Insurance Insider News, March 10 2010

NEW PRODUCTS l  FINANCIAL PLANNING  l  LIFE INSURANCE & ANNUITIES l CALIFORNIA

NEW PRODUCTS
Marketing Support for Agents
AIMS Benefit Solutions has joined forces with national insurance broker, MedLink, in order to better support annuity, life, health, and disability insurance agents through specialized staff and technology. Under the new relationship, AIMS provides marketing support for MedLink's LTC insurance agents while MedLink does the same for life offerings from AIMS agents. MedLink has also helped AIMS create a new Web site for life brokerage products at http://www.lifeandhealthonline.net/aims. For more information, e-mail info@aimsbenefits.com.
 
Life Settlements
Caldwell Life Strategies reorganized its affiliates under a single corporation resulting in a new name and corporate identity, including a new website,
www.Caldwell-LS.com. Caldwell is an asset manager providing life settlement and related investing solutions.
 
Simplified Medical Bills Paying
CIGNA is rolling out Intuit’s Quicken system to track expenses and pay bills online. Quicken Health Expense Tracker is available on www.myCIGNA.com.
 
Cancer Policy
Transamerica Life Insurance Company and Livestrong are ramping up to offer cancer-only and group critical illness policies. SurvivorPlan products provide coverage for many ancillary costs associated with cancer care, including loss of income, travel for treatment, experimental treatment, and spousal and other dependent care. The cancer-only and critical illness plans also provide policyholders with the optional benefit of a comprehensive blood screening profile each year at no out-of-pocket cost. For more information visit www.Livestrong.org.
 
Critical Illness
Trustmark Voluntary Benefit Solutions now includes Best Doctors membership in all new Critical Illness policies. This gives policyholders access to comprehensive medical reviews to help confirm their diagnosis and ensure the best treatment plan, at no extra cost. Best Doctors provides medical-decision support for some of the toughest medical situations, such as dealing with conflicting diagnoses; choosing a course of treatment; deciding whether a sub-specialist is required; finding highly skilled specialists; or even advising on which questions patients should ask their physicians. For more information, visit www.trustmarksolutions.com.
 
Streamlined LTC Application Process
American General Life Companies is offering a streamlined, automated application process for American General LTC Insurance. A Web-based tool is designed to help producers complete and submit the right forms every time and shorten producers’ requirements for field underwriting. For more information, visit http://eStation.aglife.com.
 
Back Injuries Are the Number One Claim
Colonial Life’s new accident plan has three coverage levels to fit employees’ budgets. Other benefit options, at no additional cost, include a choice of accident or accident/sickness disability riders offering total and partial disability benefits. A sickness hospital confinement rider is available for an additional cost. Back sprain or strain was the number-one injury, according to a tally of accident insurance claims submitted to Colonial Life in 2009. Here’s a look at the top five most commonly reported injuries last year:
1. Back sprain or strain
2. Ankle injury
3. Knee injury
4. Fractured arm
5. Open wound on a finger
 
For more information call 803-798-7000 or visit www.ColonialLife.com.

FINANCIAL PLANNING
Workers Want Guaranteed Income
A survey by the Employee Benefit Research Institute (EBRI) reveals that nearly half of all workers would consider a financial product or select a retirement plan option that pays them guaranteed income for life. Forty-six percent said that they were very likely or somewhat likely to turn to a guaranteed income product. Another 14% of retirees have already turned to these guaranteed products to provide income throughout their golden years.
The most recent findings spotlight a continued decline in retirement preparedness, with nearly three in 20 workers saying they have less than $1,000 in savings. Less than half of the respondents have thought about how much money they will need to save in order to retire comfortably. For more information, visit www.IRIonline.org.
 
Retiring Americans Face $260,000 in Healthcare Costs
Healthcare costs for retiring Americans, including nursing home care, average $260,000 and can exceed $500,000 A typical household has a 5% percent risk that the present value of its lifetime uninsured healthcare costs will exceed $311,000. And when nursing home costs are included, the amount for a typical couple increases to $260,000, with a 5% risk of exceeding $570,000, according to a study by the Center for Retirement Research (CRR) at Boston College and underwritten by Prudential Financial.
Although lifetime healthcare costs decline with age, they remain substantial. At age 85, couples face an average remaining lifetime cost of $140,000 without nursing home care and a 5% risk of exceeding $266,000. When including nursing home care, the average cost is $203,000 with a 5% chance of exceeding $477,000.
The study concludes that households need to consider the following when deciding how much to save for retirement and how rapidly to draw down their wealth during retirement:
• What risk they are prepared to accept of having their assets substantially depleted by healthcare costs.
• Whether they are above or below the average risk of incurring exceptionally high costs.
• Whether they should insure against healthcare costs by purchasing long-term care insurance.
 
