Life insurance depending on age

There's one force no government has ever really been able to influence and that's the rate at which we produce children. Immediately following the Second World War, America launched into the boom years. When oral contraception arrived, the boom slackened. This reality is shaping every part of our lives as the aging population retires and starts to call on federal health resources. With retirees having leisure time and disposable income, they are a new market for a whole range of products and services. The question is how the life insurance industry should react. We know the percentage of the population aged 55 and over is due to rise by about 30% by 2020. The middle-age group from 35 to 55 will shrink but the number of adults under the age of 35 will increase by about 10%. If the life insurance industry is to grow, it must therefore redefine its priorities if it's going to remain relevant.

At present, the life insurance industry makes little attempt to shape products for the over 55 age group. Apart from annuities, there's a general resistance to selling insurance to this group. Yet life expectancy has been rising rapidly. At the other end of the age range, there's considerable unemployment and a shift from full-time employment to a more flexible approach to work. This is a different challenge to an industry that's assumed people will move from school into work, get married, and buy insurance as the first child arrives. This group also challenges the more usual face-to-face selling model, preferring to spend its time online.

This suggests the life insurance industry must restructure its products or lose out to the mutual and wealth management services. Over the next ten years, we can expect new products aimed at the different age groups. There must be a new approach to making life insurance accessible to younger members of society. This may require moving away from an inflexible pattern of installment payments in favor of variable payments. There will also be a move into the world of Facebook, tweets and other digital platforms to identify people likely to be interested in the new products and for discussion purposes. This is not going to be just about cheaper rates because life expectancy is stretching further into the future. It must also be about more relevant products to protect savings and assets as they are acquired. There will have to be outreach to the middle-age bracket to build and enhance the existing relationship. Finally there must be new products to sell to the over 55s. For this group, the priority is not outliving their savings and assets. So you can expect to see the life insurance industry offering more financial planning services and investment advice. If it fails to adapt, it will lose out to the banks and financial advisors who offer personal advice.