Whats Causing The Rise In Life Insurance Apps?
Life insurance applications in the U.S. increased 2% in July, compared with the same period last year, after a slight downturn in June, according to data from MIB Group, Westwood, Mass.
The Medical Information Bureau Life Index for July 2002 says U.S. life insurance activity in the 60-and-over age group remained strong with a 7.2% increase, coming on the heels of Junes 6.5% increase.
Some in the industry believe this is a continuation of an increase in life activity immediately following 9/11.
The MIB life index for October 2001 showed an almost 9% increase in activity over October 2000, and a 26% increase over September 2001.
But, says Elaine Tumicki, assistant vice president, product and distribution research, LIMRA, Windsor, Conn., its impossible to ascribe the hike in applications to a reaction to 9/11 without explicitly asking what prompted the interest.
“There have been some increases in the second quarter this year from last year, but without asking why those policies were bought, its hard to say whether the slight hike is due to 9/11 or something else,” she says.
John Detwiler, marketing director, MIB, agrees that its “a stretch to say its related to 9/11 at this point.”
It was fairly easy to see that 9/11 caused people to “think of their mortality” and look into life insurance at a higher rate than typical shortly after 9/11, he says. But “whether thats driving the current phenomenon I couldnt say.”
The increase is more likely related to the taut economy, Detwiler speculates.
“Traditional wisdom says insurance tends to do better in a down economy”, he says.
In fact, the heightened interest in life insurance due to 9/11 was almost nonexistent by November and December, according to a survey by LIMRA.
Almost 20% of people surveyed in those months said they were less willing to meet with an agent or financial advisor after 9/11 and two-thirds of respondents said they felt no differently about meeting in light of the tragic events.
Ram Gopalan, assistant vice president and director of Research Outreach, LIMRA, says in a report on consumer attitudes about life insurance after 9/11 that the event did not fundamentally change “the reality that, for the most part, consumers still have to be motivated and persuaded by insurance companies to buy coverage.”
Seventy percent of those surveyed in November and December indicated that 9/11 had no effect on whether or not they would buy life insurance. Twenty percent said they were less likely to buy life insurance after 9/11, according to the report.
“Analysis of the rationale clearly shows that a majority of them feel that they were adequately insured before September 11 and hence are not likely to buy additional life insurance,” Gopalan says.
He cites two possible explanations for the reluctance: people were too concerned or preoccupied just after 9/11 to meet with “strangers” to discuss life insurance needs, and the deterioration of the “economic situation.”
Michael Bonevento, a senior financial advisor who works in the Wall Township, N.J., office of American Express Financial Advisors, says that a year after the event, his clients who were directly affected by 9/11 “are very focused” on life insurance.
“Life insurance is paramount to my clients who have lost loved ones in 9/11 and they are introducing the topic,” he says. But “those who were somewhat removed from the event are not asking whether they are appropriately insured.”
Joe Sciabica, a certified financial planner with Guardian Life Insurance Company of America, New York, says life insurance sales have surged, but hes not sure that can be directly attributed to 9/11.
He says 9/11 “certainly has something to do with it,” but the growth can also be a product of agencies meeting aggressive recruitment goals.
“It may just come down to an overall concern about taking care of ones financial life; you can say thats attributable to 9/11,” Sciabica says. “If nothing else, it created an awareness that there are priorities people need to be aware of.”
But Barbara Fiscarel, an independent agent in Brooklyn, New York, says she “has been selling life insurance like crazy,” since 9/11.
“I think people have said This is just too scary out here, and a lot realize group insurance isnt necessarily going to be enough for them,” she says.
Fiscarel says its not surprising that life sales have increased to the extent they have, considering her agencys proximity to the attacks.
“People here were within smelling distance of it,” she says. “I do think people are aware of it because of that.”
Reproduced from National Underwriter Life & Health/Financial Services Edition, September 16, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.