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Whats going to be the hot life product in 2003?
For the last few years, product predictions have followed regulatory and/or economic changes without any real innovation from insurance companies.
In 1999 and 2000, for instance, term insurance and variable life were predicted to be hot sellers, thanks to the impending implementation of Triple-X reserve regulations and the continued upswing in the equity marketplace.
Then, in the last couple of years, as the equity markets cooled off, interest rates declined and consumers–recognizing that subaccounts can, in fact, lose money–rediscovered the satisfaction of financial guarantees with little or no downside risk. As a result, whole life and universal life, especially with no-lapse guarantee riders, became the favored products.
Will the same be true for 2003? Will it be another year of insurers circling the wagons and tweaking existing product offerings? Possibly. But some insurers and product developers are beginning to look at a whole new level of life protection that may indeed signal a significant revolution in the way insurers provide–and consumers shop for–life insurance protection.
The key to this significant development is in the creation of a life insurance product that does what life products are essentially designed to do–offer financial protection, regardless of the investment marketplace–but that also has a genuine potential for internal growth.
This is a significant product innovation that may change the way consumers view life insurance protection.
However, it actually represents only a natural progression in the sequence of products that have been developed over the past 20 years.
Consider: Whole life, which up until the late 1970s made up the vast majority of all life product sales, was eventually replaced by universal life. Many owners of those products were subsequently convinced that variable life offered the optimal combination of death benefit and potential for taking advantage of the burgeoning equities markets. Then, when the markets stumbled in recent years, the market swung back to where it began, with whole life once again becoming the dominant product of choice.
