It is not coincidental that LIMRA recently released a study indicating that 30 percent of U.S. households lack life insurance coverage at the same time that MetLife announced its decision to spin off its sputtering life insurance business.
Related: A brief history of life insurance
Both are red flags because life insurance serves multiple purposes. Up until the 1980s, it was seen as a must-buy product for all consumers.
It is also a pocketbook issue. Consider that membership in the National Association of Insurance and Financial Agents (NAIFA) has dropped from approximately 144,000 agents in the mid-1990s to roughly 38,000 today. The organization’s shrinking enrollment coincides with the disappearance of a former industry staple: the door-to-door agent who collected weekly or monthly, or the so-called industrial agent.
Marvin Feldman is president and CEO of Life Happens, the Arlington, Virginia-based non-profit affiliated with NAIFA. He said the industry is well aware of its problems.
During a recent interview, Feldman referenced an industry event earlier this year where MetLife officials spoke about life insurance sales now constituting only 20 percent of company revenues, while an official from Lincoln Financial indicated that life insurance represented only about 40 percent of that company’s business.
“We need to come up with viable solutions, but that is going to take a long time and some trial and error,” said Feldman, who believes that industry compensation practices played a role in the problem.
“Companies don’t hire insurance agents anymore,” he said. “The psyche of the advisors is that it is it is much easier to sell investment products.”
Feldman also acknowledged that the life insurance industry tends to be slow and methodical in its decision-making.
“There are going to have to be various changes, and the industry will survive,” he said. “But how it will survive (and) what form it will take, remains to be seen.”
Snoopy served as MetLife’s lovable corporate mascot from 1985 through 2016. (Photo: iStock)
Consider MetLife’s significant recent rebranding. Snoopy became MetLife’s mascot in 1985. But now Charles Shultz’s fun-loving beagle is being phased out because, as Feldman said, it was “aimed at consumers.”
MetLife’s new branding will likely be aimed at clients that are corporations, not consumers.