A few years ago, the U.S. group life insurance market looked about as interesting as a bowl of oatmeal.
Today, “Id describe it as stable, dull and boring,” says Michael Goldeen, a Palo Alto, Calif., benefits broker, who adds, “Thats good.”
LIMRA International, Windsor, Conn., has found that agents and brokers who sell employee benefits tend to devote far more attention to health and pension plans than group life plans.
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But producers who sell group life like the fact that the group life market may not demand that much attention.
“To me, its very good that it hasnt changed that much,” says Bill Lindberg, a broker at Lindberg & Ripple Inc., Windsor, Conn., who sells group life insurance to small and midsize employers.
Rates have held steady, and the market is as competitive as it ever was, he says.
As for administration, “once in a while, someone dies,” Goldeen says. “Other than that, I never hear about it.”
Seventy-nine percent of midsize employers and 98% of employers with more than 500 employees already offer group life benefits, according to LIMRA.
The high penetration rates mean that insurers often have to take business away from competitors to sign new cases, says Kate Borgatti, a LIMRA group product analyst.
LIMRA figures show that annualized new group life premium fell 4% in 2002, to $2.4 billion, and that premiums for all group life policies in force increased 5%, to $16 billion.
The increase in total in-force premiums “is in line with salary increases and inflation, and thus indicating relatively stagnant market growth,” Borgatti says.
But modest revenue growth is not necessarily so terrible in a world where sales of equity-linked products have been plummeting.
One sign of the stability is in group life product design.
Most of the changes that have occurred have been driven by insurers efforts to stand out, not by employee demand, industry executives say.
Standard Insurance Company, Portland, Ore., has improved its accelerated death benefit in recent years by increasing the percentage paid out to 100%, from 50%.
Another change: Most big insurers that offer accelerated death benefits no longer require that a policyholder be confined to a nursing home to receive the benefits.
“Some of the smaller players might require it, but the bigger ones dont because of the pushback we got from our customers,” says Jeff Smith, an assistant vice president at Standard.
Standard also has added an optional critical illness rider, which can pay out even when an insured is not terminally ill, and a family benefit package, which includes an education benefit for the children of insureds who die in accidents.