Baby boomers and members of earlier generations will soon begin to die in large numbers, leaving houses, cash and life insurance death benefits to their heirs.
Samantha Chow, the global life, health and annuity sector leader at Capgemini, believes that marketing problems will make it hard for life and annuity issuers to capture much of that asset flow.
Life insurers let marketing slide during the 2010s, when low interest rates made providing attractive products at attractive prices difficult.
Now, “the pendulum is not swinging in the right direction,” Chow said.
Some people younger than 50 may know that they can use cash-value life insurance to save for college or achieve other long-term planning goals, but, for the most part, “the younger generation has no clue.”
What it means: If Chow is right, life and annuity annuity issuers may have to struggle to attract the same share of newly invested assets that they’re attracting today.
For financial professionals, that might lead to a shrinking number of life and annuity providers but more respect from the insurers that are still out there.
The great wealth transfer: Cerulli Associates analysts predicted in 2022 that the dying members of the Greatest Generation, Silent Generation and baby boom generation would pass $73 trillion in assets on to heirs by 2045.
Chow believes that the great wealth transfer will happen.
She thinks that Americans born before 1965 really will transfer a large amount of cash to heirs over the next 20 years.
Most of the recipients will be at least 50, and most will be trying to prepare for their own retirement, Chow said.
The assets transferred “typically will go to the bank,” Chow said.
The knowledge gap: September is Life Insurance Awareness Month. Life insurers, life insurance distributors and trade groups use the awareness month campaign to increase awareness of and interest in the idea of using life insurance to protect against the risk of death.