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Thinking differently about cash accumulation products

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If you want to be relevant in this industry, you have to get people who don’t believe in life insurance to start believing in life insurance, says Bobby Samuelson, MetLife, at the 2014 NAILBA 33 in Hollywood, Florida. “At the end of the day, our competition isn’t other advisors selling life insurance.” he adds. “Our competition is people not buying our products.”

Just look at his illustration: Total net mutual fund flows through Q3 in 2014? Aprroximately $123 billion

Compare that to: Total new IUL premium through Q3 in 2014? Approximately $2.7 billion.

And all life insurance premiums through Q3 in 2014? $13.9 billion.

To turn people into believers of life insurance, Samuelson says that you have to think differently, as well as get consumers to think differently. There are some habits of the industry that are simply not sustainable if we’re hoping to grow, Samuelson says. Here are some sound bites from his session.

“We should be looking at what’s sustainable and what’s not. Interest rates are not going to continue to fall — we’re going to enter a new regime with flat or rising rates. What’s going to sustain us for that period of time?”


Unsustainable: The language we use to describe our products.

“How do you think your clients feel when you start talking about life insurance?” Samuelson asks. LIMRA conducted a study of how consumers view insurance jargon. The phrase “death benefit,” for instance, sounds ridiculous to consumers (millennials in particular). When does one ever a benefit from death?

“Next time you sit down with a client,” Samuelson adds, “ask yourself, ‘Am I saying things that literally make no sense to this person?’”


Unsustainable: Life insurance sold for tax-favored income

“We as an industry have an obligation that if we want to keep our tax-free status, we have to insure for widows and orphans. What’s happened to life insurance ownership is that we have to figure out how to insure for widows and orphans,” Samuelson says. He also mentions word phrasings that work on whole life messaging to customers. The number one phrasing that resonated the most with high-net-worth clients: “Whole life is a tax-favored asset. Accumulation of cash value and dividends is tax-deferred, and any money you access is genuinely not taxable as income.”

rising and falling

Unsustainable: Life insurance sold for its performance attributes

“For the last 30 years, rates have been falling; portfolio rates on life insurance prices have been better than market interest rates. Life insurance has always outperformed bonds. But if interest rates go up, it’s not going to be another 30 years of falling interest rates. When it comes to the accumulation aspects of our products – it’s easy to say, ‘Take money out of bonds and put it in income. But that is solely the function of a 30-year interest rate environment,” Samuelson says.

“In a rising interest rate environment, our story is not, ‘it’s going to outperform bonds;’ it’s that ‘it’s stable. It’s protection.’ We don’t sell performance; we sell protection, conservatism,” Samuelson adds.


Unsustainable: Agent and broker compensation

“Why would I sell life insurance as a cash accumulation product if I’m taking 60 percent commission?

“What about if we compensated agents on cash accumulation like financial advisors get compensated on managed accounts? Instead of all this casualty in year one, we could go positive in year one – which is an easier sell.”

For more of our coverage of NAILBA 33, go here.


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