small policies

SALT LAKE CITY – Inflation and rising interest rates. Regulatory pressure and market volatility. These unique economic conditions might force insurers to abandon small-sized life insurance product policies.

“When I talk to some of my peers out there they’re suggesting that small policies are going to be tougher and tougher to deal with,” said Steve Cox, head of life and combination products for Life Innovators, an independent product development company.

Life insurance product trends

The trends in life insurance product development were the subject of a pair of sessions Tuesday at the LIMRA Life Insurance and Annuity Conference. Cox joined a panel titled, “Impact of the Current Economic Environment on Life Insurance and Annuities.”

Some insurers might set minimum life policies as high as $250,000, Cox said. “I think it’s hard to say you’re serving middle America when you do that,” he added.

Inflation is a double whammy for insurers, the panel noted. Although inflation declined for nine straight months, down to 5% in March, it is still well above the Federal Reserve target of 2%. Furthermore, economists say the pain to the household budget is going to be felt for some time to come.

“Certainly there’s a challenge for small policies,” said Elizabeth Dietrich, chief actuary for Prudential Retirement Strategies. “Compared to what else people are spending money on, do they have enough left in their discretionary income to put money aside for some of these other things?”

The life insurance industry is not taking advantage of the increased awareness that accompanied the COVID-19 pandemic, Cox insisted. According to the 2022 LIMRA Barometer Study, one in three (31%) US adults say they are more likely to purchase life insurance because of the pandemic.

Technology can be help smooth delivery of life insurance, Cox noted.

“What we can do