MIB Life Index Reveals Uptick in Younger, Older Age Life Applicants

U.S. life insurance application activity rose 1.3 percent last year compared with 2015, according to the MIB Life Index.

The index gained 2.7 percent in 2015 over 2014. This represented the largest annual year-over-year percentage increase since the MIB index began tracking life insurance inquiries in 2001. The index does not release the number of inquiries.

MIB is one of the life insurance industry’s most widely used underwriting requirements for identifying errors, omissions and misrepresentations on insurance applications.

The largest percentage gains in the index last year came from younger life insurance applicants under the age of 45 and from applicants older than age 60.

Inquiries from applicants under age 44 rose 1.8 percent in 2016 compared with 2015. Inquiries from applicants 60 and older also rose 1.8 percent last year over 2015.

Activity for applicants ages 45-59 dropped 0.1 percent last year, however.

The index measures application activity across all life insurance products from approximately 400 U.S. life insurance companies that are MIB members.

Application activity serves as a proxy for life insurance sales from quarter to quarter and from year to year.

The top 60 MIB member life insurance companies represent 82 percent of all life insurance application activity.

Tech Upgrades Seen as Reaching Young Buyers

Lee Oliphant, MIB Group president and CEO, said the uptick in activity among people under the age of 45 is an indication that insurance companies are upgrading their sales and distribution networks to appeal to younger buyers.

Younger buyers prefer electronic transactions, expect instant quotes and want life insurance contracts to close within days or weeks at most.

Insurance companies have stepped up to meet that challenge by broadening the number of channels through which buyers can buy life insurance. Carriers also are shortening the time it takes to issue life insurance contracts by bypassing full medical evaluations, which take longer.

The under-45 age group has shown steady growth in the number of life insurance inquiries over the past two years.

“That's the biggest piece of the application activity in the index, so it leads me to believe that the industry is making inroads in that age group, which is the biggest portion of life insurance buyers,” Oliphant said.

“We have had a couple of years of growth driven by the under-45 with the industry being able to reach that group with faster decision making,” he also said.

In 2001, when the index was launched, life insurance quoting activity was pegged at 100. Since then the index has declined to 82.4, which means that the number of life insurance inquiries has dropped over the past 16 years.

The decline in the number of inquiries is reflected in lower life insurance sales as life insurers have struggled in the face of lower interest rates and other financial services companies are competing for the wallet share of consumers.

Based on index values, the composite MIB Life Index stands at 82.4, where it was in 2012. In 2008, the value stood at 82.3.

60-Plus Age Group Inquiries Lower, But Still Rising

Inquiries from people 60 years and older have eased compared with three or four years ago when lawmakers considered lowering federal estate tax exemptions. But inquiries are still rising - up 1.8 percent last year compared to 2015, the index found.

With the higher estate planning tax limits still in place, advisors don’t feel as much pressure to put insurance strategies in place, Oliphant said.

With President Donald Trump’s pledge to overhaul income and corporate taxes, estate taxes aren’t likely to be high on the agenda.

If federal estate taxes were to disappear, there would be less pressure on people in the 60 and over age segment to inquire about life insurance.

But the five-year trailing growth rate for inquiries from people 60 and older continues to decrease with growth slowing to 5.7 percent in 2016 compared to 2012. This is down from a 14 percent grow rate from 2014 to 2010, the index found.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].