NAIFA, Primerica Clash Over Term-Only License Proposals
Efforts to establish a new type of license allowing agents to sell only term life insurance products has spurred a debate over whether such a license would limit consumer choice or expand the number of consumers with life insurance.
The National Association of Insurance and Financial Advisors “is opposed to the proposals primarily because they dont serve the best interest of the consumer,” says C. Robert Brown, the groups president. “Rich or poor, consumers need to understand the wide range of insurance products available before making a buying decision. A fully licensed life insurance agent can help find a solution that best suits that individuals needs and circumstances. An agent licensed to sell just one product cant. Consumers deserve better.”
The American Council of Life Insurers has examined the term-only licensing issue but has not taken a position, according to a spokesman.
However, at least one company, Citigroup subsidiary Primerica, has been working actively to establish the term life only license.
According to Peter Schneider, general counsel for Primerica, the company is supporting the term life only license because it sees middle and lower income consumers not being served by the industry.
“We took a look at what the industry is doing with respect to serving the middle and lower income consumer,” he says. “The life industry is basically not doing it.”
Two of the main reasons for this, Schneider explains, are the decreasing number of agents and the development of the industry.
There are 30% fewer life insurance agents than there were in 1989, he notes, and the problem is especially severe in minority communities. In Hispanic neighborhoods, he says, statistics show that as many as 70% of consumers have not even been approached by a life insurance agent.