2018 View From The Top

Some of California’s Top Life Carriers offer insights on the current state of the industry.

It’s that time of year again – time to hear from some of our favorite – and dare we say most influential?– people in life insurance. Cal Broker asked a number of life insurance pros to weigh in on the industry. Here’s what you need to know now…

Cal Broker: Has there been a significant change in product mix over the past 12 months in terms of guarantees, variable or term?

Stephanie Shields, vice president of premier broker solutions, Aflac:
Aflac continues to see high growth rates in both group whole life and group term life insurance policies. They are often offered together in a paired strategy to meet policyholders needs both during their working careers and beyond. This allows customers to plan for their short- and longer-term needs, tailoring the plan to fit their lives.

Aflac’s new guaranteed-issue options allow employers to offer more robust life insurance packages to their employees. The improvements create more flexibility, more choice and more value, all for the same great rates as our current plan.

Pam Jenkins, assistant vice president, product and market development, Colonial Life:
According to Eastbridge Worksite/Voluntary Sales Report (2017), life sales again captured the largest share of total voluntary sales by line of business with 29 percent, up slightly from last year. Term sales showed a 14 percent sales increase in 2017, while universal life/whole life sales were up 7 percent.

Greg Faux, second vice president, life product development, Guardian Life Insurance Company of America: The trends from the past few years have continued, with a shift away from longer-duration guarantees towards more accumulation-focused products.  While interest rates have started to move upward, they continue to put pressure on products like guaranteed UL.

Term insurance will always have its place, and we’ve seen continued steady growth.  We’ve also seen increasing interest in combination life and long term care products as longevity and chronic illness are primary concerns for much of the population.

James Ryan, SVP, head of sales and distribution for individual life insurance, Voya Financial: At Voya, we see the growing demand for Indexed Universal Life (IUL) as a big opportunity. According to LIMRA sales data, IUL new annualized premiums grew 8 percent in the first quarter — marking the sixth consecutive quarter of growth for IUL. This sales trend is not surprising, since we find more and more Americans are interested in the living benefits that life insurance products can provide. In addition to traditional death benefit protection, IUL products provide a cash-value component that Americans can use to help cover unexpected expenses, education cost or to supplement their retirement savings.

Given the strong value these products offer to customers, Voya has shifted our strategy over the past few years to focus on the sale of IUL products. In September, we plan to launch a new Index Credit Accumulation Rider to our top-selling IUL product called Global Choice. This gives customers the potential to more rapidly increase their cash value, by allowing them to use a portion of past gains to purchase greater participation in their selected index performance.

With interest rates rising, Variable Universal Life (VUL) products are also surging in popularity. According to LIMRA sales data, VUL new annualized premiums jumped 10 percent in the first quarter — marking the second consecutive quarter of double-digit increases to VUL. While VUL products only held 6 percent market share of total life insurance sales in the first quarter, it’s clear that Americans are interested in life insurance products that offer them greater upside potential as interest rates continue to climb. At Voya, we’re keeping a close watch on this market and are in the early stages of developing an innovative VUL product that we think will be a game-changer.
Cal Broker: Do you see growth in particular niche markets?

Stephanie Shields, vice president of premier broker solutions, Aflac:We think one of the key opportunities continues to be hybrid life products that offer a living benefit or long-term care component. Research shows that 30 percent of households in the U.S. do not have life insurance, meaning there is great opportunity in the market. More broadly, we are seeing the adoption of voluntary benefits strategies across all industries and size segments as consumer awareness continues to increase. We are moving with a focused approach in terms of our marketing effort and product portfolio.

Pam Jenkins, assistant vice president, product and market development, Colonial Life: Life insurance is needed across all markets as America’s workers in general are uninsured or underinsured. Over a third (35 percent) of all households would feel adverse financial impacts within one month if a primary wage earner died. Even those with life insurance say they probably do not have enough.  This represents a good opportunity to educate employees about their needs and help them match those needs with the right type and affordable amount of coverage.

Greg Faux, second vice president, life product development, Guardian Life Insurance Company of America: Small businesses have long been a primary focus for us. Business owners naturally look for assistance in areas such as providing employee benefits and executive retention, as well as their own personal planning needs. Also, whenever there are significant changes to the tax code, as we’ve seen recently, there is an opportunity to review estate plans and related insurance policies to ensure client’s needs are still being met.

 James Ryan, SVP, head of sales and distribution for individual life insurance, Voya Financial: The demographic of our country is changing. According to the U.S. Census Bureau, the minority population in America (Hispanics, African-Americans and Asians, for example) currently represents roughly one-third of the U.S. population and is expected to become the majority, reaching over 50 percent by the year 2044.

