Selling Life Insurance in a Low-Interest Rate Environment

  • Originally published September 4, 2012 , last updated November 30, 2016
Selling Life Insurance in a Low-Interest Rate Environment

With U.S. interest rates at their lowest since right after World War II, life insurance companies face a significant challenge in keeping their products competitive while also turning a profit. Low interest rates result in lower returns on their investments and make it difficult to keep promises they’ve made to policyholders.

Furthermore, those in the know don’t expect the environment to improve any time soon. In a Towers Watson survey of CFOs of North American insurance companies, 68% said they expect a three- to five-year period of low interest rates.

This all might sound like dire news for life insurance agents, but there is one bright spot: indexed universal life (IUL). According to LIMRA, IUL sales were up a whopping 37% in the second quarter, and 29% in the first half of 2012. "Indexed universal life continues to attract consumers who are interested in the opportunity for cash value growth potential while protecting their principal, which this product provides,” said Ashley Durham, senior research analyst LIMRA product research.

For younger clients who are interested in using life insurance for retirement supplement or college funding, they almost have to go with an IUL right now because it’s the only life product that gives them the opportunity to build cash value. For example, North American’s Rapid Builder IUL specifically designed to build early cash value accumulation. It offers permanent life insurance protection combined with the opportunity to earn interest linked to the performance of one or more stock market indices.

Senior Market Sales has a competitive lineup of Indexed Universal Life products. Call our Life Department at 1-877-888-0166 to speak to a marketing consultant about running an illustration.