InsuranceNewsNet Magazine January 2011 : Page 24
LIMRA: Whole Life Up in 3Q by 6% Whole life insurance grew 15 percent over the first nine months of 2010, with a 6 percent increase during the third quarter this year, LIMRA’s U.S Individual Life Insurance Sales survey showed. Despite the continued growth of whole life, it has slowed compared to the year’s first couple of quarters, which showed increases of 15 and 23 percent. Whole Life Growth At the end of the third quarter, whole life made up 30 percent of the overall annualized premium sales, according to LIMRA. Other life products that gained during the third quarter were universal life (UL), 9 Months 3rd Quarter up 8 percent, and indexed UL, up 45 per-cent, helping overall UL sales increase. Those that showed losses during the same period included variable UL, down 9 percent, and term life, down 16 percent — with three quarters of term writ-ers reporting losses, the sales survey concluded. less expensive because, in many cases, healthy people can qualify for more affordable individual policies, compared to people with health issues, who may fare better with group plans. Largest U.S. Life Insurers’ 3Q Profits Double The third-quarter statutory net income more than doubled year over year on a combined basis for America’s biggest life insurance groups, according to the third-quarter analysis performed by SNL Financial. Net income reported by 25 of the 27 largest U.S. life insurers skyrocketed 108.2 percent higher than in the third quarter of 2009, reaching almost $8.7 billion. How-ever, pretax operating income declined 4.4 percent during the same period, reported to be $11.6 billion, according to the data. The significant increase in profits was primarily attributed to lower net-realized capital losses and not largely improved business or top-line growth. 15% 6% NCOIL Calls for More Life Settlement Notifications Life insurance companies will likely be required to more frequently to notify lapsing policy holders about other finan-cial options, such as life settlements and accelerated death benefits, after the National Conference of Insurance Leg-islators (NCOIL) approved a model act. Specifically, the model act mandates that insurance companies provide infor-mation on the alternatives to surrendering or lapsing policies to those who are chron-ically ill or more than 60 years old. With more boomers expected to retire in 2011, this new regulation proves a major win for the life settlement industry. interest or deducted charges. Policyhold-ers should also be aware of their responsi-bility to make changes in coverage as well as their ability to manage their mortality risks and investments. Life Insurers Fight Federal Derivative Regulation Life insurance companies do not view their derivatives usage as a systematic risk to the U.S. financial system and strongly disagree with the potential federal regulation of their hedging tool, according to an A.M. Best report. Insurers argue that, as the major deriva-tive end-users, they effectively reduce risks assumed in policyholder protection, and therefore propose that the Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commis-sion (CFTC) eliminate them from federal regulation under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which authorized the SEC to regu-late security-based swaps and the CFTC to oversee all other swaps. Another issue raised, by the American Council of Life Insurers, is whether or not the clearing house requirement will force insurers to trade through an exchange. If required, derivative users would probably lose collateral requirement flexibility, which could affect insurers’ risk management pol-icies relative to their products’ pricing and benefits because of their increased hedging costs, A.M. Best reported. USA Today Gives Insurance Cost-Saving Tips The number of Americans without any life insurance coverage grew to 30 per-cent, compared to 22 percent in 2004, even though consumers can make cov-erage more affordable, according to a USA Today article. Purchasing term life products with a specific 20-to 30-year time frame of cov-erage versus buying permanent life insur-ance can save consumers extra cash, the article suggests. However, readers were recommended to seek out term poli-cies that offer the ability to convert them to permanent policies (without medi-cal underwriting when the term period expires) in order to avoid unaffordable premium increases or denial of coverage. Other suggested cost-cutting strate-gies recommended included the follow-ing: purchasing a policy while still young and healthy, when premiums will be lower; paying the premiums on an annual basis to attain a discount or to avoid monthly billing fees; and to not assume employer-offered voluntary group life policies are What UL Prospects Should Evaluate Potential universal life (UL) insurance policyholders should evaluate personal life circumstances and their long-term needs to determine the appropriate policy, as well as adjust their policies when per-sonal situations change, such as a marriage, a new child or a job promotion, according to UniversalLifeInsurance.net. Because UL differs from other products that invest funds in the stock market, it provides increased transparency, includ-ing the ability for consumers to watch their account values fluctuate with earned 24 InsuranceNewsNet Magazine January 2011
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