Life Insurance Industry Problems That Effect You

With the Baby Boomers reaching retirement age in exponential numbers over the next few decades, the life insurance industry is one of many industries whose method of operation may have to change with the times in order to remain viable.

Challenges Facing the Industry

There are several challenges facing the life insurance industry right now. The industry is facing decreasing revenues, less training for agents, and an increasing average age of agents.

Because life insurance costs are, among other considerations, based on the average number of death benefits expected to be paid, the multi-decade increase in aging baby boomer population has made costs are continuing to rise.

As costs rise for the insurance companies, their revenues continue to decrease. As with any company, when life insurance companies do not have enough revenue, they cut back on the services most customers expect to have: well-trained agents, a wide choice of products, and solvency. Companies will not be able to spend as much on training agents, nor will they have the ability to hire new agents. Since the average age of agents in the industry is around 50 years old, the industry may face an inability to fully staff branch offices and may be forced to close some of them.

How Do These Challenges Affect You?

The biggest affect consumers will feel from the challenges faced by the insurance industry is increasing costs for life insurance. Some analysts predict that life insurance premiums will increase 50-100% over the next several years; other, more pessimistic analysts expect the increases to be closer to 300%. The best way for you to protect yourself from rising costs is to buy soon.

In addition to increasing costs, consumers will also suffer from service cutbacks. Not only is it possible that your local office could close, forcing you to seek an agent elsewhere, but it will also take longer to process claims. Customer service levels will most likely suffer as companies are forced to adjust their operations to deal with skyrocketing costs. Unfortunately, already under-trained agents will receive little, if any support, so the risk of being sold a product without the agent fully understanding what he or she is selling is more likely.

The Bright Side

As life expectancies continue to increase and chronic disease becomes more manageable and treatable, actuarial tables will slowly adjust, which should help stabilize insurance costs for consumers over the long term. Government intervention and over-site will also ensure consumer protection.

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