Life Insurance Premium Rises 6 Percent

April 22nd, 2016, No Comments, be the first ».

U.S. individual life insurance new annualized premium increased 1 percent in the fourth quarter of 2015. This is the sixth consecutive quarter of positive growth, according to LIMRA’s Fourth Quarter 2015 U.S. Retail Individual Life Insurance Sales Survey.

“While growth slowed in the fourth quarter, individual life insurance premium sales increased 6 percent in 2015,” noted Ashley Durham, assistant research director, LIMRA Insurance Research. “Whole life and indexed universal life insurance products continued to drive overall growth throughout the year.” Total policy count rose 1 percent in the fourth quarter and 4 percent for the year.  This is the first year of positive policy count growth since 2012.

Universal life (UL) new annualized premium fell 1 percent in the fourth quarter, primarily because of a decline in lifetime guaranteed universal life and current assumption UL (down 10 and 14 percent).  Despite fourth quarter declines, UL ended the year up by 7 percent.

Indexed UL premium increased 6 percent in the fourth quarter. This is the slowest quarterly growth indexed UL has experienced since the fourth quarter 2013. In 2015, indexed UL jumped 15 percent and was the primary driver of overall UL sales growth for the year.  IUL represented 55 percent of UL new premium and 21 percent of all individual life insurance new premium. Total UL premium represented 38 percent of all life insurance new premium in 2015.

Whole life premium continues to enjoy positive growth.  In the fourth quarter, WL increased 6 percent and improved 9 percent in 2015. This is the 10th consecutive year of positive growth for whole life. WL represented 34 percent of the total life insurance new premium in 2015.

Term sales growth was modest, up 1 percent in the quarter and 2 percent for the year. LIMRA is projecting little term sales growth over the next couple of years as pricing, reserving and capital issues continue to affect the market. Term’s market share was 21 percent in 2015.

LIMRA

Retirement Plan Reviews Miss the Mark In Terms of Frequency and Focus

April 6th, 2016, Comments Off on Retirement Plan Reviews Miss the Mark In Terms of Frequency and Focus.

Many financial advisors neglect to review the effectiveness of retirement plans with plan sponsors as often as many sponsors want and, when reviews do take place, they often fail to focus on what’s most important, according to research from MassMutual Retirement Services.

“Frequent, focused plan reviews are essential to assess the ongoing effectiveness of a retirement plan and to help ensure that plan participants are saving enough to retire when they reach their traditional retirement age,” said Tom Foster Jr., spokesperson and practice management leader for MassMutual Retirement Services. “It’s a clear opportunity for financial advisors to improve and build their retirement plan practices.”

Many plan sponsors say they want to review their retirement plans more often than they currently do. Nearly three in five (57 percent) plan sponsors want advisors to help them review their retirement plans semiannually or more often, something that only 44 percent of sponsors report currently takes place, according to the 2016 MassMutual Retirement Plan Review Study.  However, sponsors who rely on advisors typically review their retirement plans more often than sponsors who do not use an advisor.

The study polled 565 employers that sponsor retirement plans, including 449 that worked with an advisor and 116 that did not, with retirement plan recordkeeping assets ranging from less than $1 million to as much as $75 million. In addition, the research included two focus groups with plan advisors. The research was conducted in 2015 by Greenwald & Associates.

Plan reviews can lead to improvements such as new plan designs to better meet an employer’s objectives, according to Foster. MassMutual has enhanced its plan design-related services with new educational materials to help employers address employee demographics, organizational structures, business strategy, financial obligations and participant needs. Employers can learn more about these services by contacting their relationship manager or account manager.

Any improvements to a plan should generally start with a careful review and include consultation with plan legal counsel and other experienced advisors, as appropriate, Foster said. However, when reviews do take place, many advisors and employers are not focusing on what’s most important in determining whether a retirement plan is effective, he said.

“Unfortunately, only one in four sponsors reviews its plan to determine whether employees are actually saving enough to retire,” Foster said. “This points to a missed opportunity on the part of both advisors and sponsors. We need to focus more on the effectiveness of the retirement plan and educational programs to help ensure that working Americans are saving enough to retire on their own terms.”

The research finds differences in focus between sponsors with an advisor as opposed to sponsors without an advisor. During plan reviews, sponsors who work with an advisor typically prioritize satisfaction with their plan provider. Sponsors without an advisor prioritize fees and costs. The study finds that some of the major considerations of plan review break down as follows:

 

Major Considerations Advisor No Advisor
Satisfaction with plan provider 79% 71%
Performance of investments 76% 59%
Fees associated with plan 71% 73%
Effectiveness of education and advice 50% 31%
Participation rate 45% 34%
Time and effort to administer plan 43% 28%
Whether employees are saving enough 27% 25%

 

“Advisors can do a world of good to help employers focus on savings, the effectiveness of education programs, and perhaps the ultimate metric: whether their employees on target to be retirement ready,” Foster said. “Participation in the plan is certainly important too. But if every employee participates but each saves only 1 percent of his or her salary, it’s totally ineffective as no one will ever be prepared to retire.”

Ayo Mseka
Editor-in-Chief