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Limited Term License Proponents Find Ammo In Study

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Findings will be presented at NAIC hearing later this month

A new study that finds minority groups are underserved in the sale of life insurance products will be used during an upcoming hearing to buttress the argument for establishing a limited term insurance license.

The hearing will be held on June 11 during the summer meeting of the National Association of Insurance Commissioners.

Primerica Financial Services, Duluth, Ga., a unit of Citigroup, New York, and legislators including Rep. Shirley Bowler, R-Harahan, La., are among those who have argued for the establishment of such a license to open up the market.

At press time, the National Association of Insurance and Financial Advisors, Falls Church, Va., reiterated its opposition to the proposal but declined further comment.

North Dakota Insurance Commissioner Jim Poolman, chair of the producer licensing working group, has cited the need to maintain a uniform approach to licensing as part of a broader effort to reinforce the general need for uniformity.

The survey offers the following findings:

==Minorities are more likely than whites to consider life insurance a must-have.

==92% of African Americans and 82% of Hispanics agree that life insurance is essential, as compared to 72% of whites who said the same.

==Less than half (47%) of Hispanics nationwide reportedly are covered by a life insurance policy, far less than the national average of 63%. Another 37% of Hispanics admit that they have no insurance coverage and 30% of blacks say the same.

==While 69% of blacks acknowledged some familiarity with life insurance policies, the remainder said they were not knowledgeable on the subject.

==Respondents with yearly incomes of $30,000 or less were 9% more likely than the national population not to have life insurance.

“People in this market have a great need for insurance,” says Peter Schneider, executive vice president and general counsel with Primerica. He cites the fact that those with lower incomes were less likely to have insurance if a breadwinner dies.

He says he hopes the study will start a debate about how to better serve the market.

Increasing commissions on a “commodity” product that already has a thin margin would make sale of term more unattractive to insurers, he says.

But, a tiered licensing system similar to the securities industry could help create more agents and reduce costs, he adds, noting there are different licenses required for mutual fund, equities and options selling.

When asked why existing agents could not reach out to church or other community groups to more efficiently serve the market, Schneider says if there were a limited term license, then there would be agents in those churches and community groups to do that.

Selling Life Insurance

How to Reach Underserved Markets

Policy Face Amounts Blacks Hispanics

$50,000-$100,000 40% 30%

Up to $50,000 23% 22%

Means of Obtaining Blacks Hispanics General Population

Employer 28% 26% 21%

Self-initiated 51% 57% 47%

Source: Primerica Financial Services and The Polling Co.


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