It's debatable if the fiduciary standard is 'higher' than suitability. But the better question might be, who's holding the bar?
By Cyril Tuohy
MetLife, which missed its second-quarter earnings estimates, has announced rate reductions on some of its guaranteed level term insurance products as the company seeks to boost life insurance sales in an era of slow growth marked by low interest rates.
Rate changes do not apply to all ages, rate classes, coverage amounts and level-premium periods, the company added.
Despite posting second quarter net income of $1.34 billion, an increase from $471 million in the year-ago period, MetLife delivered operating earnings per share of $1.39, below consensus estimates of $1.41 per share, according to Zacks Equity Research.
Gene Lunman, MetLife’s senior vice president of Retail Life and Disability Insurance Products, said the lower rates would help make life insurance more accessible to more people.
"By continually evaluating our life insurance portfolio, we are able to evolve our product offerings to help consumers protect themselves and their families, and provide financial professionals with products that can meet the needs of a wide array of customers," he said.
Consumer surveys reveal that many people, by their own admission, are uninsured and underinsured for life insurance coverage.
With a level-term insurance policy, premiums for coverage amounts don’t change for as long as the policy is in force, usually 10, 20 or 30 years.
Premiums will remain level for buyers of coverage in excess of $100,000, MetLife said. Policyholders will also have the opportunity to convert their policies to permanent life insurance policies, which will cover them for the rest of their lives.
Term life policies are the easiest and simplest protection products to buy. They appeal mostly to young adults with new families.
Insurance companies have found selling term life insurance policies slow going in an era of low interest rates and strong equity markets.
First-quarter term life annualized premiums shrank 4 percent, face amounts dropped 4 percent and the number of policies sold dipped 6 percent compared to the year-ago period, according to LIMRA’s U.S. Individual Life Insurance Sales Summary report.
Overall life insurance industry sales dipped in the first quarter compared to the year-ago period, LIMRA also found.
Annualized premium and face amounts each shrank 7 percent, and the number of policies sold dropped 5 percent in the first quarter compared to the year-ago period.
Only variable universal life policies, which have an investment component, recorded an increase in sales in the first quarter compared to the year-ago period, LIMRA said.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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