For more information, visit www.prudential.com.
 
Home Equity Is a Big Factor in Retirement Planning
Even after the bursting of the housing bubble, home equity remains a major financial asset, which can significantly affect retirement security. Home equity has a greater effect on the percentage of households at risk than did the recent stock market crash, according to new research from the Center for Retirement Research (CRR) at Boston College. It is based on analysis of the National Retirement Risk Index (NRRI).
More than 60% of households are at risk of being financially unprepared for retirement.
“If the last 18 months have taught us anything, it’s that consumers need to resist becoming overly dependent on any one asset, especially when taking into account the unpredictable nature of the stock and real estate markets...Consumers must be open to utilizing all of their assets and consider working with a financial professional who is prepared to handle the task of developing a comprehensive retirement income strategy,” said Brad Davis, vice president of retirement income solutions for Nationwide Financial Services. 
According to research from the Financial Planning Association, more than 89% of financial professionals say they are likely to get more training on ways to generate retirement income. Nationwide created RetireSense for planners, which provides a clear road map for retirement income planning, which helps identify which investments to consider harvesting for income, and when to do so. For more information, visit nationwide.com.
 
LIFE INSURANCE & ANNUITIES
Selling Life Insurance Through Direct Marketing
In 2008, 20% of life insurance policies were sold through direct marketing including the Internet, direct mail, and telephone. Five percent of life insurance premium was sold through direct marketing as well as 13% of the total face value, according to research by LIMRA and LIDMA – the Life Insurance Direct Marketing Association.
The number of consumers who bought insurance online has doubled since
2006. Price, convenience, and a good Web site were the top factors that influenced these consumers. With advances in technology, researchers anticipate that more consumers, especially younger generations, will use direct channels to buy life insurance in the next five to 10 years.
The statistics include sales generated through carriers and third-party quoting aggregators. Direct marketing accounts for a much larger portion of life insurance sales than previously reported.
Byron Udell, chairman of LIDMA's Market Research Committee said, “Knowing that about one out of every five individual policies comes from a direct channel speaks to the great strides that our niche continues to make in the marketplace.” For more information, visit http://www.limra.com or www.lidma.org.
 
Guaranteed Benefits Remain Popular in Annuities
In the fourth quarter of 2009, 84% of those who purchased a variable annuity also chose guaranteed living benefits (GLBs), according to a study by LIMRA.
For four consecutive quarters, election rates were at 89% or higher, but they dipped because of a decline of the election of the guaranteed living withdrawal (GLWB) rider. However, the GLWB market share remained high.

Dan Beatrice, senior analyst, LIMRA Retirement Research said, “Especially in this shaky economy, consumers are choosing security through GLBs. Despite companies' efforts to de-risk benefit riders, lowering their comparative attractiveness, 80% of new variable annuity sales premium during the year went into contracts in which a GLB was elected.”

GLWB asset growth has outpaced the other types of living benefits and comprised nearly half of all variable annuity assets with a GLB by the end of 2009.
Variable annuity assets with GLBs increased 41% from $292 billion at the beginning of 2009 to $411 billion at the end of 2009 while total variable annuity assets increased 21% from $1.151 trillion to $1.389 trillion during the same period.
The 2009 growth of variable annuity assets with GLBs attached exceeded non-GLB asset growth primarily because of the high election rates by buyers in new variable annuity purchases. In addition, a high proportion of variable annuity contracts with GLBs are still within their surrender charge period, which would be a disincentive to surrender the contract. Older contracts that have low or no surrender charges tend not to have GLBs. For more information, visit www.limra.com.
 
How Annuity Premiums Stacked up in the Fourth Quarter
 U.S. sales of fixed annuities were down 43% compared to the forth quarter of 2009 and 11% down compared to the third quarter. In calendar year 2009, total market sales were 2% below 2008, according to data from Beacon Research.
Jeremy Alexander, CEO of Beacon Research said, “We expect first quarter sales to post a sequential increase. Fixed annuity rates are somewhat higher and there has been stepped up promotional activity of all four fixed annuity product types. Though consumer demand should remain strong, further growth will depend on the interest rate environment and the availability of investment grade bonds to back new business.”

