Tag Archives: Industry Information

Life Insurance Industry Changes To Watch For In 2013

Change AheadThe New Year is upon us and as everyone is set to begin making changes in their personal and professional lives for 2013, the life insurance industry is also getting ready for some possible changes .

Life Health Pro has released the five things to expect for life insurance in 2013:


  1. The tax-favored status of life insurance products:  While industry watchers don’t believe that life insurance products will lose their tax-favored status as a result of the fiscal cliff and other reforms, everything is on that table and the COLI and BOLI product tax status can change.
  2. Evolving to respond to the changing consumer: The way consumers shop for life insurance may begin to evolve in 2013. Social media, digital marketing, and mobile distribution strategies could become the new way to purchase life insurance.
  3. Remaining Relevant:  Rebranding may become a priority in the New Year as many young people are not aware that life insurance can be used as an investment vehicle. According to an Ernst & Young report, the average household expenditure on life insurance has declined by 50 percent over the last decade.
  4. Entering developing markets:  International markets are being eyed as the next big opportunity, but with that there are a whole new set of cultural and political barriers you need to overcome.
  5. Awareness of international and domestic regulatory issues: Some of the largest carriers, such as AIG, Prudential and MetLife may soon be designated as systemically significant (SIFI) and they will have to get used to federal regulation and higher capital standards. Of course, SIFI designation has been on the horizon for these firms for the better part of a year, so they should be prepared for it already. The question is what happens if SIFI designation drops on a company not expecting it, LifeHealthPro.com reported.

Consumers are Turning to the Web for Insurance and Annuity Information

Information on the InternetThe number of consumers who are researching individual insurance and annuity products over the Web has increase by 61 percent since 2006, but nearly the same amount consumers are still turning to agents, brokers and advisors for information, according to new research by LIMRA.

According to LIMRA’s report, this is an increase from the 38 percent of consumers in 2006, who turned to the Web to educate themselves about individual insurance and annuity products.

But, still nearly 7 in 10 consumers (69 percent) still turn to agents, brokers and advisors for information because they are “often viewed as the most valuable and influential information sources,” says Mart Art, a LIMRA research director.

The report found the three reasons consumers are turning to the Internet to find information, which apply to all age-groups and income levels:

  1. Research companies and product offerings
  2. Seek general product information
  3. Compare prices

The report also found that:

  • Men and younger, higher-income, higher-educated consumers look on the Internet more often than other demographic groups.
  • Sixty-five percent of men use the Internet for research, compared with just 58 percent of women.
  • Seventy-three percent of Gen Y consumers seeking information online more than Gen X and Baby Boomer consumers.
  • Gen Y consumers are also more likely to rate online sources as their most valuable information avenue for online recommendations of companies and to use agent locators.

How to Calculate Persistency and Placement

In the life insurance industry and at National Agents Alliance, we use placement and persistency to measure the quality of your performance. The concept is very simple. If you can’t get policies placed or keep policies on the books your persistency, placement and income falls with it. Whereas, if you can get policies placed and remain on the books, your persistency and placement rises along with your income and recognition within NAA.

To get a better understanding we will break down how to find your placement and persistency:

How to calculate placement rate:

First it is important to understand that quantity does not equal quality.

If you submit 10 cases but only eight cases have been placed and made it past the Free Look period (typically 30 days, but some states and products may vary), you take the number of placed cases over the number of submitted cases and divide.

Placement Calculation

Let’s remember that quantity doesn’t equal quality. For example, you increased the number of cases submitted to 100, but for one reason or another 30 cases were not placed. When you put 70 placed cases over 100 submitted cases your placement rate is only 70 percent, which is not better than only submitting 10 cases and placing eight.

Quantity vs Quality

The only way to increase your placement rate is to increase the number of placed cases over the number of submitted cases.

How to calculate 4 month persistency:

To calculate persistency you start with placed cases (not submitted business), which has made it through the Free Look period and are active with premiums paid to date.  If you placed 10 cases and only seven cases earned four months of premium then you have a 70 percent 4-month persistency. You must collect premium for all four months on all 10 cases in order to have 100 percent 4-month persistency.

Persistency Calculation

How to calculate 13-month persistency:

Take one month’s worth of business that has gone through the Free Look period and has stayed on the books.  If all of your cases have stayed on the books and premiums have been paid every month up to 13 months, then you have 100 percent persistency.

For example, if in January you placed 10 cases and in 13 months all 10 cases are still on the books, then you have a 100 percent persistency.

Persistency Calculation 2

You cannot determine your persistency in the 12th month, because you need to ensure that premiums have been met for the 12th month in order to calculate your persistency for that year. The same goes for business written in the second month; you have to wait until 13 months later to calculate that persistency for the second block. At the end of 25 months, you then can calculate your persistency for the whole years’ worth of business.

