As the new year approaches, now is a fitting time to review some of the key drivers of product transformation in our industry over the past 12 months.
After all, these trends and developments carry the potential to continue shaping the life insurance, retirement planning, and accident and health markets in 2014. And the driving forces in our market and the ways carriers respond to them can determine how effectively we all provide the kinds of innovative solutions today’s consumers need and demand.
Here are five things to keep an eye on in the year ahead.
Enhanced guaranteed universal life products
We’ve all seen that access to the life insurance markets can be a challenge. For instance, given the mandate for increased reserves on guaranteed universal life (GUL) products, some carriers pulled back or withdrew completely from their commitments to the GUL market in 2013.
But along with challenges come opportunities — especially for carriers and distribution partners that are able to not only respond swiftly and effectively but also have the resources, experience, insight and vision to anticipate consumer needs and move proactively to fulfill them. Recent carrier contraction in the GUL market notwithstanding, enhanced GUL offerings have made their debut in the past several months, creating exciting, new solutions for clients and, therefore, new opportunities for distribution partners.
Retirement income innovations
A groundswell of consumer interest in ensuring sufficient income in retirement has also led to innovative product development and refinement, which promises new opportunities for agents, advisors and clients. As LIMRA President and CEO Bob Kerzner noted in his third-quarter industry briefing in August, “It seems as though retirement security and financial literacy are on everyone’s mind.”
In fact, nearly 40 percent of Americans surveyed recently by LIMRA said they were interested in learning about generating retirement income. And only 17 percent of the survey respondents said they were very confident they could achieve a secure retirement.
The LIMRA findings call to mind another recent, major body of research, the AIG Retirement Re-Set Study. This study found that Americans age 55 and beyond continue to be more interested in guarantees and financial peace of mind, and they believe achieving peace of mind is four times more important than accumulating as much wealth as possible.
The continued resetting of the consumer mindset — protecting assets is now eight times more important than achieving higher, riskier returns — has given rise to a new generation of solutions on both the retirement planning and the life insurance side of the industry. For example, new breeds of index annuities are available with guaranteed living benefit riders that give clients the very attractive opportunity to increase their retirement income potential. As can be expected, some limitations and conditions apply, but the advent of this new type of retirement savings product heralds a fresh, savvy solution for the need to help clients secure sufficient income for life.
On the life product side, innovative income riders are now available to help turn the life insurance benefit of certain universal life products into a guaranteed stream of retirement income. As 2014 approaches, there is ample reason to anticipate burgeoning consumer interest in highly flexible financial solutions such as these, which can help provide much-needed protection against the valid fear of outliving retirement income.
New life insurance riders
As I consider opportunities for all of us — carriers, agents and advisors — to serve client needs with the most conscientious degree of sensitivity in the coming year, it would be nearly impossible to overstate my enthusiasm for the newest designs in accelerated benefit riders.
I believe living benefit riders are an intelligent way to guide many consumers in buying life insurance. Historically, people have not always connected well to the more traditional life insurance products that pay out only upon death, but they can grasp the value proposition of a life insurance product they don’t have to die to use.
See also: 10 timely life insurance riders
I’m talking about a quintessential type of life insurance product, one that can meet clients’ evolving needs — or their children’s needs — over the years, one that can provide early access to the death benefit if needed, one that offers a longevity rider that can provide an additional income stream if the conditions of the policy are met.