At Voya, we see the shifting and diverse population of America as a growing market. Particularly, among the Asian American community, there is an opportunity for even more growth in the future. According to the Pew Research Center, the Asian population in the U.S. grew 72 percent between 2000 and 2015 — from 11.9 million to 20.4 million — the fastest growth rate of any major racial or ethnic group. Voya has a strong presence serving the multi-cultural market — specifically, the Asian-American community. Voya’s life insurance business tailors to the needs of this group by creating in-language and in-culture marketing materials, while also providing dedicated support service to accommodate people who speak Mandarin and other dialects of Chinese. Research also shows that the Asian American community, while growing in size, is still a relatively underserved market with preferences towards strong brand loyalty. That’s why last fall Voya introduced a Chinese version of its name to help appeal to the Asian American community and reinforce its commitment to this growing market. The Chinese name is pronounced wò yǎ — which translates to richness and happiness of life for the future. To help build further brand awareness, Voya launched a three-month advertising campaign leveraging a combination of television and digital ads as well as paid searches to target key Asian American markets and media channels. For example, as part of the campaign activation, Voya ran commercials in Mandarin on Chinese TV stations in a number of select U.S. cities — like San Francisco, Los Angeles and New York City.

Another growing niche market is high-net worth foreign nationals (HNWFN). This market is typically defined as a person with investable finances in excess of one million dollars. According to industry research, global high-net worth individual wealth is projected to surpass $100 trillion by 2025, which is being propelled by strong Asia-Pacific growth. At Voya, we

have the tools and capabilities to successfully serve HNWFNs looking for domestic insurance-based solutions. In fact, a large portion of Voya’s IUL sales are to HNWFNs, since they value the protection and cash-value benefits these products offer.

Cal Broker: What is happening with your distribution systems? If you have an agency force, is it growing, are you hiring and is there more attrition than usual?

Stephanie Shields, vice president of premier broker solutions, Aflac: Both our agent and broker teams provide valuable support to the life markets at the worksite. Our agents and broker partners play a key role in our continued success in reaching new accounts and customers in the U.S. Today, there are more than 70,000 independent agents licensed to sell Aflac products in all 50 United States and in Guam, Puerto Rico and the Virgin Islands. Our sales force continues to thrive and grow.

Aflac’s distribution strategy continues to expand and evolve. We continue to revise and develop our products based on policyholders’ ever-changing needs to ensure we can offer our products to the greatest number of people in the most efficient way possible, all through the channels they desire. As more workers join the freelance and gig economy, we believe it is vital to find ways to reach this largely untapped customer base.

Pam Jenkins, assistant vice president, product and market development, Colonial Life: At Colonial Life, our strong agency distribution has kept us among the leaders of the voluntary industry.  There is tremendous opportunity in the worksite industry for people who genuinely care about protecting America’s workers. Colonial Life provides the chance to be in business for yourself but not by yourself, and control your own schedule and income. Our agency sales organization members build their business by working both directly with employers as well as partnering with brokers.

Greg Faux, second vice president, life product development, Guardian Life Insurance Company of America: There is the reality we all face, and that’s the aging of the distribution force – many of whom are retiring, which can have an impact on the distribution model. It empowers us to make a concerted effort to build, maintain and still capture the experience of those individuals.

We are focused on maintaining the population level of our advisor base at our current pace, while continuing our efforts to foster an environment of collaboration and partnership (advisors teaming up to service clients).  There is continued interest in financial sales careers among professional women, who are attracted to the entrepreneurial spirit and we have several programs to help drive their growth. We’ve introduced flexible leadership training programs designed to be more accommodating for those interested in a sales career. It uses assessments so that each person gets the support and training they need, when they need it. We’ve also tested our use of apprenticeships to outline different pathways and bridges to becoming an advisor so that individuals can find the track that works best for them.

James Ryan, SVP, head of sales and distribution for individual life insurance, Voya Financial: Our life insurance products are sold by a select group of external distribution partners who share our commitment to helping Americans achieve their financial goals. They are sold through institutions — like banks, independent broker-dealers and independent marketing partners. This approach has been largely successful and has differentiated us from our competition, particularly among multi-cultural agents who are more open to brand loyalty than other groups.

Cal Broker: Last year we heard a lot about millennials. Are these customers still of primary focus and interest? Are there other niches on your radar now?

