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The Dow Jones Industrial Average dropped 227 points on the day this was being written, and the NASDAQ fell by nearly 76 points.
Such swoons have become commonplace in 2001. But, to date, neither they nor todays economic slowdown have caused an all-out stampede among insurance producers toward selling traditional life products like whole life, interest-sensitive WL, WL/term blends, level term, and universal life with no-lapse guarantees.
National Underwriter interviews have found that nontraditional products (most especially variable life) still sing for some producers and some clients. So todays life sales bag is full of all sorts of products, traditional and non.
LIMRA Internationals first-quarter 2001 sales figures do show that "UL premiums grew by 15%, the first quarterly increase in UL premium in six quarters." The volatile stock market may have nudged a move to fixed products, suggests Elaine Tumicki, assistant vice president of product and distribution research (see related story on page 35).
But thats not a sea change, say several producersnor a reason to abandon well-established sales strategies.
"This is not the late 1980s," explains John Lefferts, regional president for AXA Advisors in Dallas. "Its an entirely different environment."
He is alluding to how the entire life insurance industry seemed to drop VLs cold, and sometimes ULs, too, after the Black Monday stock market crashes of 1987 and 1989 triggered widespread equity- and risk avoidance. For a long while after that, the industry pushed a "back to basics" campaign, emphasizing the safety and predictability of traditional life productsa campaign that did not end until the stock market took off in the mid-to-late-1990s, giving wings to renewed buyer and seller interest in VL.
"Now, people have a taste for risk," says Lefferts. "I dont think theyll want to go backwards," even in a downturn. "They know they need to stay flexible."
He concedes that he is seeing "a little more" sale of term insurance, as well as more consumer interest in bank certificates of deposit. Also, some prospects seem to be "waiting on the sidelines, looking to see which way the economy is going to go before making a money decision."
So the economy is affecting buyers, Lefferts agrees. "But I see no flight to WL products," he adds, contending that WL is not flexible enough for todays needs.
Reports that the "back to basics" campaign may in fact be coming backagainseem to ignite from statistics, such as LIMRAs, cited above.
Also, some people allude to scattered anecdotes that suggest a comeback is looming. For instance, Woodman Accident and Life Insurance Company, Lincoln, Neb., recently told NU that its WL sales are now "even" with UL, whereas UL was ahead two years ago. (The insurers fixed annuity sales are up, too, notes Mike Woody, director of life product development.)
And Lincoln Financial Distributors, Fairfax, Va., has seen quotes for UL with lifetime no-lapse guarantees increase "astronomically" in the first quarter of 2001, says Robert Klein, vice president and national life sales manager. "Clients who were being hammered by the stock market were asking for security and guarantees," he explains.
Still, producers dont seem to be gearing up for a big traditional sales strategy, like the one in the late 1980s.
Those who have always favored selling traditional products still favor them (due to their guarantees and predictability); those who favor VLs still swear by them (due to their flexibility and long-term growth potential); and those who prefer selling a mix still do that.
The point, says Stevan M. Cohen, second sales vice president at Lincoln Financial Distributors in Manhattan, N.Y., is that "we dont want to sell a traditional product just because the market is down and its easier to sell.
"Instead, we want to look at the buyers needs and pick the right solution. We want to offer an array of solutions, and decide with the customer, as a team, the one(s) to select."
Today, it is needs and suitability analysis that counts, Cohen says. Traditional productslike UL with no-lapse guaranteesmight work best for clients having a lower risk tolerance, he suggests, while a VL might be better for people with more risk tolerance and a longer time horizon and need.
