Compiled by Thora Madden
Check out what some great life insurance minds have to say about the present and future of this product.
- Given all the dramatic forces at play in the world right now, do you see growth in particular niche markets in response?
Bob Ruff, SVP, Growth Solutions, Aflac:
The pandemic has been a difficult time for all of America—whether emotionally, financially or physically for those who get the coronavirus. Aflac examined this larger topic in our white paper “Stronger on the Other Side,” where we discuss the increased interest in supplemental insurance and value-added services as a result of these uncertain times.
While not new, supplemental products warrant a second look because they can offer employers and employees added peace of mind. These plans serve a dual role: In addition to helping with expenses health insurance doesn’t cover, they also serve as a financial safety net if covered illnesses arise as complications of the coronavirus. According to the 2020-2021 Aflac WorkForces Report, more than 80% of employers have expressed interest in offering supplemental insurance plans that cover costs associated with the coronavirus or a future pandemic. It is worth noting that many carriers are actively developing new plans and enhancing existing plans that pay benefits for prevention, diagnosis and treatment of a variety of virus strains.
Telemedicine is increasingly popular because it provides access to remote consultation and care. While it will not replace regular, physical examinations, telemedicine provides a solution when in-person care is not feasible, realistic or required. Employers can incorporate telemedicine into their benefits strategies to increase employee access to care. Supplemental insurers may include these services as part of a partnership or can help make these services available at low or no direct cost to employers. It’s a simple step that can pay big dividends in employee health and well-being.
In addition, emotional well-being during the pandemic and beyond is an important issue for businesses looking for ways to help take care of employees. Stress-management programs and resources are important to fostering mental and emotional well-being that can fuel workforce productivity. Examples of these programs, often referred to as value-added services, include disruptive-event-management programs, employee assistance programs (EAP), health advocacy services, wellness programs and financial support services. Administration and funding of value-added services may be difficult for some businesses. Many supplemental insurers recognize these barriers and respond by providing services at no or a reduced cost when benefits counselors are given opportunities to meet with employees during enrollment events. Others may embed services into plan designs or make them available to employers at reduced rates negotiated with the service providers.
Pam Jenkins, AVP, Product and Market Development, Colonial Life: Life insurance is needed across all markets as America’s workers in general are uninsured or underinsured. LIMRA’s 2020 Insurance Barometer Study shows that nearly half of us don’t have coverage. Certainly if a primary wage-earner died, this would cause tremendous hardship for surviving family members. The pandemic has heightened our sensitivity to the very real chance of unexpected serious illness or death.
Matthew Purington, AVP, Product and Market Development, Unum:
Frankly, not so much growth in niche markets, but rather an increasing awareness of the need for life insurance in general; the direct and indirect impact of the pandemic as well as continued social unrest have brought the need for protection into sharper perspective.
- Has there been a significant change in product mix for life insurance over the past 12 months in terms of guarantees, variable or term?
Ruff, Aflac:
Our group whole and term life insurance plans continue to show sizable growth. Among other things, COVID-19 has been a staunch reminder of how suddenly things can change in the world. As customers continue to make flexibility in insurance decisions a priority, these plans remain popular for many. Aflac has expanded our guarantee-issue options to help make coverage accessible and as affordable as possible.
Jenkins, Colonial Life:
According to the 2019 Eastbridge Worksite/Voluntary Sales Report, life sales again captured the largest share (28%) of total voluntary sales by line of business. We continue to see a major focus on the term life market. Sales increased 8% in 2019, primarily from group term life provided by the employer with buy-up for the employee. Cash value life sales increased by 3% over the previous year.
- What is happening with your distribution systems? If you have an agency force, is it growing? Are you hiring? Is there more attrition than usual?
Ruff, Aflac:
Independent agents licensed to sell Aflac insurance and brokers are invaluable in helping us connect with individuals and businesses in the United States, Guam and Puerto Rico. Their feedback helps provide us with new ideas and innovations on the distribution side in the hopes of further expansion and efficiency. This is why we have taken action during the pandemic such as providing no-interest loans, in accordance with IRS guidelines, for Aflac independent agents.
