Consumer spending is down significantly and that extends to life insurance.
Life premiums are down 26% in first quarter 2009 and variable life insurance premiums are off 61% (LIMRA International, Windsor, Conn.). Long term care insurance premiums through the first half of 2009 are down 31% from the first half of 2008 (LIMRA).
Most of the decrease has been attributed to consumer demand, but capital requirements also have impacted sales. Some assets on company balance sheets had to be written down, and insurers responded by limiting production in some areas.
However, there still are plenty of life insurance opportunities ahead.
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As consumers are watching much more closely where they spend their dollars, for instance, it is a great time to sell lower-cost, protection-oriented life insurance.
This is already happening. Although term life production was down slightly in first quarter 2009, some insurers have increased their term sales. Some life insurers have also added return-of-premium features to their term products, offering cash values for consumers but with premiums that are lower than that for other permanent life insurance plans.
Equity-indexed products have also received a boost in sales. With the decrease in the equity markets, consumers are looking for ways to reduce exposure to market declines. The floor guarantees in equity-indexed life insurance offer some consumers exactly that.
The market downturn has further reduced monies available for wealth transfer. Survivorship life insurance can address that, since it provides an excellent means of guaranteeing how much money a couple will transfer to heirs. In addition, the survivorship product is an excellent tool for estate planning purposes–an especially important consideration, since the estate tax rate is expected to increase in 2011.