One gets so accustomed to analysts, pundits and politicians taking their potshots at the life insurance business that when someone in these precincts comes forth with a positive assessment, it causes a warm rosy glow, kind of like a snifter of brandy on a wintry night.
This was the kind of feeling I got when reading Jim Connolly’s story on a talk given by Steven Schwartz recently at the 10th annual insurance conference of the New York Society of Security Analysts. You can find it on page 10.
Indeed, Schwartz, who is a senior vice president in the Chicago office of Raymond James & Associates, was much more than simply positive. He was positively giddy about the longer term prospects for the business.
When, for instance, was the last time you heard anyone talk about “a golden age” for the life insurance business and actually mean sometime in the future? Most of the time, in fact, “golden ages” are retrospective and so at the same time that we are looking up at them (from how far down we’ve slid) we’re looking back at them.
But no, Schwartz sees the period from 2009 through 2050 as a “golden age” for the industry.
The reason? You guessed it–none other than the 77 million-strong cohort of baby boomers, that wondrous generation that includes such luminaries as Bill Clinton and George W. Bush, Oprah Winfrey and Jay Leno, Stephen King and J.K. Rowling of Harry Potter fame.
The boomers are a diverse lot, but the industry should be able to come up with products and services to meet one and all needs. Some boomers, for instance, have done nicely saving for retirement–socking away cash, making prudent investments, and buying second and even third houses. They’ve made provisions for long term care contingencies and, in general, feel pretty secure.
For them, the business has an array of products that will enable a lifestyle similar to what they enjoyed before retiring as well as products that will allow them to pass on some of their wealth to their kids and grandkids.
For those boomers (probably the majority) who have not been this ant-like in ensuring their future, the industry can and will provide products and services that will ameliorate to a degree the effects of a life lived like a grasshopper.
We’ll see a bevy of products that transform from one to another as a certain age is reached as, for example, a disability income policy that turns into a long term care insurance policy at age 65. There also will be things like annuity/LTC combos that seek to maximize the effectiveness of whatever the amount of money that has been saved for retirement years.
Schwartz was diligent in pointing out the near-term obstacles that the industry has to confront before this golden age sets in. But they all seem manageable. And in spite of these, he says, “the future of the life insurance industry is extraordinarily bright in my opinion.”
Thank you for the rosy glow, Steven, I can hardly wait for the golden age to begin.
Note: A kind reader pointed out that I had a fact wrong in last week’s column about the Medicare Part D mess. The fact is that the maximum out of pocket for beneficiaries is $3,600. Guess I got “lost in the donut hole,” too.