During difficult economic times, some consumers view life insurance premiums as discretionary expenditures. So, it is notable that recently new life insurance sales have declined and terminations have risen. But such tough climates provide opportunities for insurers and agents to meet mid-market needs and retain these policyholders in valuable new ways.
Here are some product concepts that may open such mid-market opportunities:
Unemployment features: Waiver of premium/charges in event of unemployment has existed for some time, but a welcome new wrinkle may be to increase death benefits by a modest percentage if the insured is unemployed at the time of death. Such increases could be implemented for a specified time period at little or no additional cost to the policy owner, and without extra underwriting.
Premium/charge waivers: For a limited time period on in-force or new business, insurers could offer expanded premium waivers on select types of coverage (e.g., spouse and child riders, or on disability income coverage for limited periods). This premium forgiveness, which could be provided under relatively more liberal triggering conditions–including unemployment, hospitalization, casualty losses or mortgage delinquency–could pay dividends to the carrier as a result of improved persistency.
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Temporary price reductions: Some past programs have allowed smokers to pay non-smoker rates for a period of time. This idea could be expanded by offering new or in-force cases a one-class premium improvement for a defined period in recognition of the difficult economy. Additionally, premiums for a specific benefit type, such as accidental death benefits, could be cut for a defined period, in recognition that people have reduced their driving and fatal accidents have dropped significantly.
Grace periods: The standard life policy grace period could be extended by an additional period (such as 30 days) to give payers additional time to stay current on their contracts. Like many ideas in this article, reinsurer support may be needed for implementation. Grace period extension could be applied across the board or perhaps only to those having demonstrated payment consistency for, say, more than 3 or 4 policy years.
Liquidity improvements: On new and in-force business, insurers could offer limited time sweeteners of liquidity provisions, such as lower policy loan interest rates or more generous free partial withdrawal provisions, particularly under specified need-based conditions–e.g., coverage of education expenses, mortgage delinquency, or medical costs.