How can the industry’s bulwark product–life insurance–ever be described as, or treated as, a niche product?
To some industry professionals, that’s like saying the product is off, not mainstream–even sub-par.
Yet, as new policy sales have flatlined for the past few years (with notable exceptions, of course), the niche-word does come up. It typically happens when people try to explain away the flatline by saying the product has “gone niche”–meaning, “What can you expect from it except specialized sales once in a while?”
Niche-talk actually has a long history.
For instance, universal life insurance enjoyed a meteoric rise in the early 1980s, accompanied by predictions that UL would become the industry’s new standard product–the policy for all comers. Then, in the mid-1980s, when UL sales swooned, the product seemed to go on life support until marketers found ways to sell it for specialized uses. Soon it was tagged a niche product and no longer was king. (Curiously, UL has since enjoyed a nice rebound in the early 2000s, so does that mean it’s not a niche product anymore?)
Variable universal life went through a similar switcheroo. There was one period, during the hot-market part of the 1990s, when some advocates predicted VUL would be the dominant life policy of the land–because of its flexibility, market sensitivity and multiple investment options, including fixed account, etc. But after the market crash in the early 2000s, VUL sales went south and suddenly VUL was being vetted as the “right product for the right person.” In other words, niche, niche, niche.
Even term life insurance has had some repositioning going on. For instance, while basic term insurance is still viewed as the standard bedrock of group benefit plans, the advent of level term (10-year, 20-year, etc.) has brought individual term insurance into the world of meeting very specific time-limited needs (read, niche, niche, niche). More recently, the return-of-premium term policies have taken on that same role.
Life sales for the older age set is another form of niching that’s been going on–not by policy type but by market.