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March 01, 2004 at 02:00 AM
Lately, trying to sell survivorship life insurance has been like trying to sell a rain poncho on a cloudless day–sure, people may need it someday, but it would be a lot easier to move merchandise if the need seemed a little more pressing. Survivorship, or second-to-die, life insurance has traditionally been sold for one reason–to pay the estate taxes due at the death of the second spouse–and anyone with an estate expected to exceed the estate tax exemption amount was a reasonable candidate. Today, however, the sales pitch has lost much of its punch: “Well, Mr. and Mrs. Client, I’m not exactly sure what the estate tax exemption is going to be in any given year, since it’s going to stair-step up until 2009, and disappear entirely in 2010. It’s supposed to reappear again in 2011, but to tell you the truth, I’m not exactly sure about that, either. You should probably wait and see, but wouldn’t you like to buy a survivorship policy today, anyway, in order to pay the estate taxes that you might never owe?”
It’s a tough sell, agrees John Ryan of Ryan Insurance Strategy Consultants in Greenwood Village, Colorado, an insurance firm specializing in serving fee-only advisors. “I’d venture to say that 80%-90% of survivorship insurance is sold for estate liquidity purposes,” he says. “I’ve got friends in Denver whose practices were 70% survivorship life sales, and they’re struggling.”
Indeed, survivorship life sales have faltered throughout the industry, says Les Lovier, VP of product development at AXA Financial in New York City. “It’s been picking up a little bit very recently, but generally, business has been poor, and I think that’s true industry-wide,” he says. “In many cases, people are waiting to see whether estate taxes are repealed or not.” As a result, some companies are scaling back their research and development on new survivorship products, preferring to wait until (or if) sales improve. “Nearly all the major companies still offer [survivorship] products,” says Lovier, “but they’re not necessarily designing as many new ones, because sales aren’t at the level they once were.”
True, there can be other reasons that clients should buy survivorship life, and Paul Mason, VP of marketing for Jefferson Pilot Financial in Greensboro, North Carolina, says that “the specter of possible estate tax repeal has shifted the focus of producers to other, equally strong uses of second-to-die coverage.” But you’re likely to run into trouble if you start off with survivorship as the solution, and go around looking for problems it can solve: The fact that you only sell hammers is no excuse for selling a hammer to someone who really needs a paintbrush. “Sometimes we as an industry have one solution in our minds when we go in to talk to someone, and we don’t present Plan B and Plan C to them, when in fact [those options] might be better for them in the long run,” says Ryan. “But there’s always two ways to skin a cat.”
