For U.S. life insurers, the dice have rolled and produced the following conditions:
- Rising interest rates.
- Higher levels of inflation, which might draw a yawn from the winter children of the 1970s but spook the summer children of the 2010s.
- Geopolitical uncertainty.
- COVID-19 (and monkeypox).
- Consumers who are doing well but feeling … gloomy.
What It Means
The gameboard looks fluid. The pace of major new product announcements appears to be slower than in the past.
Clients who want firm benefits guarantees or inflation protection options might get better results if they wait and buy later, but it's also possible that shoppers who hesitate now will be lost.
The Moves
Here's a look at the principles behind some of the moves, based on a review of recent production introductions.
1. Indexes are still hot.
Many life insurers are still bringing out variable and non-variable index-linked products.
Tying the performance of a life or annuity products to the performance of an investment index can give an insurer a simple, efficient way to manage the investment machinery inside a product and cope with risk by buying investment index options, and using derivatives to guard against fluctuations in stock prices, interest rates and currency exchange rates.
Lincoln Financial Group recently introduced the Lincoln WealthPreserve 2 Survivorship Indexed Universal Life policies.
Couples and business partners can use the policy to insure two people with a single policy.
The policy pays death benefit at the end of the surviving insured's life.
Purchasers can buy a rider that will help with inflation, by increasing the policy's coverage by 3% each year.
Legacy Marketing Group has joined with Americo Financial Life and Annuity Insurance Co. to launch the LibertyMark Freedom non-variable indexed annuity contract.
The contract is designed to appeal to optimists: It comes with 14 index options, and most have no caps on participation rates, meaning that holders could continue to share in increases even if some indexes soar.
The contract comes an optional enhanced death benefit rider, the Heritage Maximizer rider, which can add a 30% death benefit bonus to the full accumulation value.
The contract offers a minimum return of 1% on 100% of premiums.
Americo is responsible for supporting the rate guarantee.
Transamerica has introduced the Transamerica Structured Index Advantage Annuity contract, a registered index-linked annuity.
The variable product provides a buffer against some market losses.
2. Menus are getting longer.
Some companies are trying to add product appeal by adding to the list of annuity investment choices.
Protective Life recently said that both its commission-based variable annuity products and its fee-based products will offer investment options from four new investment managers: AllianceBernstein, BlackRock, Columbia Threadneedle and T. Rowe Price.
The commission-based products will have 29 new subaccounts, and the fee-based products will have 38 new subaccounts.
3. Streamlining is still in progress.
Many life insurers were trying to simplify life insurance underwriting before the COVID-19 pandemic came along.
One question was whether simplification efforts would survive the effects of the pandemic on U.S. mortality rates.
