While insurance carriers move to develop new hybrid policies built around life insurance some in the industry question their ultimate value
The trend toward insurance carriers bringing hybrid policies to market as a way to make living benefits more palatable with consumers might be delivering greater revenue but in doing so they could be watering down each of the products ultimately doing harm to clients rather than helping them.
“The insurance carriers are trying to appeal to a larger audience with each product and they’re also trying to insurance clients from “womb” to “tomb” or as close as possible so if you can insure them for one risk and then at a certain age automatically switch them to a different risk [CI, DI, LTC] then you really get to capture that income stream for a lot longer,” Certified Health Specialist and Certified Long Term Planner Thais McKee told LHP. “I think its clever marketing. It’s cheaper to keep a client then to find a new one. “
The insurance carriers are in the business of generating revenue. If they can create products that are easier to sell by agents in the field it becomes a win/win situation for everybody except the client, McKee believes.
“I’m somewhat conflicted because it’s easier to sell a product that has multiple potential payouts. But, you usually end up having to give up one to get another,” said McKee. “So, if you’re a 55-year-old person and you’ve got a battalion of kids and their education, medical, food and all the rest of it, likely by 55 you’re still needing the disability insurance. To force people to give up one to get the other is the more devious side of the insurance industry.”
McKee prefers to provide clients with the appropriate product for the appropriate risk. She doesn’t subscribe to the philosophy of killing two birds with one stone. It might be easier for an agent but it’s not necessarily what’s in their best interests.
“Typically people will become sick before they die,” McKee said. “So, I’m much more of a proponent of the modular approach where you buy the best product for the best risk which means it’s a bit tricky because you really have to be well versed in all three risks people face – disability, critical illness and long-term care.”
“The insurance carriers are trying to appeal to a larger audience with each product and they’re also trying to insurance clients from “womb” to “tomb” or as close as possible so if you can insure them for one risk and then at a certain age automatically switch them to a different risk [CI, DI, LTC] then you really get to capture that income stream for a lot longer,” Certified Health Specialist and Certified Long Term Planner Thais McKee told LHP. “I think its clever marketing. It’s cheaper to keep a client then to find a new one. “
The insurance carriers are in the business of generating revenue. If they can create products that are easier to sell by agents in the field it becomes a win/win situation for everybody except the client, McKee believes.
“I’m somewhat conflicted because it’s easier to sell a product that has multiple potential payouts. But, you usually end up having to give up one to get another,” said McKee. “So, if you’re a 55-year-old person and you’ve got a battalion of kids and their education, medical, food and all the rest of it, likely by 55 you’re still needing the disability insurance. To force people to give up one to get the other is the more devious side of the insurance industry.”
McKee prefers to provide clients with the appropriate product for the appropriate risk. She doesn’t subscribe to the philosophy of killing two birds with one stone. It might be easier for an agent but it’s not necessarily what’s in their best interests.
“Typically people will become sick before they die,” McKee said. “So, I’m much more of a proponent of the modular approach where you buy the best product for the best risk which means it’s a bit tricky because you really have to be well versed in all three risks people face – disability, critical illness and long-term care.”
