Question: What is a key threat – and a key opportunity – facing the life insurance industry in the coming year? Why?
“A key threat has to do with the fiduciary standard that the Department of Labor (DOL) is working on. Unless DOL does nothing at all, what their standard will do will be significant and not in the best interest of our customers. It will limit the ability of our customers to get advice and counsel, which is what they want to be able to do. As for opportunity, the No. 1 opportunity I see is the focus on the consumer. This means the industry’s focus on what customers need, how they want to access what we have, and the services that provide value and quality to the customer. The companies that provide the customer solutions, services and delivery — they will be the successful companies.”
–Steve Valerius, president-individual division of Ameritas, Cincinnati, Ohio
“A threat for advisors in the business, and the firms for which they work, is how far to go when doing a client diagnostic evaluation, whether for life insurance, retirement income or other financial need. Right now, that is an open question. Some people say the advisor should go through the client’s situation to the fullest extent. However, there are cases where you can’t do that. That may be because the client won’t tell you certain information. Or the advisor doesn’t have the time or background to be able to diagnose. Some advisors may not even know how to do it. And some firms don’t want their advisors to go outside the structure and processes the firm has established for such work. One way to do this is to qualify the client, but is that enough? Some say no, you need to look at the situation by tiers — for example, clients who are overfunded; clients who have funding but who may also face constraints that mean they may not have enough; and clients who are underfunded and need to move into product solutions quickly. The opportunity I see is the same as the threat: The industry needs to find the answer to the threat, and that will uncover the opportunity.”
—Francois Gardena, founding chairman, Retirement Income Industry Association, Boston, Mass.
“One threat is that the millennials have a negative to savings, so their disposable income is not going into buying life insurance. For a lot of them, they are spending money on paying off debts, so life insurance just isn’t top of mind. Either they don’t have the ability to purchase life insurance or they think they don’t have the ability to buy it because they think the cost is too high. Some think the cost is too high even though they don’t know what it costs. That leads to an opportunity. This is the industry’s opportunity to educate millennials on how affordable life insurance is and can be. Based on my experience, when you show them the numbers, they are surprised at how low cost life insurance actually is.”
—Terri Chuse, business services manager, American Family Insurance, Boston, Mass.