2013 Life Insurance Survey: The results

When asked what kind of impact the fiscal cliff deal, which established a permanent estate tax at the beginning of the year, had on their life insurance sales, 70 percent of respondents reported no impact at all. Of those advisors who did perceive some kind of impact, 17 percent report a positive impact on sales, versus 13 percent who reported a negative impact.

When it comes to anticipated life insurance sales levels in the coming 12 months, advisors are overwhelmingly optimistic (Figure 2; click to enlarge). Nearly three in four advisors expect an increase in sales in the next year; 28 percent expect a “substantial” increase. Roughly one quarter (24 percent) expect sales to remain the same, and only three percent expect any kind of decline in sales.

Despite advisors’ positivity about life insurance sales in the coming 12 months, they are acutely aware of threats to the future of their sales (Figure 3; click to enlarge).

The greatest perceived threat to future sales is the passage of laws that would change the tax status of life insurance, considered a threat by more than 1 in 3 advisors. The more sales production respondents experienced in the past year, the more likely they are to perceive this as a threat. The federal government’s budget crisis and the passage of the Patient Protection and Affordable Care Act (PPACA) could be exacerbating the fear of industry-unfriendly legislation among advisors, but this is purely speculative. The study did not ask follow-up questions related to laws affecting the tax status of life insurance, though it is clear from participants’ open-ended responses that PPACA figures heavily on advisors’ minds at the moment.

Of the top five threats to advisors’ future sales, three are directly related to consumer disengagement from the life insurance industry: affordability (34 percent), consumer apathy (32 percent) and lack of consumer awareness about the need for life insurance (31 percent). 

Three times as many advisors feel that online and direct sales are a greater threat to their business than already established distribution channels, such as banks and competition from other financial sales professionals. Interestingly, advisors whose primary focus is property & casualty insurance are more likely to perceive online sales as a threat to their life insurance business, presumably because they are accustomed to contending with online P&C platforms like Progressive and Geico.

Methodology: In July of 2013, the National  Underwriter research team randomly surveyed more than 2,000 financial sales professionals licensed to sell life insurance in the United States. The names were selected from a proprietary database of more than 1.2 million licensed professionals across the U.S. These financial professionals were invited by email and online promotions to participate in the survey, which was conducted online. The results represent the responses from financial professionals who have sold a life insurance policy to at least one client in the past 12 months.

Note: For the purposes of reporting on this study, the financial sales professionals who responded to this survey will be referred to as “advisors.”

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