Perspectives - January/February 2014 - (Page 29)

death benefits, liquidity features and increasing income," Kerley says. "And we expect that more companies will join this space in 2014." Atkins believes the recent changes in the annuity market reflects a renewed focus on what's really important about selling insurance: providing protection. "I've seen a trend toward annuities providing for guaranteed income amounts rather than a tax-deferred savings account-so less emphasis on the cash accumulation and more on the income you get at retirement," he remarks. "I think that's a good thing because that's what annuities are supposed to be about: providing income for life. Everybody who is retired should have an annuity as part of their income plan." Lagging Long Term Care Products Long term care insurance sales have plummeted in the past year. In our survey, NAILBA member agencies said their agents wrote only $537,000 in long term care insurance premium in 2012. That represents a meager 3 percent of total premium written. LIMRA reports that annualized new premiums from U.S. sales of individual long-term care insurance fell to $213 million in the second quarter of 2013. "In the first half of 2013, sales had dropped 20 percent, making it the greatest decline since 2009," Kerley says. However, he adds that three of the top five carriers did show some gains in the LTCI market. But why exactly is LTCI floundering? "Generally, I think the market is still turned off by use it or lose it," Kerley notes. "So it's a product that's struggling, no question about it." Long points out that the prolonged low interest rate environ- DAVID LONG, Long Insurance Services- CPS Sacramento, points out that the prolonged low interest rate environment has made a major impact on LTCI. ment has made a major impact on LTCI. "That's how insurance companies make money, on the spread between what their portfolio can make and what they pay out," he explains. "In long term care, we used to have things like short pay options and unlimited benefit scenarios, but in the low interest rate environment it's just bad business to continue to offer benefits like that. So we've seen what's available really dry up." Atkins says regulation is also affecting LTCI. "In the regulatory world, there's ongoing activity that is affecting products," he describes. "There's a lot of pressure to continually expand benefits, but there is not an appetite among the regulators to allow price increases, to keep the companies making money. And because of that, people have dropped out of the long term care market." Long predicts that when interest rates uptick, the LTCI market will likely bounce back. On the other hand, Atkins says the market will continue to shrink unless there are some major regulation changes. "Until the attitude changes in the regulatory world or consumers are willing to accept a much higher price in exchange for perhaps a better benefit package, there won't be anybody doing much in long term care," he says. "The few companies that remain will do what they have to do to hang on, but there will not be a great amount of offering in long term care." 04. FOUR Combo Products Prepare for Take-Off While the long term care market dwindles, combination products are skyrocketing. "These hybrid products, such as life insurance with long term care benefit, are gaining a lot of popularity," Long says. In fact, 2012 marked the fourth consecutive year of double digit growth in this market, according to Kerley. "The combination products are starting to take off," he adds. Atkins believes these "super combo products" are likely the future of insurance. May reflects this sentiment saying, "The trend of having traditional life insurance contracts with long term care riders, critical illness riders, perhaps even disability income riders or other lifestyle riders, is probably going to continue and open doors of creativity in solving some of the needs out there. I think in particular the long term care rider- with all of the pressures on pricing of individual long term care, many have come to see it as a very reasonable way to help supplement the offset of that exposure." "The better the communication between carriers and BGAs, the better the chances that the products that come out are what the clients need and what agents can understand," Long says. Atkins adds, "Engagement is the key. If carriers understand not only what the BGA is doing today in terms of the business but where that business is going in the future, everybody is going to win." Amy Bell is a professional f reelance w r iter and ow ner of WritePunch Inc. With more than 10 years of writing, editing, and marketing experience, she writes for a variet y of companies and publicat ions throughout the nation, including Agent's Sales Journal, Blueprints, Real Estate & C o n s t r u c t i o n R e v i e w, T h e Weat her C hannel, and Tur ner Broadcasting. She is a University of Georgia Graduate with a BA in Journalism. Visit her Web site at w w w.w r itepunch.com for more information. Staying on Top How can BGAs stay on top of these ever-changing product trends to ensure they not only survive but thrive? All four State of the Industry Panel members agree that it all comes down to communication. www.nailba.org 29 http://www.writepunch.com http://www.nailba.org

Table of Contents for the Digital Edition of Perspectives - January/February 2014

NAILBA Perspectives - January/February 2014
Contents
Chairman’s Corner
CEO Insights What’s New at NAILBA?
The New HIPAA Information Requirements
NAILBA 32 Highlights
Reading Ahead
In Vogue: Life, LTC & Annuity Product Trends
NAILBA Charitable Foundation What a Great Year it Was!
Member Profiles
Agency Successor Networking Group
The Power of LIFE Behind You
Agency Resources
Legislative Update
Index of Advertisers
Calendar of Events

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