- 2-Minute Article
Innovation Breathes New Life into Life Insurance
Looking for an option with death benefit protection and high early cash value?
What are some of the biggest barriers that discourage life insurance sales? And more importantly, how can we overcome them?
Life insurance ownership is at one of its lowest points in modern times1 yet nearly one third of Americans believe they need more life insurance, and more than two in five say they would feel a financial impact within six months if the primary wage earner died. Despite these statistics, 54 percent of Americans say it's unlikely they will purchase life insurance within the next 12 months.2
Clearly there's a disconnect between how Americans feel about life insurance and their purchasing behavior. This may be largely attributed to barriers that discourage potential buyers from obtaining coverage, and financial professionals from presenting it as an option to their clients. Let's take a look at three big barriers to life insurance ownership and how Brighthouse Financial is breaking those barriers with our latest innovation.
Barrier #1: The underwriting process
The traditional rule of life insurance demands that the underwriting process be, at times, complex. Brighthouse Financial is rewriting this rule with the Brighthouse Enhanced Rate PlusSM underwriting program that is available to eligible clients who apply for Brighthouse Premier Accumulator Universal Life (PAUL) and who qualify under the program. It requires clients to have a phone interview with a Brighthouse Financial representative and doesn't require blood or urine samples. (This is a bonus for financial professionals as it takes much of the application process off their hands.)
After conducting appropriate background checks through various databases, the client could secure a policy in five days or less. The simplified process means less paperwork for advisors and a simpler, less invasive, and faster process for clients. Clients who don't qualify will just go through the standard, traditional underwriting process.
Barrier #2: Surrender charges
Life insurance clients are two times more likely3 to surrender their policy and take cash out of it than they are to get a death benefit. Traditional insurance rules state that clients who change their mind and decide they no longer want their policy must be assessed significant surrender charges. Not so with the Premier Accumulator Universal Life product, which features no surrender charges. No surrender charges mean clients have access to more of the money they put into the policy cash value within the first few years.5 This feature makes PAUL very attractive by providing a guaranteed death benefit while also allowing clients to access more of their cash value early, should they need it.
Barrier #3: Compensation structure
With traditional life insurance, financial professionals receive the majority of the compensation in the first year they sell the policy. The Premier Accumulator Universal Life product rewrites this rule with a trailed compensation structure. This means that while first-year compensation is less than traditional life insurance products deliver, financial professionals can earn more over the life of the policy.
The compensation structure also benefits advisors in another way. When they retire, they can have a book of business that's generating long-term income, which may allow them to sell their book of business for more than they would otherwise.
While the insurance industry may be good at developing new products, they're often too complicated for average consumers to understand on their own, which makes the job of the financial professional even harder. With PAUL, Brighthouse Financial is rewriting the traditional rules of insurance, creating innovative products that benefit clients and financial professionals alike.