Pam Jenkins, assistant vice president, product and market development, Colonial Life:

Millennials make up the largest segment of America’s workers today. According to LIMRA’s 2018 Insurance Barometer Study, millennials need life insurance information and education, as they are most likely to be uncertain about product types, coverage amounts, and qualifying for coverage. They also prefer to buy life insurance in person, although many will research online. 44 percent of millennials estimate the cost at over five times the actual amount. While the generations that follow will have their own unique needs, there is still much opportunity for educating millennials.

Greg Faux, second vice president, life product development, Guardian Life Insurance Company of America:

Millennials are and will be a focus for the foreseeable future.  Based on our recent study, Millennials and Money: Understanding What Drives Financial Confidence study, millennials are open to learning about financial strategies more so than predicted, as nearly 75 percent say they would attend an in-person financial seminar, and almost one in three unadvised millennials are likely to begin using a professional advisor in the next year. As this segment of the population moves through the major milestones of life, such as marriage, having or adopting children, and buying a home, we will continue to provide security with the products and services that have worked so well with prior generations.  At the same time, we realize that each generation is different.  For example, the popular perception is that millennials, having grown up in the age of the smartphone, engage with the world differently.  This is driving the industry towards new and better ways of engaging that should benefit all consumers, not just millennials.  The way we are starting to build up tools and resources is from a mobile-first posture.

Matthew Purington, assistant vice president, product and market development, Unum: Yes, millennials now make up the majority of the workforce. So they are and will continue to be a primary focus. But the workforce is diverse, so employers should develop a well-rounded benefits strategy that caters to all segments of the population and includes multi-year strategies with the right product blend and enrollment approach. Likewise, the “Gig” economy (i.e., independent contractors) continues to be a watch area and a potential growth opportunity in the industry.

James Ryan, SVP, head of sales and distribution for individual life insurance, Voya Financial: While millennials are certainly a popular group to discuss these days, there’s another underserved market that doesn’t get enough attention: the special needs community. According to the U.S. Census Bureau, one in five Americans — an estimated 56.7 million people — will be affected by a special need or disability in their lifetime. Research also shows that 105 million Americans are friends and family of people with special needs in the U.S., and more than one in six American workers also act as caregivers.

As experts in retirement, investment management, employee benefits and individual life, Voya is uniquely positioned to make an impact in the lives of people with special needs as well as their families and caregivers by helping them think differently — and holistically — about planning for a financial future. Specifically, this includes offering a depth of resources focused on financial planning and education through our Voya Cares® program.

At Voya, we’re also especially proud of our Invest in Something Special campaign, where Voya Cares and the Special Olympics partnered together to help raise awareness for this underserved market. To show the strength and courage that people with special needs display every day, and to support the special needs community, late last year Voya shared Special Olympics athletes’ inspirational and heart-warming stories and pledged to donate $1 — up to $500,000 — for each like, share or comment generated with the Invest in Something Special hashtag. At the end of the weeklong social media campaign, the hashtag engaged nearly one million people and initiated more than 940,000 likes, comments and shares. Most importantly, the campaign inspired a national conversation about inclusion. The overwhelming response to the invest in Something Special campaign resulted in a donation of more than half a million dollars shared across 52 U.S. Special Olympics Programs.

Cal Broker: What kind of growth do you see in life insurance sales as an employee-paid or employer-paid benefit?

Stephanie Shields, vice president of premier broker solutions, Aflac: Life insurance continues to be one of the most desired benefits on the market. Employers are increasingly seeking ways to maximize what is spent on benefits, providing employees with enhanced coverage options. Aflac believes that trends of life insurance sales at the worksite eclipsing private sales will be on the rise as employers seek to meet employee population needs with both contributory and non-contributory strategies.

On top of that, our new guarantee-issue options can allow employers to offer more valuable life packages to their employees. We have even opened up guarantee-issue access to employers with 10 life applications or 15 percent participation, whichever is more, so agents can reach more customers and clients than ever before.

Pam Jenkins, assistant vice president, product and market development, Colonial Life: Term insurance growth is stimulated by employer-paid benefits, which does create additional growth as employees “buy-up” for more coverage. For cash value plans that are intended to cover a person for their lifetime, employee-paid and owned coverage is the best solution.

Greg Faux, second vice president, life product development, Guardian Life Insurance Company of America: The workplace is a natural point of engagement for insurance benefits and is the first time many consumers will seriously think about the need for life insurance.  There is also an alignment with employee benefits as advisors meet with business owners to discuss their personal planning needs. Individual financial planning for owners and executives is a labor-intensive process, and as the conversation shifts to employee benefits, we continue to hear the need for simpler, cost-effective products from advisors working in this space.  This extends beyond product development to marketing, the underwriting process, and the way we talk about the services we provide. We expect the workplace to continue being an area of growth and focus for us and the industry.

