Current Trends in Insurance
With ongoing tax law changes, product enhancements, insurance carriers entering or leaving different markets and new riders, how do you keep up with all of these changes?
NAIFA members who attended one of the 2012 NAIFA Career Conference and Annual Meeting Workshops on Monday received some help in keeping up with these changes from Mike Smith, LUTCF, a life member of the MDRT, with 20 years of experience in the insurance industry. Smith is president of CPS Horizon Financial Group and shared with conference attendees various concepts and products, which may not necessarily be new, but have been packaged in a new way to meet the needs of a changing marketplace.
Among those concepts he mentioned were: *Legacy planning. Several carriers are developing plans that skip a generation, he said. Under this scenario, a trust is built for future generations and benefits are paid in installments. “Think of your clients, and call those you think this concept might benefit,” he said.
*Linked benefits. Various benefits are linked, such as a combination of long-term-care insurance and another product.
*Quick-Issue applications. With this concept, your client can be approved for insurance in four or five days. With these applications, he pays a slightly higher premium for not taking a medical exam and related tests, but he is approved quickly. More and more carriers are offering these products and now is the time to use them to help as many of your clients as possible, he said. *Index universal life insurance. IUL is now the fastest-growing product in the country, he said. Forty-six carriers now offer it, and it brought in $800 million in premium in 2011. “It is the fastest growing product today, “he said.
With these products, he said, the policy owner gets the positive returns of the stock market up to a cap, but with no negative returns if the market drops. With IUL, it is good to remember that life insurance is not the primary goal—building cash value is, he said.
There is some questionable marketing involved with IUL products, he pointed out. It is a great product, but it should not be abused. You should take a look at IUL products, he advised, but do not jump into it with both feet.
*Accelerated or living benefits. These products are making life insurance products “life insurance you do not have to die to benefit from,” he said. They help you answer the questions of clients who want to know, “What is in it for me?”
Once you know about these products, you should call your clients and ask to discuss them, he added. You can say to them: “There have been some tax law changes that may positively affect you. I’d like to schedule some time to go over them with you.” Or: “Frank, I know that old annuity you have with XYZ Company. Thanks to a tax law change, I may be able to enhance the benefits of that annuity. I would like to meet with you to discuss this tax change and what it may mean to you .”