Younger Consumers Favor Income Stream Life Insurance Benefits

Forty percent of consumers under 40 prefer a monthly life insurance income benefit while about 30% favor a lump-sum payment, according to a LIMRA survey. Scott Kallenbach of LIMRA noted that life insurance is most often paid as a lump sum. But the study reveals that products offering monthly income would have strong appeal among younger and middle class consumers. Offering these products could be a way to reach these consumers more effectively. Sixty-one percent of all consumers own life insurance to replace lost income, and 44% own life insurance to supplement retirement income. When consumers were asked about a policy that could change with their needs, 70% expressed interest with one third being very or extremely interested in these flexible products.

Study: Professional retirement advice could benefit women

Saving for retirement is a top financial concern of women and men, but taking action appears more difficult for women, according to research by the LIMRA Secure Retirement Institute. Six in 10 women say they need professional help to create and evaluate savings plans, the study shows. PlanSponsor.com (3/18), Employee Benefit News (3/19)

Workers See a Growing Need for Voluntary Benefits

Sixty-three percent of workers see a growing need for voluntary benefits in 2014. Also, 48% of employees say they are more knowledgeable about voluntary benefits than they were last year, according to the 2014 Aflac WorkForces Report. Eighty-eight percent of agree, at least somewhat, that they consider voluntary insurance benefits to be a part of a comprehensive benefits program, With plans such as accident, critical illness and hospital confinement, employees view voluntary benefits as a way to fill in coverage gaps.

The demand for voluntary plans is on the rise thanks to increasing health care costs and an evolving health benefit landscape. According to a LIMRA survey, voluntary health product sales increased 13% in 2013.

The Aflac study notes that many workers would not be prepared to cope with a financial crisis in a health emergency. For example, 69% agree, at least somewhat, that they regularly underestimate the total costs of an illness or injury. Sixty-six percent say they wouldn’t be able to adjust to the large financial costs associated with a serious injury or illness.

Fifty-three percent say their benefit costs a higher than they were last year; 42% are not prepared to pay the out-of-pocket expenses for an unexpected serious illness or accident; and 24% say that high medical costs have hurt their credit scores or they’ve been contacted by collection agencies about medical bills.

More employers are offering voluntary benefits. Thirty-five percent of employers offered voluntary insurance to employees in 2014, a 9% increase from 2012. Employees who are enrolled in voluntary insurance are 18% more likely to be satisfied with their jobs and 38% more likely to be satisfied with their benefit package. They are 19% less likely to look for another job in the next 12 months. They are also 64% more likely to feel fully protected by their current insurance coverage

Majority of Workers Feel Responsible To Save for Their Retirement

Seventy-eight percent of workers say it’s their responsibility to save for their retirement. Also, 84% of defined contribution plan participants say it’s their responsibility to save for their retirement, according to a LIMRA survey. The survey also found the following:

  • 77% say that all workers should have access to a retirement savings plan at work and that these plans offer an effective way to save for retirement.
  • 60% say that those who save in a defined contribution retirement plan are likely to achieve a secure retirement.
  • 85% of defined contribution plan participants say these plans provide an effective way to save for retirement. Thirty percent say that their defined contribution plan savings will represent the primary source of retirement income.
  • 50%  of defined contribution plan participants and nearly 40% of plan participants under 45 say that savings in their defined contribution plans will be their primary source of retirement income.
  • 45% of workers who participate in their defined contribution retirement plan are more confident that they will realize their chosen retirement lifestyle compared to 32% of non-participating workers.

Employers Say That the ACA Has Affected Their Retirement Plans

Forty-five percent of employers expect the Affordable Care Act (ACA) to change their retirement benefit strategy and spending, and 43% say it already has. Fifty-five percent of those who say the ACA has changed their strategy are spending less on retirement benefits and shifting costs to employees while 42% are spending less time evaluating their retirement benefits. Alison Salka of LIMRA said, “Employers have limited resources to manage their employees’ comprehensive benefits package. The added complexity and costs of health care are definitely taking a toll on employers’ ability to manage their retirement savings plans. As a result, employers are looking for more support from the industry to help them provide a comprehensive retirement savings program for their employees.” Cost-shifting is more prevalent among employers that offer a defined benefit plan and defined contribution plan (67% versus 48%). Sixty-three percent of those how expect the ACA to affect their retirement plan strategies and spending say it will mean less money spent on retirement plans. For more information, visitwww.secureretirementinstitute.com.

Health Reform Not Expected to Dampen the Need for Advisors

Ninety-four percent of small businesses say their need for an outside advisor will increase or stay the same in the next two years, according to a recent LIMRA study. “While the new public and private exchanges will eliminate the need for many of the administrative functions that advisors perform, such as requests for proposals, helping both employers and employees understand the options available within and outside the exchanges will be a new way for advisors to grow their business,” said Mary Boyce of LIMRA.

Companies that are most likely to see a need for an advisor in the next two years are those with 10 to 24 employees, those that are still establishing themselves, and those that are looking to expand. According to the U.S. Census Bureau, 98% of businesses in the U.S. have fewer than 100 employees, accounting for approximately 35% of the U.S. workforce. Yet only half use an advisor for business or personal needs regardless of whether they offer benefits to employees. Mary Boyce of LIMRA said, “This presents a huge opportunity for advisors who are able to demonstrate their value.”

Half of the employers surveyed who use an advisor said they were satisfied with their advisor. But there is room for improvement, as 40% of small businesses are neutral with regards to satisfaction with their advisor. Cost was the top reason small business employers gave for eliminating their advisor. Employers rely on their advisors for a variety of services. The most important include reviewing their plans to make sure that the rates are competitive and services are current and reviewing the renewal rate adjustment to ensure that it is competitive. For more information, visit limra.com.

