increase the likelihood of growth in retirement income while enabling companies to continue providing compelling GLBs. Also expect to see a renewed emphasis on the tax-deferral aspect of annuities due to recent tax changes, particularly for the affluent. Because annuity assets accumulate tax-deferred, there are no tax consequences until clients take money from their contract, often at lower tax rates occurring during retirement, making this annuity option more attractive to clients in 2013. For more information, visit

Last Updated 06/29/2022

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