News You Need to Know: Products
Annuities
Investment News: “Guaranteed Features Propel Indexed-Annuity Sales,” 2014-06-06
Fixed-income alternatives offer firms more opportunities with more growth than CDs.
Indexed annuities have been gaining popularity all year long as low interest rate CDs are less promising. Insurance sales agents account for the largest growth rate in the sector.Investment News, “Indexed Annuities Gain Popularity While Rates Remain Low,” 2014-23-14
Indexed annuities are becoming more popular.
Indexed annuities are becoming popular with reps at broker-dealers and wire houses as a viable fixed-income alternative and a possible provider of lifetime-income benefits.Wall Street Journal: “Variable Annuities and Guarantees Are Thriving,”2011-05-14
Diversifying Variable Annuities among carriers offers selection and protection.
Using purchasing strategies like staggering and special riders, variable annuities come to the front of guarantee products.
Client solutions go even deeper when adding in diversity among the different carrier products.Wall Street Journal: “Long Derided, This Investment Now Looks Wise,” 2009-July-14
For years variable annuities were shunned for being too expensive, now they’re looking like they are a wise choice. Most annuities offer some form of investment guarantee for an additional fee. Because of such guarantees, many holders of variable annuities actually saw their accounts increase 6% or more in value last year, when the Standard & Poor’s 500-stock index dropped nearly 39%.
Baby boomers find these products to their liking. Features like the “living benefit” eliminate the fear of out-living their income.NASDAQ: “Is The Time Right For Income Annuities?” 2014-06-27
Industry experts expect the income annuities sales to double in the next 4 years.
LIMRA Secure Retirement Institute says From 2009 to 2013, sales of SPIAs and deferred income annuities (DIAs) surged almost 40% to $10.5 billion.
Growth is linked to the rising tide of retirees, who increasingly will lack a pension.
Life Insurance
BISRA: “2012 Bank Life Sales Close to All Time High,” 2012
This is the second highest product level in history for the bank channel with total life insurance premiums sold through financial institutions reaching $1,621 million in 2012, up 13% from the prior year.
Banks continue to integrate wealth management products with single premium products “Since 2009, at least 9 out of every 10 dollars in new life sales premium sold in the bank channel has come from single premium products” stated Dan Beatrice, Associate Research Director at BISRA.Fox Business: “The 9 Most Useful Life Insurance Riders,” 2011-02-35
This is a great article that advisors can give to clients. Basically, it explains how life insurance riders offer flexibility, extra benefits, and peace of mind.
It reviews different types of riders, including: waiver of premium, disability income, guaranteed insurability for declining health, term conversion, and accelerated death benefits.
The article emphasis that there is no longer a one size fits all policy, making product knowledge imperative.Investopedia: “Let Life Insurance Riders Drive Your Coverage,” sourced 2014-09-14
To cut premium costs, it is always a good idea to get a rider at economical rates. Riders provide several kinds of insurance protection. Of course, for that you have to meet the rider’s outlined conditions.
This article delves into various types of riders and discusses the ways they can drastically affect the way you buy life insurance. It is a great tool to help clients consider eventualities and make appropriate decisions.Daily Finance: “9 Reasons You Should Take another Look at Whole Life Insurance,” 2014-03-05
A properly designed whole life insurance policy can provide your clients with the ability to live the life they want.
Lack of information can challenge a viable product in the marketplace. Properly designed, a whole life product can provide principal protection, annual guaranteed growth of money, non-taxable dividends, access to cash, death benefits and more.American Banker: “Is it Time to Bring Life Back to Banks?” 2014-06-26
For the last 20 years, there have been marked changes in both banking and insurance. Some banks gravitated to auto and homeowners insurance, because they were straightforward, quick transactions.
Some banks became interested in getting into the insurance business. Insurance providers used to lack innovation from both a product and technology basis. That has changed. Hybrid life and long-term care products are addressing client needs. Processing and underwriting is almost 100% electronic.
Banks are experts at building relationships and that’s exactly what the insurance business needs. Both industries are similarly concerned with helping clients preserve and grow their wealth, and do so in highly regulated environments. The latest advancements in banking and insurance only enhance their compatibility.
Long-Term-Care
Forbes: “New and Unexpected Ways to Fund Long-Term Care Expenses,” 2014-04-21
Long-term care planning is much more than just buying insurance. Less than 10% of people have a long-term care plan, and only 8% have long-term care insurance. Yet nearly 70% of people will need long-term care at some point in their lives.
Discover how hybrid policies a combination of life insurance and long-term care policies bring new opportunities to funding long-term care expenses.
Long-term care expenses can also be financed through a variety of newly developed “hybrid” or so called linked-benefit products. One method seeing tremendous growth and adoption is the life insurance policy that offers tax qualified long-term care riders. Life insurance policies can also be used to fund long-term care costs in a variety of other manners: withdrawals or policy loans, life settlement option, or a viatical settlement. Annuities can also be used to fund hybrid plans. Companies like One America offer fixed annuities with long-term care riders. An existing life insurance or annuity product can fund a hybrid product via a 1035 exchange.Insurance.com: “Baby Boomer Trend: Asset-Based Long-Term Care Insurance,” 2012-07-09
The American Association for Long-Term Care Insurance reports that buyers are getting younger, the majority now being under 65.
Low interest rates may be driving the increase as consumers look for ways to get a better return and or use of their funds, and at the very least provide money to their heirs if they don’t need care.
While combination policies have been around for 30 years, only recently have insurers enhanced and repackaged their offerings.Life Health Pro, “Embrace Asset-Based Long-Term Care Products,” 2013-11-05
Rate hikes and facts make long-term care products more viable than ever.
While rate hikes in standard policies concern consumers, hybrids, riders and facts are driving the consumer to long-term care products.
A great LTC feature is death benefit paid to heirs if the policy is not used or exhausted in entirety. Qualified assets in a portfolio can be used while maintaining their tax-favored status.Life Health Pro: “Using Facts to Combat the Long Term Care ‘Self-Insurance’ Plan,” 2010-04-06
Learn how to combat the “I’ll just self insure” objection.
Americans are dramatically underprepared to pay for long-term care. According to the National Clearinghouse for Long-Term Care Information, 70 percent of people over age 65 will require some type of long-term care services during their lifetime. On average, care will be required for three years. While only one-third of today’s 65-year-olds may never need long-term care services, 20 percent will need care for longer than five years.
Despite the proven need for coverage, LIMRA estimates that only about 7 million Americans have long-term care insurance. The U.S. Census Bureau estimates that, in 2010, there were more than 40 million Americans age 65 and older.
Asset-based long-term care is a viable solution. Policies are built either on the chassis of whole life insurance or an annuity. Advisors can have a discussion with clients about their long-term care plans, or the nearly bankrupt state of the government, which may not provide for them.The Scan Foundation: “Growing Demand for Long-Term Care in the U.S. (Updated),” 2012-06-01
This fact sheet describes trends that contribute to the growing demand for long-term care among Americans. The Scan Foundation anticipates significant growth in the demand for long-term care based on U.S. population is also living longer, often with chronic illness and disabling conditions. It is estimated that the long-term care need will increase from 12 million today to 27 million in 2050.
