Life Insurance in the United States

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Life Insurance in the United States

Description:    Growth in the U.S. life insurance market has essentially leveled off as investors look to annuities
                and other wealth accumulation vehicles rather than insurance against premature death. To address
                diverging preferences, the industry is now providing new products, such as those including long-
                term care, or various guarantees to appeal to risk-averse customers. This report reviews issues in
                the industry and also looks to answer the following questions: Which consumers are most likely to
                want group or individual life products? Which ones are most willing to combine life insurance with
                financial planning? Which consumers are likely to want life insurance and financial investments
                bundled together?

                Traditionally, life insurance has been sold through one-on-one transactions, but the agency
                distribution channel is decreasing in size. The agency force is also aging, and companies are
                restructuring their sales organizations to trim expenditures for agent recruitment and development.
                At the same time, a sizable number of agents are adapting their practices to offer financial planning
                and a broader range of investment products. An exclusive survey in this report looks at how agents
                see the industry and the issues they see as impacting their business, as well as what they see as
                most important in industry recruitment and retention efforts.



Contents:       Scope and Themes
                 What you need to know
                 Definitions
                 Abbreviations and terms
                 Abbreviations
                 Terms
                 Executive Summary
                 Top issues and developments in the industry
                 The marketplace
                 Product development
                 Distribution channels
                 Agent performance, attributes and attitudes
                 The Consumer
                 Forecast
                 Market Drivers
                 Accumulation vs. risk focus
                 Figure 1: Net premiums and considerations of life insurers, 1994, 2003, 2004
                 Demographic trends
                 Life cycles
                 Figure 2: Population aged 65+: 2000-50
                 Figure 3: proportion of population aged 65+: 2000-50
                 Minority markets.
                 Figure 4: Projected % of total U.S. population, 2000 to 2050
                 Pandemics
                 Technological and administrative issues
                 Persistency
                 Regulation
                 Estate planning
                 Securitization
                 Mergers and acquisitions/international expansion
                 Market Size and Trends
                 Figure 5: Value of individual life insurance premiums in the U.S., 1998-2004
                 Figure 6: Individual life insurance purchases in the U.S., 1995-2004
                 Figure 7: In-force policies in the U.S., 1995-2004
                 Figure 8: Life insurance premiums totals in the U.S., 1995-2004
                 Market Segmentation
                 Term and permanent insurance
 Figure 9: Individual life insurance purchases by plan type, 2004
 Figure 10: Value of individual life insurance purchases, permanent and term, 1998-2004
 Figure 11: Volume of individual life insurance policy purchases, permanent and term, 1998-2004
 Variable/universal/variable universal life
 Figure 12: Top ten variable life sales rankings (single premiums included at 10%
 excludes COLI, BOLI, and group VUL), 2004 and 2005
 Insurance sales by state
 Figure 13: Life insurance purchases and in-force for the five most populous U.S. states, 2004
 Competitive Landscape
 Figure 14: Leading writers of U.S life/health insurance by revenues, 2005
 Figure 15: Largest life insurers by total direct life insurance premiums, 2004
 Figure 16: Largest life insurers by individual life insurance in force, 2004
 Figure 17: U.S. term life in force, top life writers, 2005
 Figure 18: U.S. term life issued, top life writers, 2005
 Figure 19: U.S. ordinary life in force, top life writers, 2005
 Product development: rethinking the fundamentals
 Broad considerations: complexity versus simplicity
 Underwriting categories
 Combinations
 Flexibility
 Innovative product features
 No-lapse universal life
 Indexed universal life
 Figure 20: Leading writers of U.S. index life insurance sales, 2005
 Return-of-premium term
 Corporate-owned life insurance (COLI)
 Life settlements
 Competitive responses to minority markets
 Distribution channels
 Agent distribution channels
 Brokerage general agents and independent marketing organizations
 New models for success
 Agent recruitment and retention
 Affinity groups/associations
 Banks
 Figure 21: Leading providers of life insurance sold through banks (weighted premiums), 2004 and
2005
 Internet
 Internet consumer-education features
 Group life insurance
 Figure 22: Value of group life insurance owned, by provider, January-July 2006
 Insurance Agents—what do they think?
 Agent characteristics
 Summary
 Percentage of business that is life insurance
 Figure 23: percentage of agent’s business that is any type of life insurance, by gender, September
2006
 Figure 24: percentage of agent’s business that is any type of life insurance, by gender, September