Matthew Purington, assistant vice president, product and market development, Unum:

I see modest but steady growth. While the shift to voluntary continues, employer-paid coverage remains a valued employee benefit and a significant percentage of sales. And, as employees continue to take on more costs for health care, offering an employer-paid benefit can help fill a widening gap for employees as well.

James Ryan, SVP, head of sales and distribution for individual life insurance, Voya Financial: As the financial wellness needs of Americans continue to evolve, innovative compensation benefits are becoming an increasingly important way for employees to attract and reward key members of their workforce. Recently, Voya acquired Pen-Cal Administrators, Inc., a California-based company with over 50 years of experience designing and administering non-qualified deferred compensation benefit plans and providing consulting services. We are excited that Pen-Cal is now part of the “One Voya” family, and our Individual Life business is exploring potential cross-selling opportunities for Corporate-Owned Life Insurance (COLI) funded non-qualified plans.

Cal Broker: What, if any, state or federal legislative issues are you concerned about?

Stephanie Shields, vice president of premier broker solutions, Aflac: Since our policies are not major medical insurance, the changes resulting from health care legislation do not often have a direct impact on our business. However, we expect the uncertainty around the health care industry to continue for the foreseeable future, increasing consumer awareness around their health care offering.

Rising health care costs can force more and more companies to offer high-deductible plans, leaving many employees to wonder how they will make ends meet. Household out-of-pocket health care expenses – not to mention any other costs associated with an accident or illness, like taking time off work, child care, travel costs, etc. – can be overwhelming to the average American worker. Aflac’s cash benefits can help provide additional safety and stability for workers and their families.

Pam Jenkins, assistant vice president, product and market development, Colonial Life: Low interest rates are the single greatest challenge facing the industry. These low rates will continue to put pressure on financial services companies and the interest-sensitive financial products they issue, including life insurance. All life insurance products are affected to varying degrees, but long-term contracts that rely heavily on earned interest, such as whole life and universal life, are especially impacted. All life insurers will be challenged to make product adjustments in order to manage lower investment income and profitability in the current environment.

James Ryan, SVP, head of sales and distribution for individual life insurance, Voya Financial: The financial services industry has seen tremendous economic and regulatory change over the last decade. Like many in the industry, Voya was closely monitoring the DOL’s fiduciary rule until it was recently overturned. A main component of the DOL rule was the requirement that providers of investment advice act in their customers’ best interest. Working in our clients’ and customers’ best interests has been a long established part of Voya’s culture and business practices. This is at the core of our values — and does not change simply because the DOL rule no longer applies.

As for our Individual Life business, specifically, we’re developing plans to retool our life insurance product portfolio as part of the 2020 regulatory changes that require carriers to adopt the new Commissioners’ Standard Ordinary (CSO) mortality tables, along with the Principles-Based Reserves framework.

Cal Broker: What are some of the common characteristics of your most successful life insurance producers?

 Stephanie Shields, vice president of premier broker solutions, Aflac: Our most successful life insurance producers help clients and employees understand the importance of life insurance and effectively position the products as valuable components to any benefits plan. We expect voluntary insurance to be increasingly viewed in the workplace as a “must have.” One of the driving factors behind this belief is that workers who have major medical insurance may be feeling the brunt of higher health care costs and need options to help cover those costs.

Also, our most effective producers have deep relationships with their broker partners and clients that enable them to understand each employer’s unique benefits strategy and tailor a life solution that delivers on their objectives. These producers know how to provide coverage options and plan recommendations (variations of employer-paid, supplemental buy-up and voluntary options) to help create the most attractive offering for a particular benefits package.

Last, strong producers help policyholders understand how any changes in their lives should play a part in how they evaluate their specific needs to help make sure they have adequate protection. The better the offering through the workplace, the less likely individuals may be to seek individual coverage through other vendors.

Pam Jenkins, assistant vice president, product and market development, Colonial Life: We strongly believe in the value of one-to-one, personal benefits counseling sessions to help employees understand their needs and options to create an effective financial safety net for themselves and their families. So our most successful life insurance producers are those who are not only experts in product knowledge but who also excel at this customized counseling approach. They create trust and credibility, as well as long-term relationships — they’ll be back in the same account next year and the year after, talking to the same employees, whose needs likely will change. We’ve developed a certification process so brokers, employers and employees can be assured they’re working with the best in the business when it comes to individual benefits counseling.

