Data from global researcher shows sales dropped significantly in 2017 on the heels of tax reform
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Data from global research firm LIMRA indicates that those shopping for life insurance online are already using a financial advisor.
Providers across the board have expanded their digital offerings in recent years, but according to an industry expert, the broker distribution model remains the preferred method for most consumers.
“The most likely online buyer is a male in their mid-30s who is married and has a child or two,” says Brent Lemanski, executive director at LIMRA and LOMA Canada. “They also already own life insurance and have an advisor. What is driving that is they feel more knowledgeable and enabled.”
A preference for purchasing life insurance through an advisor also extends to younger consumers, as Lemanski explains.
“Across all age bands, a lot of consumers are going out and gathering information, but when it comes time to actually make a decision, they still want advice because it’s complicated and they have a lot of questions.”
According to LIMRA, the life industry in Canada experienced a dip in terms of premium sales in 2017, but that was expected given 2016’s strong performance. The tax changes enacted in January 2017 meant many people elected to purchase plans in 2016 before the new rules took effect, explains Lemanski.
“There has been an anomaly the past two years – If you look at 2017 over 2016, life premiums were down 18%,” he says. “That looks like a really weird number, but if you look at 2016 over 2015, life premiums were up 36%.”
He adds: “In 2014, life premiums were up 4%, and in 2015 it was 10%. That was unusually high, but at the end of 2015 was when the tax changes were announced, so some early sales came in at the end of 2015, then a lot in 2016, and 2017 was a correction year.”
While premiums have generally been increasing year-over-year, bar 2017, the amount of plans has been slipping. It means the incidence rate in Canada, like the US, continues to drop, which is clearly a concern for the insurance industry. Something else to take into consideration, is the different life products, which fluctuate in sales depending on a number of factors.
“If you look across the product lines, term has been relatively steady, while universal and whole life, which are cash-value products – they essentially are depending on stock market performance. In years of strong stock performance, UL tends to outsell whole life, and the opposite is true when stocks drop,” says Lemanski.
