LIMRA Chief: Estate Tax Uncertainty a Problem; Longevity an Opening for Life Industry

The biggest opportunity for U.S. life insurers following the financial crisis is in demographics, said the chief of LIMRA, LOMA and LL Global.

The wealthy still aren't clear on the estate tax issue, said Robert Kerzner, president and chief executive officer of the life insurance industry research group, but once they are, they'll be looking to life insurance "as perhaps one of the planning tools, as they have in the past." Kerzner met with BestWire at his group's 2009 annual meeting in New York.

In the second quarter, U.S. sales of individual life insurance dropped 20%. Year-to-date sales saw a 23% decline, which represented the steepest six-month drop in nearly 70 years, according to LIMRA. Every product line was hit. But variable sales, with the strongest link to the stock market, continued to hurt the most (BestWire, Sept. 14, 2009).

The biggest drops have been among those who are older and in larger face amount policies, he said. "That has incented some companies to look more carefully, spend more time and energy on how to get more of the middle market captured," Kerzner noted.

LIMRA's studies still indicate 39% to 44% of people say they know they don't have enough life insurance and "as the economy comes back, so will consumers," he said.

A recent LIMRA retirement study shows health care as the top concern among retirees, he said. Next was inflation, followed by stock market volatility and then longevity. Yet financial planners ranked longevity as their top issue, he said. "When you think about the biggest risks that people face -- about running out of money -- longevity is a huge issue."

Products such as single premium immediate annuities or permanent life insurance should be part of a retirement portfolio, Kerzner said, noting once people retire, they need to be concerned about "am I going to have a check every month in that mailbox?"

Kerzner said the industry must build products that "can endure the test of time." Business intellect and historic knowledge of the business are just as important as financial models, he said.