Posts Tagged ‘LIMRA’

Hispanics a Natural Market for Life Insurance

November 7th, 2013, Comments Off.

According to a recent LIMRA study titled, “Financial Protection for Hispanics,” Hispanics offer a natural market for life insurance.

“While the Hispanic population is complex — they come from many countries — they share a tendency to be young, with large families including children and extended family members,” says Nilufer Ahmed, senior research director, LIMRA Insurance Research. “Their strong emphasis on family makes them a natural market for life insurance.”

Other characteristics of the market include:

  • One third of all Hispanics are third generation or higher in the United States, and speak fluent English.
  • Increased levels of acculturation means increased ownership of individual life insurance, with the most acculturated Hispanics having similar levels of ownership as the general population.
  • Hispanics express multiple financial concerns to a greater degree than the general population. Almost half of Hispanics are very or extremely concerned about dying unexpectedly, compared to less than a third of the general population.
  • More than half of Hispanic households fall in the middle-income category.

According to U.S. Census Bureau estimates, in the next 20 years, Hispanics are projected to grow three times more than any other ethnic group in the U.S. Much like the general population, perceptions about affordability and lack of product knowledge prevent many Hispanics from obtaining life insurance. Also similar to the general population, Hispanics buy life insurance for two main reasons: to provide an income stream if the insured dies and to cover burial and funeral costs.

Opportunities exist for advisors who pay attention to the opportunities and the cultural sensitivities that exist within the Hispanic market, according to the survey. For example, many Hispanic families are multi-generational, with different levels of acculturation in the same household. A smart advisor will take into account the bilingual needs of the family and make sure to include all the family members who are dependent on the wage earner.

Advisors can also refer to financial concerns that Hispanics have as a way to introduce a discussion of life insurance and how it fits in to a plan for each family situation.

This September marks the 10th anniversary of Life Insurance Awareness Month (LIAM), an effort to raise awareness among consumers and producers about the need for life insurance. As a supporter of this information campaign, LIMRA makes available an annual Facts of Life fact sheet on the importance of life insurance. For more information, visit LIMRA at www.limra.com.

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By Ayo Mseka
Editor-In-Chief
Advisor Today

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Trends in Income Annuities

August 22nd, 2013, Comments Off.

A recent joint LIMRA/CANNEX study has found that a majority of the companies offering income annuities have added features designed to address consumer concerns and attract new sales.

Income annuities provide a guaranteed stream of income for as long as the owner or annuitant lives and can ensure that this income covers both lives of a couple. The study, Features in Income Annuities, surveyed 39 insurance companies that offer income annuities representing 84 percent of the 2012 industry sales.

Many income annuities now include features that offer retirees increased access to cash or liquidity in case of an unforeseen need. Other features include death benefits to address the event of a premature death and flexible income options to keep up with inflation. All these features are designed to make income annuities an appealing part of anyone’s portfolio.

“There is a disconnect between the need and the amount of sales,” Lowell Aronoff, CEO, CANNEX, says. “Retirement income research universally suggests that income annuities should be a core product for nearly all retirees. Yet sales of these products are still fairly modest.”

A sure bet

In the past, one objection advisors had to recommending income annuities for their clients was loss of liquidity. However, the majority of immediate annuities—including 9 of the top 10 companies—now offer access to cash outside of their scheduled payments in case of emergency or other needs. Liquidity may come in several forms: access to the guaranteed payments, access to the life contingent payments or an acceleration of several months of scheduled payments in advance.

Assurance of receiving death benefits can offer owners and their beneficiaries peace-of-mind and confidence during the purchase process. All carriers surveyed offer the simplest form of death benefit, where if the annuitant dies, payments will continue to their estate for a specified number of years, and most provide the option to guarantee that the client never loses money by continuing guaranteed payments until the sum received equals the initial amount invested. Most of the companies in the survey (31 out of 39) offer at least one death benefit that provides additional money upon the annuitant’s death as a payout option.

Currently, all of the top 10 companies offer a Cost of Living Adjustment (COLA) option that allows retirees to receive increasing income and address one of their chief concerns—inflation. Retirees can choose various COLA rates of up to six percent increases or more. Other companies offer payments that are pegged to the Consumer Price Index.

“Advisors who are engaged in retirement income planning are beginning to take a second look at income annuities,” Mark Paracer, LIMRA research project director, says. “Including an income annuity—either deferred or immediate—can help retirees ensure that at least their essential expenses in retirement are covered, allowing an advisor to invest the remaining portion of their portfolio with a goal of higher returns.”

For more information about LIMRA, visit www.limra.com. For more information about CANNEX, visit www.cannex.com.

 

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