In 2003, Look For Irreplaceable Types Of Life Insurance Policies

Consider: Whole life, which up until the late 1970s made up the vast majority of all life product sales, was eventually replaced by universal life. Many owners of those products were subsequently convinced that variable life offered the optimal combination of death benefit and potential for taking advantage of the burgeoning equities markets. Then, when the markets stumbled in recent years, the market swung back to where it began, with whole life once again becoming the dominant product of choice.

What consumers are continuing to look for, as they have been since the concept of gaining financial security through insurance first began, is a high degree of certainty, combined with a reasonable opportunity for making financial progress. People want economic security for their lives, but they also want to know there is economic potential for their money.

Responding to that fusion of basic consumer desires, some insurers have created products that can reasonably meet both needs: products that can provide the permanence that exists in the whole life plans with the growth potential provided in variable contracts. The trick, of course, is to make certain the new products offer the right level of certainty and opportunity.

The companies that figure out how to create and distribute such hybrid products have created a kind of contract that might reasonably be called “irreplaceable.” If they are designed appropriately, they should hold up under any interest rate and equity environment, providing a combination of benefits that consumers will find extremely attractive. Some will even be enhanced further with terminal and chronic illness riders.

Successful companies and agents in 2003 are likely to be those that respond to the expressed needs of the marketplace and embrace the changes that are occurring in the industry.

So many potential customers are still grossly underinsured, yet they retain the natural unwillingness to discuss and face their own mortality or likelihood of needing care for chronic illness or incapacity.

The products in 2003 that are most likely to pique the interest of those potential customers, and those most likely to be considered the “hot” product idea for next year and probably for a number of years to come, are those innovative contracts that combine essential elements from both universal life and variable life, and offer them in conjunction with guaranteed death benefit options.

Of course, even products this innovative will not sell themselves. They still require knowledgeable and skillful agents to do what they do best. In that respect, the insurance business has not changed and is not likely to. Even a product that could be called “irreplaceable” has to be initially sold in the first place. Prospects have to be turned into clients. No product evolution will ever change that value proposition.

Michael S. Pinkans, CFA, CFP, CLU, ChFC, is a registered representative and investment advisor with Equity Services Inc. and vice president of sales and promotion at National Life Insurance Company, Montpelier, Vt. His e-mail address is [email protected].

Reproduced from National Underwriter Life & Health/Financial Services Edition, December 30, 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.