A Social Security cost-of-living adjustment could have a small but positive impact on retirement planning.
Question: What will be the trends in life insurance products for the coming year?
“We will see more hybrid products in which the policies combine universal life with long-term care coverage. We will see more sales of those products too. That’s because there is more awareness now about the need for long-term care, and that need is not going away. Other reasons are that companies have had difficulties with the pricing and claims experience of the traditional standalone long-term care policies, and customers worry about the use-it-or-lose it nature of the traditional long-term care policies. With hybrid contracts, the customer knows that the benefit will always be used—for care or at death. At least six carriers now offer those hybrid products. Another trend for 2013 is increased availability and sale of indexed universal life. It’s an accumulation product that is taking market share from variable life insurance, which is not as strong a seller as it was in the past.”
– Ann Eads, Vice President-Carrier Relations, LPL Insurance Associates, Charlotte, N.C.
“Combo products were this year’s product story—combining universal life with long-term care—and they will continue to be next year’s story. As for life policies with secondary guarantees, some companies will probably back off from the guarantees or altogether stop offering the policies that had the guarantees. AG 38 won’t be effective until 2013, but some companies are probably welcoming it because it’s pushing them to cut back. I think most of those products will be modified. As for new types of coverage, we may see combo life with critical illness policies or some other kinds of combination policies that provide value that is in addition to the death benefit. The industry needs to make its life insurance products more salable, and combos can do that. People don’t really think they will die, or at least die early. They are more concerned about living too long. The carriers need to recognize this in their products, if they can price it right.”
– Jerry Hartman, Chairman and CEO of Insurance Network America, Inc., Boise, Ind.
“The focus for us will be on growing business in mid-America, with a target premium for universal life of $3,000 to $3,500 and an average premium for term insurance of $750 to $800. Next year, we will double our business in this market. We will sell a lot more indexed universal life. The focus will increasingly be on indexed universal life with long-term care coverage—the advisors are asking for that. Universal life with secondary guarantees will be tough to price with the new regulations coming in. We will need to see where the pricing goes and where the product design goes before predicting what will happen to these products. It might be that the products could continue selling, even if the price is higher, provided the competition is selling with the same deck of cards.”
–Mike Sause, President and Founder, Annuity Marketing Service, Inc., Baton Rough, La.