As much of the U.S. workforce has been operating remotely, the need for our distribution partners to have access to digital tools is more crucial than ever before. This includes continual benefits communication and education through the use of emails, microsites, videos, brochures and more. The enrollment environment looks different, as well, with virtual meetings being the norm to consult with a benefits advisor and apply for coverage. That said, Aflac values a high-touch, high-tech experience where human interaction and technology are balanced to help ensure a satisfactory customer experience.
Jenkins, Colonial Life:
At Colonial Life, our strong agency distribution has kept us among the leaders of the voluntary industry. There is tremendous opportunity in the worksite industry for people who genuinely care about protecting America’s workers. Colonial Life provides the chance to be in business for yourself but not by yourself, and control your own schedule and income. Our agency sales organization members build their business by working both directly with employers as well as partnering with brokers.
- In terms of life insurance customers, are there certain niches or age groups that brokers should place more of a focus on?
Ruff, Aflac:
Everyone is a potential candidate for coverage. There are far too many Americans without sufficient life insurance, and our hope is to educate all of them on the importance of obtaining such coverage. According to Life Happens and LIMRA’s 2020 Insurance Barometer study, 46% of U.S. adults did not have life insurance prior to the pandemic. Considering the financial hardships many may face because of the coronavirus, that number could be even higher now. Additionally, millennials may be a strong demographic to hone in on, because rates tend to be less expensive when you obtain coverage earlier in life. In fact, 40% of people who own life insurance wish they had purchased policies at a younger age, according to the LIMRA study. Whether they are single or have a family, life insurance can have value, in particular if they are a caregiver for an older family member or their parents co-signed loans with them. It is important to consider life insurance to help those who may be financially impacted if you were to pass.
Jenkins, Colonial Life:
The days of a personal life insurance agent who visited your home are long gone. Many people don’t know where to turn to even ask about life insurance. This highlights a huge opportunity for brokers to work with clients to offer life insurance in the workplace.
Young people—Gen Y and Gen Z employees between ages 18 and 37—are less likely to report life insurance as an option at their employer. Just 40% of young employees say life insurance is available, while nearly 60% of older employees—Gen X and Baby Boomers between 38 and 70—report the same. This indicates there may be an opportunity for better benefits education and communication to younger employees who may be considering life events that increase the need for life insurance (marriage, children, buying homes).
Purington, UNUM:
Not so much more focus, but continued focus; for individual policies with “issue age” rates, purchasing at a younger age can provide a lifetime of protection at the most economical rate for the consumer; for group policies with “guaranteed issue” purchasing and maintaining sufficient coverage to replace the income of an insured should they die is a key financial strategy for those who have loved one who rely on the insured’s income for their sustenance.
- What kind of growth do you see in life insurance sales as an employee-paid or employer-paid benefit?
Ruff, Aflac:
Demand continues to grow for more valuable and accessible life insurance packages. Our response has been to bolster our guarantee-issue options, helping employers maximize their benefits spending with a variety of coverage options. We have significantly increased the amount of guaranteed-issue coverage offered and lowered the requisite participation levels enough to allow for more employees than ever before to have access to quality coverage through their worksite.
One trend we see is the rise of rates and benefits tying into wellness initiatives. Companies are more often rewarding healthier behavior with higher face amounts or better premium offers. Since better eating and exercise habits tend to lead to a healthy lifestyle, it can be a win-win for both parties: Insureds have incentive to better their health, while companies can reward those who commit themselves to a positive lifestyle.
Jenkins, Colonial Life:
Making sure customers understand the options for life insurance is key. Many don’t know when they leave an employer they may not get to keep—or even think to keep—their group term life insurance. Term insurance growth is stimulated by employer-paid benefits, which does create additional growth as employees “buy-up” for more coverage. For cash value plans that are intended to cover a person for their lifetime, employee-paid and owned coverage is the best solution. The main thing is to have life insurance!
Purington, UNUM:
Growth continues modestly, as would be expected for a highly penetrated insurance product.
- What, if any, state or federal legislative issues are you concerned about?
