For advisors who feel life insurance is a soft market lacking further potential, consider the following:
- According to LIMRA, more than half of U.S. adults have not purchased an individual life insurance policy.
- The industry has experienced a 46 percent decline in new life insurance agent recruits since 1975.
- The Task Force for the Future, an industry-wide coalition charged with identifying and solving major challenges facing the life insurance industry, found that the average age for life insurance agents exceeds 55 years.
Far from a soft market, evidence points to the exact opposite, as an increasing need for life insurance and annuities is serviced by a decreasing number of qualified advisors. The simple and potentially lucrative conclusion is that life insurance opportunities remain wide open.
But this market opportunity translates to market complexity as regulatory confusion over living benefits, rider options and equity-indexed products increases. For advisors who want to survive – and thrive – in future life insurance and annuity markets, education on product design and client suitability is increasingly critical. Thankfully, there are plenty of credible resources to turn to.
Commissioners crack down
"We recently added an ethics training requirement to our 'Uniform Standards for Continuing Education,'" says Jim Poolman, insurance commissioner for the state of North Dakota. "We want to make sure they understand what's a suitable sale and what's not. Make no mistake: Regulators will continue to crack down on suitability issues."
In addition to his home-state responsibilities, Poolman oversees education and training initiatives for the National Association of Insurance Commissioners. He serves as chairman of the association's Life and Annuity Committee as well as the Producer Licensing Working Group.
A recent NAIC meeting focused on equity-indexed annuities, which, Poolman says, are gaining in popularity at an exponential rate. He reports that two separate committees – the Life Insurance and Annuity Committee and the Market Regulation Committee – are looking into EIA training and education programs for agents. They're also looking into standardization procedures for the education material carriers produce.
"We're increasingly concerned about the complexities of some of these products and how they're presented to the public," he says. "It's something that will be a major focus for the near future."
The American College
For advisors looking for help with the issues Poolman describes, educational resources are available. The American College, located in Bryn Mawr, Penn., offers two of the better-known educational designations for the life insurance industry – the Charted Life Underwriter and Life Underwriter Training Council Fellow.
The college claims that since its inception in 1927, more than 94,000 individuals have earned the CLU. In addition to the basic uses of life insurance, course topics include complex income replacement, estate planning and wealth transfer strategies. The college cites an internal study that found individuals who have obtained the CLU have a 34 percent higher income, on average, than those without the designation. To become a CLU, an individual must complete a comprehensive course of study and pass a series of eight college-level examinations in several subject areas. These include life insurance, pensions, taxation, finance, economics and business, and estate planning. Rigid ethical and experience requirements also must be met.
The LUTCF is billed as an introductory program for those who are new to the life insurance field or for experienced advisors looking to fine-tune sales skills. The American College and the National Association of Insurance and Financial Advisors jointly sponsor the LUTC Fellow designation, which 65,000 insurance professionals have obtained. To earn the LUTCF, 300 credits or five courses must be completed, in addition to one course on ethics. The candidate also must be a NAIFA member in good standing during the conferment year. Courses in the LUTCF program are either in an 8-week or 12-week format.
In order to ensure the accuracy and relevancy of both programs, the college conducts periodic reviews of textbooks and course curriculum. If major changes occur, such as with tax or pension laws, reviews occur on a more frequent basis.
"We aren't a traditional college, and our students are in the trenches living and breathing this stuff," says Edward Graves, associate professor of life insurance studies at The American College. "It's their livelihood on the line. If we don't get something right, they let us know about it. So that's a strong motivating factor for us. We want to get out in front of changes to the course material to get it right before we hear about it from our students."
