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How the Life and Annuity Product Gameboard Looks Now

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What You Need to Know

  • Life insurers are still basing products on indexes.
  • Underwriting reform seems to be triumphing over COVID-19, at least for now.
  • Stabilization features have some buzz.

For U.S. life insurers, the dice have rolled and produced the following conditions:

  • Rising interest rates.
  • Higher levels of inflation, which might draw a yawn from the winter children of the 1970s but spook the summer children of the 2010s.
  • Geopolitical uncertainty.
  • COVID-19 (and monkeypox).
  • Consumers who are doing well but feeling … gloomy.

What It Means

The gameboard looks fluid. The pace of major new product announcements appears to be slower than in the past.

Clients who want firm benefits guarantees or inflation protection options might get better results if they wait and buy later, but it’s also possible that shoppers who hesitate now will be lost.

The Moves

Here’s a look at the principles behind some of the moves, based on a review of recent production introductions.

1. Indexes are still hot.

Many life insurers are still bringing out variable and non-variable index-linked products.

Tying the performance of a life or annuity products to the performance of an investment index can give an insurer a simple, efficient way to manage the investment machinery inside a product and cope with risk by buying investment index options, and using derivatives to guard against fluctuations in stock prices, interest rates and currency exchange rates.

Lincoln Financial Group recently introduced the Lincoln WealthPreserve 2 Survivorship Indexed Universal Life policies.

Couples and business partners can use the policy to insure two people with a single policy.

The policy pays death benefit at the end of the surviving insured’s life.

Purchasers can buy a rider that will help with inflation, by increasing the policy’s coverage by 3% each year.

Legacy Marketing Group has joined with Americo Financial Life and Annuity Insurance Co. to launch the LibertyMark Freedom non-variable indexed annuity contract.

The contract is designed to appeal to optimists: It comes with 14 index options, and most have no caps on participation rates, meaning that holders could continue to share in increases even if some indexes soar.

The contract comes an optional enhanced death benefit rider, the Heritage Maximizer rider, which can add a 30% death benefit bonus to the full accumulation value.

The contract offers a minimum return of 1% on 100% of premiums.

Americo is responsible for supporting the rate guarantee.

Transamerica has introduced the Transamerica Structured Index Advantage Annuity contract, a registered index-linked annuity.

The variable product provides a buffer against some market losses.

2. Menus are getting longer.

Some companies are trying to add product appeal by adding to the list of annuity investment choices.

Protective Life recently said that both its commission-based variable annuity products and its fee-based products will offer investment options from four new investment managers: AllianceBernstein, BlackRock, Columbia Threadneedle and T. Rowe Price.

The commission-based products will have 29 new subaccounts, and the fee-based products will have 38 new subaccounts.

3. Streamlining is still in progress.

Many life insurers were trying to simplify life insurance underwriting before the COVID-19 pandemic came along.

One question was whether simplification efforts would survive the effects of the pandemic on U.S. mortality rates.

But life insurers seem happy with how new, streamlined underwriting programs are working, and many companies are still working to speed up applicant risk assessment, as well as other processes.

Policygenius has joined with Foresters Financial to introduce the Foresters Your Term policy, a policy that can offer a 24-hour online underwriting process, for a solid term life policy, for many applicants.

The policy can provide terms of 10, 15, 20, 25 or 30 years, and coverage amounts ranging from $100,000 to $1 million.

Meanwhile, life insurers are also continuing to try to accelerate internal processes.

BetterLife, for example, has picked iPipeline to upgrade all of its technology systems, both for agent-led transactions and consumer self-insurance-based transactions.

4. Death has the consumer’s attention.

COVID-19 put consumers on notice that crowdfunding websites are often a poor, unreliable mechanism for paying for funerals and other end-of-life expenses.

Western and Southern Life Insurance Co. has responded to consumers’ interest in end-of-life products by adding the Easy Choice Life policy.

Consumers can buy the simplified-issue whole life policy without going through a medical exam or having blood tests.

The policy can pay up to $49,999 in death benefits.

Premiums are payable for 20 years, or to age 100, depending on the payment option chosen.

5. All that shaking is getting annoying.

Insurers are adding some product features specifically to respond to consumers’ concerns about investment market volatility.

Allianz Life Insurance Co. of North America is scratching the volatility relief itch by introducing the Multi-Year point-to-point crediting method for non-variable indexed annuities.

Allocation options based on the method can offer participation rates that are designed to begin higher and increase gradually throughout the multi-year term, according to Allianz Life.

The method comes with an Allianz Life Index Lock feature that can increase consumers’ ability to address volatility, by letting them lock in an index value once per crediting period, the company says.

6. Some people could still live a long time.

COVID-19 has shortened average life expectancy for some consumers, but not for all.

Pacific Life is appealing to retirement savers who could live a long time by working with Wespath Benefits and WTW to provide a qualifying longevity annuity contract, or QLAC, option in Wespath’s enhanced LifeStage Retirement Income program.

The program can provide a retirement income stream that starts at age 80 and insures the client against the risk of outliving savings.

The feature can also protect a spouse against the risk of outliving savings.

Pacific Life notes that the QLAC has another virtue: It can reduce the dreaded required minimum distributions, or RMDs.

(Photo: Emilia Mariana Ungur/Shutterstock)


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