Life Insurance a Hot Financial Planning Tool?

Piggy BankIs life insurance becoming a hot financial planning tool? According to new research from Northwestern Mutual, that seems to be the case. Americans are obtaining life insurance to help secure their financial future and are incorporating into their financial plans.

Because of marriages, growing families and a looming retirement, the flexibility that life insurance products offer are attractive to those who are seeking to maintain a peace of mind no matter what life may throw at them.

According to the research:

  • Twenty-three percent of Americans ages 18-34, are the most likely demographic to purchase life insurance because of a birth.
  • Thirty-six percent of Americans age 55 or older and 39 percent of 45 to 54-year-olds were prompted to buy life insurance because of a marriage.
  • Thirty-one percent of Americans age 55 and older bought it as part of their retirement plan, while 25 percent of 45 to 54-year-olds did the same.
  • Twenty-five percent states home ownership among Americans 45 to 54-year-olds.
  • Thirty-five 18 – 34-year-olds are significantly more likely than those ages 35-54 to have peace of mind as a result of knowing all their debts are paid.
  • Both 35 – 44 (34 percent) year olds and 45 – 54 (36 percent) years olds derive the greatest peace of mind knowing that their family will be provided for in the event of their unexpected death, and those aged 18-34 (68 percent) and 45-54 (58 percent) who have life insurance were significantly more likely to have been motivated to purchase life insurance in order to provide for their loved ones.

LIMRA report for Sept. 2012

Bad Economy SignThe shaky economy has left families scraping to survive. According to the latest LIMRA study, Americans are more concerned with paying their mortgage and bills than they were a year ago.  Here is some information that National Agents Alliance team members should find interesting and potentially helpful.

Identifying those at risk.

The numbers: Three in 10 households, roughly 35 million, are uninsured and half say they need more life insurance.

More than half of Gen X and Y homes, 30 million people, need MORE life insurance.

The middle market represents the largest segment of uninsured households, with 36 million – half – admitting they need more coverage.

Seven in 10 women agree that life insurance is a necessity and all people should have it – only 62 percent of males believe this to be true.

One-third of wives own no life insurance at all – despite the fact that seven in 10 homes are dual-income households, and nearly 30 percent of wives earn more than their spouse.

Why aren’t people buying?

The LIMRA study found the top two reasons people don’t buy life insurance are competing financial priorities or because they think they cannot afford coverage.

Another recent LIMRA study discovered that consumers overestimate the cost of life insurance by as much as 3 times the actual cost.

Shockingly, six in 10 consumers don’t recall being approached to buy life insurance in the last 24 months. Further, 35 percent of shoppers who met with an agent did not buy life insurance and said that the agent never followed up with them.

Another factor in play is the clients’ lack of knowledge about life insurance. This held people back from buying for the following reasons: 12 percent couldn’t decide what type was needed or how much to buy, 10 percent were afraid of making the wrong decision and eight percent did not know enough about life insurance.

What’s the motivation?

41 percent of potential clients said LIFE EVENTS – getting married, having a child or buying a home – prompted them to shop for life insurance.

One quarter of possible clients were looking for coverage because their financial advisor or agent initiated contact or suggested the need for life insurance.

25 percent of life insurance shoppers looked at buying coverage because they thought they might need more and wanted to review their coverage.

One in eight shoppers said a friend or family member recommended a sales rep or financial advisor, prompting them to shop for life insurance.

From window shopping to buying!

78 percent of shoppers with previous relationships with an agent bought life insurance – almost 10 percent higher than shoppers who had no prior relationship with their agent.

Providing a needs-based outlook for customers helps them see how insurance can work for them and their families. 75 percent of shoppers who received a needs-based analysis bought insurance, compared to less than half of those who didn’t have an analysis.

Agents should also recommend an amount to buy for their clients. LIMRA’s study found shoppers are more likely to buy insurance – and larger policies – after getting a recommendation from their agent.

Following up is critical for agents to provide coverage to clients. 35 percent of non-buying prospects said they were still shopping and agents never followed up with them. Additionally, a third more were still making a decision about life insurance.

Big Picture

Americans value life insurance. Eight in 10 consumers say they’ve had a positive experience with life insurance and add that the industry is critical should a loved one pass away. Nearly 67 percent of all Americans feel life insurance gives people peace of mind.

The top financial concern for half of consumers is having enough money to enjoy a comfortable retirement. Almost a third of consumers are most worried about paying their mortgage or rent – 31 percent are extremely or very concerned.

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