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
Perspectives - January/February 2014
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