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Life Insurance - US - October 2006

SCOPE AND THEMES
What you need to know
Definitions
Abbreviations and terms
Abbreviations
Terms
EXECUTIVE SUMMARY
Top issues and developments in the industry
The marketplace
Product development
Distribution channels
Agent performance, attributes and attitudes
The Consumer
Forecast
MARKET DRIVERS
Accumulation vs. risk focus
Figure 1: Net premiums and considerations of life insurers, 1994, 2003, 2004
Demographic trends
Life cycles
Figure 2: Population aged 65+: 2000-50
Figure 3: proportion of population aged 65+: 2000-50
Minority markets.
Figure 4: Projected % of total U.S. population, 2000 to 2050
Pandemics
Technological and administrative issues
Persistency
Regulation
Estate planning
Securitization
Mergers and acquisitions/international expansion
MARKET SIZE AND TRENDS
Figure 5: Value of individual life insurance premiums in the U.S., 1998-2004
Figure 6: Individual life insurance purchases in the U.S., 1995-2004
Figure 7: In-force policies in the U.S., 1995-2004
Figure 8: Life insurance premiums totals in the U.S., 1995-2004
MARKET SEGMENTATION
Term and permanent insurance
Figure 9: Individual life insurance purchases by plan type, 2004
Figure 10: Value of individual life insurance purchases, permanent and term, 1998-2004
Figure 11: Volume of individual life insurance policy purchases, permanent and term, 1998-2004
Variable/universal/variable universal life
Figure 12: Top ten variable life sales rankings (single premiums included at 10%; excludes COLI, BOLI, and group VUL),  2004 and 2005
Insurance sales by state
Figure 13: Life insurance purchases and in-force for the five most populous U.S. states, 2004
COMPETITIVE LANDSCAPE
Figure 14: Leading writers of U.S life/health insurance by revenues, 2005
Figure 15: Largest life insurers by total direct life insurance premiums, 2004
Figure 16: Largest life insurers by individual life insurance in force, 2004
Figure 17: U.S. term life in force, top life writers, 2005
Figure 18: U.S. term life issued, top life writers, 2005
Figure 19: U.S. ordinary life in force, top life writers, 2005
 PRODUCT DEVELOPMENT: RETHINKING THE FUNDAMENTALS
Broad considerations: complexity versus simplicity
Underwriting categories
Combinations
Flexibility
 INNOVATIVE PRODUCT FEATURES
No-lapse universal life
Indexed universal life
Figure 20: Leading writers of U.S. index life insurance sales, 2005
Return-of-premium term
Corporate-owned life insurance (COLI)
Life settlements
Competitive responses to minority markets
 DISTRIBUTION CHANNELS
Agent distribution channels
Brokerage general agents and independent marketing organizations
 NEW MODELS FOR SUCCESS
Agent recruitment and retention
Affinity groups/associations
 BANKS
Figure 21: Leading providers of life insurance sold through banks (weighted premiums), 2004 and 2005
 INTERNET
Internet consumer-education features
 GROUP LIFE INSURANCE
Figure 22: Value of group life insurance owned, by provider, January-July 2006
INSURANCE AGENTS—WHAT DO THEY THINK?
