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Term, Term, Term . . . 40 Year Term Now Available!

 

Change is the only constant and term insurance is no different.  Today the term insurance industry is rapidly evolving.  Below are some of the most interesting changes occurring.

Product

  • – 40-year term is now available for clients up to age 45.
  • – 35-year term can be purchased up to age 50.
  • – Living benefits for critical and chronic illness are available on select term products.  Be aware these benefits are often limited or discounted at claim time and should not be used to replace other types of coverage like disability or long-term care insurance.
  • – À la carte offerings continue to increase.  Today your term policy may not be convertible at all, or for the full level period.  A rider may need to be added to improve the coverage and flexibility of your client’s intended plan.

Underwriting

Accelerated Underwriting Programs

  • – Allow clients to avoid blood, urine and a physical exam in exchange for a health interview conducted over the phone.
  • – Are geared towards healthier clients ages 18-60, up to $1 million.  Learn more in our Integrated Insights™ – Accelerated Underwriting Programs piece.
  • – An individual life policy is often superior to group life insurance.  The healthier your client is the more likely you will save them money too.  Accelerated underwriting allows your client to get individual coverage easier than before but may require a little more work on their part vs. group coverage.  Learn why individual is often better than group coverage via our Integrated Insights™ – Group v. Individual Term.

Child Term Riders

Child Term Riders can be added with NO underwriting, allowing your client to insure children with health conditions.

Marketplace

Direct to Consumer

Some insurance companies have different distribution models and are now bypassing the agent, going straight to the client.  These direct-to-consumer offerings have limitations making them inferior to working with a life insurance expert.

The limitations are many, including:

  • – One product, one price and one underwriting offer
  • – The inability to shop like an insurance broker can
  • – If clients don’t like the offer, they likely need to start all over again somewhere else
  • – Concern of discussing contract features like ownership and beneficiary arrangements
  • – Limited or no ability to discuss proper needs analysis
  • – Limited perspective on the marketplace and different offerings

No Commission

In addition to cutting out the agent, some insurers are cutting out the commission.  These no commission options are causing more confusion in the marketplace.  There is a perception the client is gaining something, but that is not what our research has shown so far.  These companies may have competitive pricing but other features like conversion and living benefit riders are not available.

If you perceive “no commission” to be a better value, I challenge you to think through the reality of today’s term market.  If an agent makes a one time 100% commission on a 20-year term policy, the “no-commission” options are only cutting out approximately 5% of the cumulative premium.  For an insurer to do this, they must build an infrastructure to replace the agent, and a marketing campaign to get the consumer to call them from that 5% savings.

On Monday Night Football I saw a commercial for one of these “no-commission” upstarts.  How many policies need to be sold to pay for that advertisement?  How many consumers are disciplined to pick up the phone and call?   Of course, we might be a little biased here, but partnering with a life insurance expert, offering a wide array of companies and a proven process of working with clients, is your best choice.

 

 

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