Is a particular new product strain a trend (slow-growing but long-term) or a fad (fast catching but short-term wow)?
Insurance professionals, in the field and at the companies, aren’t always sure. But they should try to decide, at least for themselves, as this will impact how they handle the products they see.
First, some examples of the confusion that is out there.
In the middle of 2007, a few insurance experts told me that they think “the retirement income thing has pretty well run its course.” This was said even though the major players in this market were just then debuting new products and approaches, some with startling differences from each other and from previous versions. (See this week’s articles by Milliman’s Susan Sell and Brent Hamann and also CANNEX’s Lowell Aronoff for a taste of what has been going on.)
Meanwhile, others see no end in sight for retirement income needs and planning, not only because boomers will be retiring in ever-greater numbers, but also because of the greater longevity that people have today. For these professionals, income planning is a trend, not a “thing” that is pass?. It’s a market they “need to be in.”
Long term care insurance is another example. Some people believe the current stand-alone LTC designs are state of the art and au courant in terms of trends. They view the newer hybrid plans–life with LTC features, for instance–as mere fads that will never catch on in great numbers.
But in the past few years, stand-alone LTC sales have been largely disappointing (though not at all carriers)–not yet a trend? Also, a number of carriers are fixing to enter the very new hybrid market (LTC on life or annuity chassis)–a trend in the making or a fad?
One more example: Universal life insurance has drawn conflicting views over its fad-or-trend status through virtually all of its 30+ years. Even today, as carriers add lifetime no-lapse guarantee options to their ULs, the squabble continues. Whole life advocates think these ULs should go away before the guarantees develop holes, while UL proponents see the designs as “the” solution for long-term permanent protection.
Industry-wide agreement on trend or fad is unlikely, but knowing one’s own position on this is essential, as it influences product selection, presentation, and more.