NEW YORK — Because the life insurance industry weathered the recession so well, it now has the opportunity to remarket itself to consumers as a reliable and secure place to put their money, Ted Mathas says.
Speaking here at the 20th annual executive conference for the life insurance industry, Mathas, chairman of New York Life Insurance Company, New York, observed that millions of Americans have been placed in poor financial shape by the recession.
“Financial security is now becoming a much higher priority,” he said. “And it is possible that financial responsibility may even become fashionable,” he told participants at the conference, which was sponsored by National Underwriter and its parent company, Summit Business Media L.L.C., Erlanger, Ky. “Clearly, there’s at least a much greater recognition of the importance of putting money aside for the future.”
People were sold for years on the idea that market risk is the way to grow one’s assets, only to find when the market crashed last year that they had been overexposed to this risk, he said. As a result, a growing number of consumers are looking to put their money into products with fixed financial guarantees.
“That should be welcome news for the life insurance industry,” Mathas said.
The unfortunate twist for the industry is that consumers don’t always see life insurance products as their first choice for financial security, he said.
Life insurers themselves may be partly to blame, he suggested, pointing out that many companies that call themselves life insurers don’t think of permanent life insurance as being one of their foundation products.
“Consumers are rarely offered any life insurance product as a source of secure savings,” he said.
Instead, they are offered an array of variable annuities, whose performance can’t be guaranteed because they are tied to the discredited equity markets, he argued.