The Department of Labor fiduciary rule. The repercussions of protracted low interest rates. Fewer feet on the street to provide protection and income planning solutions. Legions of Americans still lacking life insurance protection, sufficient income for retirement or solutions for catastrophic long-term care expenses.
As we begin the new year, challenges loom large. But opportunities abound as well. Carriers and distribution partners must become even more relevant, responsive and resilient to serve clients effectively in 2017.
Relevant, responsive, resilient. Here are the meanings of those three words.
» Relevant — appropriate, significant, important.
» Responsive — quick to react in the way that is needed, appropriate or right for a particular situation.
» Resilient — strong, irrepressible, quick to recover.
More relevancy, responsiveness and resiliency would likely benefit all sectors of the financial services industry, whether it’s life insurance, health insurance or annuities. But how might life insurance professionals, in particular, become even more relevant, responsive and resilient? Here are seven suggestions.
1. Dig deeper.
By deepening customer insights across market segments, the different generations of consumers and diverse multicultural communities, life insurance professionals have the potential to deliver solutions expertly tailored to evolving needs.
That’s important because the protection gap remains substantial. More than 19 million consumers understand the need for life insurance, but also lack an individual policy, according to LIMRA. In fact, LIMRA recently reported that only 60 percent of households own some form of life insurance, down from 72 percent household ownership in 1976.
2. Be proactive.
As long as there is a need for protection and income planning, opportunities will exist for life insurance professionals to be proactive in providing consumer education about the most appropriate solutions. This will remain true even though it likely will be within the framework of different record-keeping and reporting requirements than in the past.
“The advice model is not dead; producers do not need to be intermediated by change if they begin to leverage companies’ tools to help them be more productive and to expand into new markets,” LIMRA President and CEO Bob Kerzner said recently. “Our research indicates people still want and need advice. Even the millennials tell us they want help when it comes to buying life insurance or saving for retirement.”
3. Train and retrain.
Most carriers, brokerage general agencies and independent marketing agencies are committed to helping educate financial professionals. Leverage their tools and training, whether it’s participating in issues-oriented educational webinars or checking out interactive online tools and other resources designed to be shared with consumers.
It’s especially important to take the time to explore new tools during times of regulatory, economic and political flux. That’s because changing times such as these require distribution professionals to grow clients' knowledge of the role that protection solutions play in increasing financial security. LIMRA’s 2016 Insurance Barometer study points to significantly increased financial concerns in the U.S. over the past year and “suggests today’s consumers are more concerned about their financial well-being than at any point in the last six years.”
4. Impart “utility.”
Consumers will face myriad health and financial challenges over their lifetimes. Professionals can help position consumers to address these challenges by educating them about the variety of products that offer integrated or available riders. These riders are designed to address a range of financial needs, whether chronic or critical illness, disability, long-term care or longevity. Advisors who can help position consumers to solve their financial challenges also may help their own livelihoods become more resilient.
Additionally, carriers may respond to protracted low interest rates by issuing solutions with more complex designs. These designs will transition from heavy emphasis on guaranteed premium products to offerings that require more client education. Life insurance professionals may be well-served by monitoring client needs even more closely to gauge whether new solutions are appropriate.
5. Look to permanent life insurance.
The new year also may be an opportune time to focus on expanding client knowledge of permanent life insurance solutions structured for both accumulation and protection. When seeking fitting solutions, review the ways in which policyholders can access cash value in the products, as many consumers crave flexibility.
Index products, which offer upside potential and downside protection, may be key as many consumers likely won’t be able to rely on social programs to fulfill their needs for lifetime income. With employer-sponsored pensions largely having been replaced by 401(k) plans and other defined contribution plans, Americans have had to bear increasing responsibility for their own financial readiness. We have little reason to believe the trend will change.
6. Know the new rule.
By the time this article is published, litigation may have resulted in a court injunction delaying implementation of the DOL rule beyond its scheduled effective date of April 10. But even if that happens, it’s incumbent on financial professionals to continue planning as though the rule will take effect soon, given the changes implementation would bring.
Those who maintain close contact with their carrier partners, BGAs or IMOs regarding changes to reporting requirements may have the greatest likelihood of remaining compliant and resilient. The protocols may vary, but guidance will be issued with them.
7. Bring a broad portfolio.
It’s vital to have the capability to use expansive, diverse product portfolios to fulfill clients’ ever-changing needs. Without these offerings at hand, it’s not easy to pinpoint the ones that may be right for each individual client.
Furthermore, in the mission to continue supplying consumers with the best products every time, being equipped with smart solutions and a thorough comprehension of how they’re designed to work is instrumental to being relevant, responsive and resilient.
Rod Rishel is chief executive officer of life, health and disability, AIG Consumer Insurance. He may be contacted at [email protected]