Broad demographic forces should make most of the next 50 years great years for life insurers.

Steven Schwartz, a senior vice president in the Chicago office of Raymond James & Associates, gave that assessment during an insurance conference organized by the New York Society of Securities Analysts.

In the short term, Schwartz said, life insurers face many challenges, including weak flows of cash into variable annuities, questions about how to price VA benefit guarantees, and a number of regulatory concerns.

The current flat yield curve is hurting sales of some products, and some life insurers are having a hard time earning enough on their own investments to profit from older policies that guarantee customers minimum rates of 4% to 5%, Schwartz said.

Over on the regulatory front, the Bush administration failed to extend cuts in capital gains to variable annuities, and it has proposed tax breaks for new savings accounts that could put life insurers at a disadvantage, Schwartz noted.

If a Bush administration effort to flatten the tax rate advances, then “make no mistake, [lawmakers] will go after the inside buildup in life insurance,” Schwartz warned.

In spite of these travails, “the future of the life insurance industry is extraordinarily bright in my opinion,” Schwartz said. The baby boom generation, he said, is “like a mouse going through a snake and at the end of the snake is the life insurance industry.”

As the baby boomers start hitting retirement age, the same people that used “Gerber, drove Schwinn and Huffy bikes, and bought Levis” will turn to life insurers for help, Schwartz said.

The boomers’ need to save for retirement, preserve assets and transfer wealth will make the years from 2009 through 2050 a golden age for life insurance, Schwartz predicted.

Increasing life expectancies, uncertainty about Social Security, growing long term care needs and the fact that younger boomers will no longer have the security of defined benefit pension plans also will create great opportunities for life insurers, Schwartz said.