Ruff, Aflac:
Since Aflac supplemental insurance plans are not major medical health insurance, healthcare legislation has not directly impacted our business. Because of the uncertainty surrounding the healthcare industry, we continue to educate consumers about their healthcare offerings and the benefits of supplemental coverage. We believe that regardless of how an individual or family acquires their health insurance, no system will cover everything. There is always a tremendous need for our products to help with the expenses health insurance doesn’t cover. Many employees are shouldering the burden of higher costs because many companies are offering high-deductible plans due to rising healthcare costs. Unforeseeable out-of-pocket healthcare expenses along with the added costs associated with injuries and illnesses, including child care expenses, travel costs and taking time off of work, can be overwhelming to Americans. Aflac coverage pays cash benefits that can help with those costs and help provide financial stability.
Jenkins, Colonial Life:
Low interest rates are the single greatest challenge facing the industry. These low rates will continue to put pressure on financial services companies and the interest-sensitive financial products they issue, including life insurance. All life insurance products are affected to varying degrees, but long-term contracts that rely heavily on earned interest, such as whole life and universal life, are especially impacted. All life insurers will be challenged to make product adjustments in order to manage lower investment income and profitability in the current environment, as exhibited by the latest mandated change to the non-forfeiture and valuation interest rates.
Purington, UNUM:
Not so much specific issues as it is continued divergence among states which have their own specific insurance regulations; while it is understood that state’s first priority is to protect their citizens, significant variance in state requirements force insurers to have different products in different states which is expensive, inefficient, and leads to confusion in the marketplace.
- What are some of the common characteristics of your most successful life insurance producers?
Ruff, Aflac:
Top life insurance producers are true benefits counselors, asking every account and employee they meet with about that individual’s circumstances to better understand their needs. Rather than trying to make a sale, they help clients and employees understand the importance of life insurance and discuss how Aflac coverage can help serve as a valuable part of their overall benefits plan. These producers understand that supplemental coverage is increasingly becoming a need in the workplace and that workers are feeling the effects of higher health costs and need options to help offset expenses.
Effective producers can help educate insureds on the ever-changing need to evaluate their coverage. Life changes daily, and our producers help insureds understand how to adapt to ensure they have adequate protection in all stages of life. We believe employees are less likely to seek individual coverage through other vendors when they have a better insurance offering through their workplace.
Jenkins, Colonial Life:
Our most successful life insurance producers balance the preferences of both clients and brokers, while striving for the great opportunity to educate employees on their full benefits portfolio. We believe in the value of one-to-one, personal benefits counseling sessions. Being flexible with enrollment options is also important in today’s virtual world. Helping employees understand their needs and options means they can create an effective financial safety net for themselves and their families. So our most successful life insurance producers are those who are not only experts in product knowledge but who also excel at this customized counseling approach. They create trust and credibility, as well as long-term relationships. We’ve developed a certification process so brokers, employers and employees can be assured they’re working with the best in the business when it comes to individual benefits counseling.
- How has the pandemic impacted your company or life insurance in general?
Ruff, Aflac:
We are learning more about how the pandemic is impacting our business and are quickly pivoting to better balance face-to-face and virtual sales practices. On a positive note, we continue to invest in virtual tools and technology to help us reach American workers operating remotely while maintaining the appropriate human touch. As we look ahead, we are very excited about our pending acquisition of Zurich Group Benefits and their integration into the Aflac family, which we announced earlier in 2020, as well as our build-out of U.S. network dental and vision products through our acquisition of Argus. These position Aflac well to help employers offer a competitive benefits package and for workers to have access to a full suite of product offerings.
Jenkins, Colonial Life:
Face-to-face benefits counseling wasn’t an option when the country was quarantined. With our technology, we were able to quickly pivot and implement virtual solutions where none may have previously existed. Many of our sales teams already used call center enrollment options, and this was a significant advantage to continue our benefits counseling. Certainly we had reduced or no access to some businesses, but we looked for alternative solutions.
The pandemic has reminded people that we are all mortal, and illness and death are realities of life. Often in unexpected ways and times.