Evaluating Whole Life Products in Uncertain Times

When 2022 began, the industry was in the process of adjusting to the changes made to IRC Section 7702 Regulations. As new policies began to emerge, another element of concern began brewing — an unsettling economic environment. Fluctuating interest rates have begun to factor into product refreshes, revamps and adjustments. And while the industry cheers higher interest rates, other factors may serve to influence consumer buying habits. Concerns about inflation, continued global supply chain disorder, geopolitical instability, unstable oil prices and shifts in employment could result in market uncertainty and reduced demand for many products, including insurance products.

It may be overwhelming to sift through the fine print of whole life products and features as you soothe your customers’ concerns. There is always value in evaluating flexible tax preferred whole life insurance policies that can address individual needs. Whole life policies can offer lifetime coverage at a guaranteed cost while potentially receiving non-guaranteed dividends and providing access to the policy’s cash value. Whole life has the benefit of these guarantees, which provide certainty during uncertain markets. As you evaluate the features of whole life products during uncertain financial times, keep these considerations in mind.

Look for long-term financial strength. Your clients trust you to make a recommendation that can withstand the test of time — 30, 40 to 50+ years from now. When considering a carrier, look for one with a long and strong history, as well as one with consistently high financial ratings from third-party ratings agencies.

The long-term nature and gradual portfolio shifts that occur in whole life products mean it will likely be some time before whole life products experience any benefit from increasing interest rates. Therefore, looking at long-term performance could be a better indicator of a quality product or carrier.

Seek Flexibility. Today’s current economic conditions tend to impact each customer differently. Identify products that have continued to offer robust, customizable options. Rider flexibility allows you to tailor solutions that can meet a variety of funding, cost and coverage flexibility requirements.

Choosing a carrier with flexible, consistent rider options will allow you to adapt to the ever-changing needs of your clients. For example, perhaps you can add riders at issue that make available the opportunity to increase/decrease premiums once the markets become more stable.

Rely on relationships. Whole life products can be complex and discussing options in person can be incredibly helpful, especially when discussing innovative features that can flex with the market or tax implications in your region. Your clients don’t expect you to have a crystal ball; however, a carrier who offers whole life as a core product could mean you’ll receive the care, attention, and guidance you need for the life of the product.

Your clients trust you. Maintain their trust by connecting them with a carrier that is committed to a relationship building strategy with you and your clients.

Change is constant. Sometimes, financial institutions will experience increased government scrutiny and regulation during times of economic downturns, resulting in some required modifications to products. And sometimes, carriers will take this opportunity to improve business models and increase efficiencies, which may result in mergers or acquisitions. Whether the changes seen in products are a result of regulation, market fluctuation or simply innovation, one certainty is that there will always be continued changes to products and carriers.

That’s why with so much flexibility in the marketplace, it’s important to remember that shopping insurance products is never like comparing apples to apples. No matter the fine print of features or riders, these high-level considerations are great reminders of the fluidity and importance of financial service professionals.

During turbulent times of economic uncertainty, find and work with an advocate that understands your short-term and long-term goals. And remember- the market will continue to fluctuate over time. Your clients’ need for dependable protection when they need it most will not.

Mark Scalercio is Senior Vice President, Head of Distribution, Individual Life & Financial Services at OneAmerica. In this role, he leads sales and distribution across all channels and aligns sales teams and distribution partners with innovative growth strategies.

OneAmerica® is the marketing name for the companies of OneAmerica. Guarantees are subject to the claims paying ability of the issuing insurance company. Dividends are not guaranteed, past performance is not indicative of future results, and actual results may vary. Riders may be optional and carry an additional cost.