2006
 Agent employment status and tenure
 Figure 25: percentage of respondents who are independent agents or employees, by gender,
September 2006
 Figure 26: Tenure as an insurance agent, by gender, September 2006
 Agent affiliation
 Figure 27: Companies agents represent, by gender, September 2006
 Figure 28: Companies agent sell for, by age, September 2006
 Impact of industry developments
 Figure 29: Impact of industry developments on agents’ business—price competition, by gender,
September 2006
 Figure 30: Impact of industry developments on agents’ business—online quotes, by gender,
September 2006
 Figure 31: Impact of industry developments on agents’ business—automated underwriting, by
gender, September 2006
 Figure 32: Impact of industry developments on agents’ business—changes in compensation, by
gender, September 2006
 Figure 33: Impact of industry developments on agents’ business – other changes in technology, by
gender, September 2006
 Obstacles to recruiting and retaining agents
 Figure 34: Obstacles to recruiting and retaining agents—compensation, by gender, September
2006
 Figure 35: Obstacles to recruiting and retaining agents—clientele, by gender, September 2006
 Figure 36: Obstacles to recruiting and retaining agents—complexity of insurance, by gender,
September 2006
 Figure 37: Obstacles to recruiting and retaining agents—work hours, by gender, September 2006
 Figure 38: Obstacles to recruiting and retaining agents—sales techniques, by gender, September
2006
 Figure 39: Obstacles to recruiting and retaining agents—fewer people buying insurance, by gender,
September 2006
 Figure 40: Obstacles to recruiting and retaining agents—agent image, by gender, September 2006
 Adequacy of support for agents
 Figure 41: Adequacy of support for agents, September 2006
 Types of incentives offered
 Figure 42: Incentives/support offered agent, by employment status, September 2006
 Figure 43: Incentives/support offered agent, by length of employment, September 2006
 Advertising and Promotion
 Figure 44: Insurance industry ad spend by company, 2005
 Fresh advertising themes
 Multicultural programs
 Direct mail
 The Consumer and What They Own
 Consumers’ life insurance needs
 Composition of households owning life insurance
 Figure 45: Life insurance ownership by number of children in household, January-July 2006
 Composition of high-income households owning life insurance
 Figure 46: Type of life insurance owned by households with income of$100,000+, by gender,
January-July 2006
 Figure 47: Adults age 18+ whose household income is $100,000+ and currently own life
insurance, by marital status, January-July 2006
 Figure 48: Adults age 18+ whose household income is $100,000+ and currently own life
insurance, by children in the household, January-July 2006
 Figure 49: Type of life insurance owned by households with income of $100,000+, by
race/ethnicity, January-July 2006
 Figure 50: Type of life insurance owned by households with income of $100,000+, by geographic
region, January-July 2006
 Figure 51: Provider of life insurance for households with income of $100,000+, January-July 2006
 Face value of life insurance owned by insurance company
 Figure 52: Adults age 18+ and currently own life insurance by face value of policies for selected
major insurers, January-July 2006
 Figure 53: Value of term life insurance owned, by provider, January–July 2006
 Figure 54: Value of whole/universal/variable life insurance owned, by provider, January–July 2006
 Future Trends
 Industry seeks sales growth
 Companies may seek to halt declining numbers of life agents
 Further product and underwriting innovations
 Mortality tables
 Principles-based reserves and capital standards
 Market forecast
 Figure 55: U.S. life insurance premiums, actual versus trended data, 1995
2004
 Life insurance premiums
 Figure 56: Forecast of total U.S. life insurance premiums, at current and constant prices, 2006-11
 First-year life insurance premiums
 Figure 57: Forecast of U.S. first-year life insurance premiums, at current and constant prices, 2006
-11
 Single life insurance premiums
 Figure 58: Forecast of U.S. single life insurance premiums, at current and constant prices, 2006-11
             Renewal life insurance premiums
             Figure 59: Forecast of U.S. renewal life insurance premiums, at current and constant prices, 2006-
            11
             Appendix: Industry Associations
             Appendix: TV Advertising and Direct Mail
             Overview—television advertising
             Figure 60: American Family Life Insurance television advertisement, 2006
             Figure 61: Colonial Penn television advertisement , 2006
             Figure 62: Gerber Life Growup plan television advertisement, 2006
             Figure 63: Guaranteed Trust Life Lifetime Plan, television advertisement, 2006
             Figure 64: Legacy group term life insurance television advertisement, 2006
             Figure 65: Matrix Direct/American general term life insurance television advertisement, 2006
             Figure 66: Mutual of Omaha life insurance television advertisement, 2006
             Figure 67: Prudential financial life insurance television advertisement, 2006
             Figure 68: Stonebridge life insurance television advertisement, 2006
             Overview – direct mail advertising
             Figure 69: Globe Life and Accident Insurance, 2006
             Figure 70: Chase Insurance Direct, 2006
             Figure 71: AARP/NYLife, 2006
             Figure 72: Globe Life Young America Plan, 2006




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