Life Claimants Report High Satisfaction

Ninety-five percent of life insurance beneficiaries are satisfied with their claims experience, according to a LIMRA study. But the level of satisfaction matters a great deal. An extremely satisfied claimant is nearly four times as likely as is a merely satisfied claimant to be very interested in doing business with the insuring company. The extremely claimant is also more than three times as likely to recommend the carrier, and more than twice as likely to feel strongly about the critical role life insurance plays following the death of a loved one.

Top-performing companies demonstrated better responsiveness and ease of the claims experience. Nearly three in four beneficiaries said the life insurance claims process was easier and less stressful than their other administrative tasks. They also gave higher ratings to the top performers for the care and compassion, and the knowledge and competence exhibited by the professional they worked with most closely.

Just over a quarter of beneficiaries work with an agent, and a disproportionately high percentage express gratitude and admiration for their agent. Often referring to their agent and office staff by name, beneficiaries commented on how beautifully everything was handled following their loved one’s death.

Many beneficiaries said how quickly their claims were paid. Yet, the median turnaround time for top performers is 19 days, which is exactly the same turnaround time for all carriers combined, suggesting that acceptable turnaround times for life insurance claims are often based on the beneficiaries’ perceptions.

While many aspects of the claims process are transactional, companies and agents can really make a difference in service. Insurers can offer additional support to overwhelmed beneficiaries, such as grief counseling, coordination of coverage, and legal services. Companies can train their distribution force to play a more personal and visible role before, during, and after the claim.

The study underscores the fact that processing a life insurance claim offers the greatest opportunity to make a lasting impression on an insured’s immediate family as well as broader circles of family and friends. For more information, visit www.limra.com.

Individual Life Insurance Premiums Increase

New annualized premium for individual life insurance grew 7% in the first quarter of 2013, with every major product line experiencing positive premium growth, according to a LIMRA survey. Total individual policy count had been increasing slightly over the last two years, but fell 5% in the first quarter. All product lines except term experienced declines in policy count.

Universal life (UL) premium grew 8% in the first quarter, mostly because of strong indexed UL sales. IUL premium increased 23% compared to the first quarter last year, which is the 16th consecutive quarter of growth. UL premium represents 40% of the total individual life insurance market.

Universal life was the biggest driver of growth in the first quarter of 2013. “IUL offers upside potential without the worry of market-related loss, which continues to appeal to today’s buyers,” said Ashley Durham, senior analyst, LIMRA Product Research. UL policy count dropped 18% in the quarter. LIMRA attributes much of the decline to companies discontinuing their term-UL products.

Lifetime guaranteed (LTG) UL premium increased 9% through first quarter 2013. Companies cited improved competitive positions, fire sales, and the ability to keep cost increases to a minimum. LTG now represents 35% of UL premium, down from a high of 53% in 2009. It still represents the largest share of new UL premium.

Whole life sales remained strong in the first quarter of 2013. Premium increased 7% in the first quarter, which is the 15th consecutive quarter of positive growth. WL policy count declined 5% compared to the first quarter of last year. WL market share was 33% in the first three months of 2013.

Term premium grew 3% and policy count grew 1% in the first quarter. More than a third of term writers reported positive growth. Variable universal life (VUL) premium grew 10% in the first quarter, mainly due to sales of small corporate-owned life insurance and private placement. VUL policy count dropped 5% in the first quarter. VUL policy count hasn’t increased for 34 consecutive quarters. For more information, visit www.limra.com.

Life Combo Products See Double-Digit Growth

GraphUpMore than 86,000 life combination policies were sold in 2012, an increase of 19% over  2011, according to a LIMRA report. Consumers under 59 held more than half of in-force polices in 2012. Sixty percent of life combination policies are insuring women. Life combination products accounted for 11% of new premium for individual life insurance.

Sales of life combination products continue to grow at a remarkable rate as new carriers enter the market and existing players refine  products to remain competitive, said Catherine Ho, LIMRA product actuary. “This segment of the market weathered the storm pretty well during the recession when individual life sales declined significantly. Now that sales growth has returned for individual life, we anticipate life combination products to continue their steady growth,” she said.

All life combination product lines experienced growth in 2012, with whole life (WL) and universal life (UL) combination premium each growing 10% and variable combination premium growing 3%. Whole life combination policy count rose 23%; UL policy count rose 19%; and variable policy count rose 4%.All but one distribution channel experienced double-digit growth in 2012 (independent RIA). Banks and savings institutions posted the largest premium growth, rising 21%; affiliated agents recorded 30% growth in policy count.

Linked benefit products dropped 1% in policy count and held only 24% of the market in 2012. These products are mostly single premium and are packaged all-in-one. Acceleration policies grew 27%, capturing 76% of the market share. These products provide long-term care benefits up to the amount of the life death benefit. For more information, visit www.limra.com.

Sales Take Off for Life Policies With LTC Benefits

The State Life Insurance Company, a OneAmerica company, says 2012 was its best ever year for sales of “Asset-Care,” a life insurance product with long-term care benefits. State Life achieved growth of 28% over its previous record set in 2011. State Life sold more policies in 2012 than it did in any other year.  Chris Coudret, executive vice president of State Life said, “More and more consumers are looking to guarantee their long-term care protection and are turning to asset-based long-term care products. With these ‘hybrid’ or ‘combo’ products, consumers can access their life insurance death benefit income tax-free to pay for qualifying expenses. Coudret says that the popularity of Asset-Care is also being driven by a patented joint care option, in which a single policy provides long-term care funding for a couple.

According to LIMRA, half of the top 20 companies that offered individual health-based long-term care insurance in 2005 have exited the market. Also, a majority of companies have had to request rate increases for stand-alone LTC insurance. For more information, visit www.oneamerica.com.

Last Updated 12/01/2021

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