Greg Faux, second vice president, life product development, Guardian Life Insurance Company of America: The most successful producers take a comprehensive, consultative approach to helping their clients along their financial journey. The ability to ask questions and actively listen are traits of top life producers. It’s important to understand what the client needs versus what you want to sell to them. Successful producers provide a superior level of value to their clients, offering knowledge and dedication to them, positively impacting their lives.

At Guardian we support our advisors in many ways to help become and remain their clients trusted advisors. They have a network of advanced sales partners, training solutions and practice management tools/programs to join and can participate in study groups to create a community of high performance producers driven to deliver best practices to meet client evolving needs. For many successful producers who have such strong partnerships with their clients, there’s a willingness for their clients to share referrals, without being asked, which is the ultimate recognition of a job well done for that producer.

Matthew Purington, assistant vice president, product and market development, Unum: Strong product knowledge and an orientation for customer-focused solutions are characteristics of successful producers. The best sales people are always listening to the client then taking proactive steps to solve problems, uncover issues and tailor recommendations. Increasingly, they also combine data and market insight to deliver smart, simple and fitting solutions.

James Ryan, SVP, head of sales and distribution for individual life insurance, Voya Financial: As we spend more time with advisors, I’m finding that today’s successful life insurance producer is more likely a financial advisor who takes a holistic approach to planning and has built a practice with its foundation in asset management. While they are focused on managing client assets, most likely in an advisory environment, they recognize the changing needs of their clients — and thus, the changing needs of their own practice. So when it comes to planning solutions, they are flexible and open-minded when it comes to helping their clients build a secure future. In addition, they understand the importance of being able to offer differentiated solutions outside of traditional money management — not only for their clients, but for their business. Life insurance can have a critical role in any financial plan, offering significant benefits both during the life of the client as well as in wealth transfer scenarios.

Strong engagement with their clients is also a universal characteristic of the most successful producers. They take the opportunity to understand more about their clients in every interaction, whether it’s a new relationship or one they’ve had for many years. Life can change on a dime, and we often unrealistically assume that we know exactly what is going on in every one of our client’s lives. Our top life producers are asking questions and listening to their client so they can uncover needs that either arise through a situation, or one that has been on the horizon for some time.

Cal Broker: With the health insurance turmoil, are you seeing more health insurance brokers getting into life insurance sales? If so, do you have any advice for them?

Stephanie Shields, vice president of premier broker solutions, Aflac: With the continued changes in health care and the consolidation taking place in the broker markets, successful brokers are deploying diversification strategies that include life and other key voluntary benefits in order to grow their client base and meet the market’s needs.

The national conversation around health care laws impacts how we think about health insurance and other benefits. The industry has an opportunity to educate customers on the valuable role voluntary benefits plays in the total value of health and wellness plans. Brokers are more likely to increase their client base and grow their sales by elevating voluntary products into their overall benefits or total rewards strategy.

For example, with Aflac’s latest life insurance expansion, brokers can offer more flexibility, more choice and more value to customers. Brokers can combine whole life insurance, term life insurance and their clients’ existing policies—giving them the chance to increase sales and kick off conversations with accounts both old and new.

Pam Jenkins, assistant vice president, product and market development, Colonial Life: Health insurance brokers have made the shift to voluntary benefits over the last several years because of health care reform. With life insurance, it’s important to select a carrier you know will be in it for the long term.

Colonial Life’s voluntary sales grew 7 percent in 2017, totaling $520 million. Colonial Life is the only company with more than $150 million in annual sales to exceed the industry average each of the past three years, according to Eastbridge. The performance earned Colonial Life the 2017 Voluntary Sales Growth Leader recognition.

Voluntary sales totaled $8.1 billion in 2017, according to Eastbridge’s annual U.S. Voluntary/Worksite Sales Report. Voluntary benefits include any financial protection that employees can choose at the workplace, including life insurance, disability insurance, dental insurance, accident insurance, critical illness insurance and cancer insurance.

As health care costs have climbed, and many employers have shared the growing costs of benefits with employees, millions are realizing they can affordably protect their finances, their families and their futures with voluntary benefits.

Greg Faux, second vice president, life product development, Guardian Life Insurance Company of America: We have a variety of brokers joining our sales team with some from the health insurance side but there isn’t a trend to infer there is a heavy flow of these brokers.  Health Insurance brokers are valuable additions to the team as they can be client focused and can synthesize intricate details of benefit offerings, which can be applied to their role as a life insurance sales member.