MVAs fell 76%, book value annuities fell 47%, income annuities fell 17%, and indexed annuities fell 4%. Income annuities posted a small 1% increase. Estimated sales shrank for the other product types: MVAs, fell 39%; book value fell 9%, and indexed fell 6%. The indexed share of sales rose to an eight-quarter high of 35%, but book value annuities remained the dominant product type with a 46% share.
Compared to 2008, indexed annuity results advanced 11%. MVAs were 16% behind. Income annuities fell 7%, and book value products fell 3%.
Western National vaulted from sixth place to become fourth quarter’s sales leader, bumping New York Life to second place. Allianz fell down a notch to come in third.
The top 10 study participants were the following in order:
• Western National Life
• New York Life
• Allianz Life
• American Equity Investment Life Insurance
• Aviva
• Pacific Life
• ING
• AEGON/Transamerica Companies
• MetLife
 
Western National led in book value sales, replacing Pacific Life. American National took top MVA sales honors from ING USA. Allianz remained number one in indexed annuities, and New York Life continued as the dominant issuer of fixed income products.
The Allianz MasterDex X moved from second place to become fourth quarter’s best-selling product. Surprisingly, it was the only indexed annuity in the top five. MasterDex X remained number one among independent producers. For more information, visit beaconresearch.net.
 
IN CALIFORNIA
Agent Learning Center
Golden Eagle Insurance has introduced an online Agent Learning Center for its appointed agencies. Golden Eagle is a Liberty Mutual Agency Markets regional company. Agents can register for classroom workshops and participate in virtual or self-paced online programs, many of which qualify for continuing education credits. They can access courses covering general insurance topics, sales, products, office productivity, consultative selling, and agency management. An Agency Manager Toolkit is available to help agency owners or principals in hiring and developing producers. For more information, visit www.goldeneaglecorp.com.
 
Kaiser Completes Electronic Health Records
Every Kaiser Permanente medical facility is now equipped with Kaiser Permanente HealthConnect, the largest private sector electronic health record in the world. Kaiser Permanente hospitals in Oakland, Richmond, and Vallejo in Northern California are the most recent facilities to complete the final phase of electronic health record implementation, which includes bedside documentation, clinical decision support and bar coding for medication administration. The comprehensive health information system securely connects more than 8.6 million people to their physicians, nurses, and pharmacists, personal information, and the latest medical knowledge. It also helps facilitate collaboration among primary and specialty care teams. For more information, visit http://www.kp.org.

Group Says Health Reform Is a Life and Death Issue
The failure to enact health reform this year will lead to about 34,600 premature deaths of people between 25 and 64 years old in California in the next decade, according to a report by the consumer health group Families USA. The link between a lack of health coverage and premature death occurs for several reasons:
• The uninsured are less likely to have a usual source of care outside the emergency room.
• The uninsured often go without screenings and preventive care.
• The uninsured often delay or forgo needed medical care.
The report warns that, on the national level, deaths would grow from 68 per day in 2010 to 84 per day in 2019.
The Families USA report applies the methodology developed in the report by the prestigious Institute of Medicine (IOM) to estimate national and state-level deaths due to lack of health coverage. The IOM found that about 18,000 non-elderly adults died in the year 2000 due a lack of health coverage. The Urban Institute updated this number and found that at least 22,000 non-elderly adults died prematurely due to a lack of health coverage in the year 2006.
The Families USA report states the following:
• In the 15 years since health reform was last debated (1995 to 2009), more than 290,000 American adults (25 to 64 years old) died prematurely due to a lack of health coverage.
• The following 12 states experienced the largest number of premature deaths due to a lack of coverage: Calif. (38,400), Texas (32,200), Fla. (24,400), N.Y. (18,800), Ga. (10,900), Il. (10,800), N.C. (9,600), Ohio (9,500), Penn. (8,700), La. (8,200), N.J. (7,800), and Mich. (7,500).
• If Congress fails to pass health reform, in the next 10 years (2010 to 2019), more than 275,000 adults across the nation will die prematurely due to a lack of health coverage.
• The following 12 states are projected to have the largest number of premature deaths due to a lack of coverage over the next 10 years: Calif. (34,600), Texas (31,700), Fla. (25,400), N.Y. (13,900), Ga. (11,500), N.C. (9,600), Il. (9,400), Ohio (8,900), La. (7,700), Mich. (7,600), Penn. (7,500), and Tenn. (7,500).
• Every day in 2010, about 68 non-elderly adult Americans across the nation will die prematurely due to lack of health coverage. If health reform fails, that number will grow to 84 Americans dying every day by 2019.
 For more information, visit www.familiesusa.org.