 AGENT CHARACTERISTICS
Summary
Percentage of business that is life insurance
Figure 23: percentage of agent’s business that is any type of life insurance, by gender, September 2006
Figure 24: percentage of agent’s business that is any type of life insurance, by gender, September 2006
Agent employment status and tenure
Figure 25: percentage of respondents who are independent agents or employees, by gender, September 2006
Figure 26: Tenure as an insurance agent, by gender, September 2006
Agent affiliation
Figure 27: Companies agents represent, by gender, September 2006
Figure 28: Companies agent sell for, by age, September 2006
Impact of industry developments
Figure 29: Impact of industry developments on agents’ business—price competition, by gender, September 2006
Figure 30: Impact of industry developments on agents’ business—online quotes, by gender, September 2006
Figure 31: Impact of industry developments on agents’ business—automated underwriting, by gender, September 2006
Figure 32: Impact of industry developments on agents’ business—changes in compensation, by gender, September 2006
Figure 33: Impact of industry developments on agents’ business – other changes in technology, by gender, September 2006
Obstacles to recruiting and retaining agents
Figure 34: Obstacles to recruiting and retaining agents—compensation, by gender, September 2006
Figure 35: Obstacles to recruiting and retaining agents—clientele, by gender, September 2006
Figure 36: Obstacles to recruiting and retaining agents—complexity of insurance, by gender, September 2006
Figure 37: Obstacles to recruiting and retaining agents—work hours, by gender, September 2006
Figure 38: Obstacles to recruiting and retaining agents—sales techniques, by gender, September 2006
Figure 39: Obstacles to recruiting and retaining agents—fewer people buying insurance, by gender, September 2006
Figure 40: Obstacles to recruiting and retaining agents—agent image, by gender, September 2006
Adequacy of support for agents
Figure 41: Adequacy of support for agents, September 2006
Types of incentives offered
Figure 42: Incentives/support offered agent, by employment status, September 2006
Figure 43: Incentives/support offered agent, by length of employment, September 2006
ADVERTISING AND PROMOTION
Figure 44: Insurance industry ad spend by company, 2005
Fresh advertising themes
Multicultural programs
Direct mail
THE CONSUMER AND WHAT THEY OWN
Consumers’ life insurance needs
Composition of households owning life insurance
Figure 45: Life insurance ownership by number of children in household, January-July 2006
Composition of high-income households owning life insurance
Figure 46: Type of life insurance owned by households with income of$100,000+, by gender, January-July 2006
Figure 47: Adults age 18+ whose household income is $100,000+ and currently own life insurance, by marital status, January-July 2006
Figure 48: Adults age 18+ whose household income is $100,000+ and currently own life insurance,  by children in the household, January-July 2006
Figure 49: Type of life insurance owned by households with income of $100,000+, by race/ethnicity, January-July 2006
Figure 50: Type of life insurance owned by households with income of $100,000+, by geographic region, January-July 2006
Figure 51: Provider of life insurance for households with income of $100,000+, January-July 2006
Face value of life insurance owned by insurance company
Figure 52: Adults age 18+ and currently own life insurance by face value of policies for selected major insurers, January-July 2006
Figure 53: Value of term life insurance owned, by provider, January–July 2006
Figure 54: Value of whole/universal/variable life insurance owned, by provider, January–July 2006
FUTURE TRENDS
Industry seeks sales growth
Companies may seek to halt declining numbers of life agents
Further product and underwriting innovations
Mortality tables
Principles-based reserves and capital standards
 MARKET FORECAST
Figure 55: U.S. life insurance premiums, actual versus trended data, 1995 - 2004
Life insurance premiums
Figure 56: Forecast of total U.S. life insurance premiums, at current and constant prices, 2006-11
First-year life insurance premiums
Figure 57: Forecast of U.S. first-year life insurance premiums, at current and constant prices, 2006-11
Single life insurance premiums
Figure 58: Forecast of U.S. single life insurance premiums, at current and constant prices, 2006-11
Renewal life insurance premiums
Figure 59: Forecast of U.S. renewal life insurance premiums, at current and constant prices, 2006-11
APPENDIX: INDUSTRY ASSOCIATIONS
APPENDIX: TV ADVERTISING AND DIRECT MAIL
Overview—television advertising
Figure 60: American Family Life Insurance television advertisement, 2006
Figure 61: Colonial Penn television advertisement , 2006
Figure 62: Gerber Life Growup plan television advertisement, 2006
Figure 63: Guaranteed Trust Life Lifetime Plan, television advertisement, 2006
Figure 64: Legacy group term life insurance television advertisement, 2006
Figure 65: Matrix Direct/American general term life insurance television advertisement, 2006
Figure 66: Mutual of Omaha life insurance television advertisement, 2006
Figure 67: Prudential financial life insurance television advertisement, 2006
Figure 68: Stonebridge life insurance television advertisement, 2006
Overview – direct mail advertising
Figure 69: Globe Life and Accident Insurance, 2006
Figure 70: Chase Insurance Direct, 2006
Figure 71: AARP/NYLife, 2006
Figure 72: Globe Life Young America Plan, 2006

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