When things go wrong, some wag usually says, "We'll laugh about it later." Well, here are 10 insurance product woes for the wags to chew on, plus some thoughts on how the woes might turn around.
1) Guaranteed minimum interest rates on fixed annuities have hit rock bottom. Indeed, man
y advisors say it's a tough go to position FAs against bank certificates of deposit. This is despite the FA's tax deferral feature and despite the continuing aversion to equity investing that many consumers display. Then again, interest in single-premium income annuities is picking up, and that's a fixed product–so hope could be as close as a SPIA.
2) Variable life insurance has lost its luster. Last year's market rout put this once-hot life insurance security on the shelf. Some insurance pros think VL sales–and development–will come roaring back once the market rebounds. Others say consumers who were burned by the 2000s' recessions will never return to securities. The real question here is how long will consumer aversion to risk last? Elephants have long memories, but do consumers?
3) Long term care insurance sales stink. Most agree that 2009 was a bust for individual LTC and they fear this will continue due to the price tag. But others predict this will change as more boomers enter retirement, see their LTC need, and decide to use some of their retirement funds to pay for coverage. Meanwhile, in the employer market, market watchers see big opportunity in worksite LTC.
4) Group life and health populations are shrinking by the week. All the layoffs and shutdowns of 2009 took a mighty toll on workers and on the group benefits brokers and carriers that no longer insure them. As 2010 gets underway, some advisors are retooling to provide individual policies for laid-off workers to buy to "replace" their now terminated group coverage–if, that is, the workers can afford and qualify for the individual policies.
5) 30-year return of premium life policies are out to pasture. When 30-year ROP became too expensive from a reserves standpoint last year, many carriers showed it the door. It's too bad; the product was perfect for the hyper-conservative buyer. Advisors who still want to offer it should check around, though, as a few carriers are trying to offer it, or some variant of it.
