While the market for selling life insurance and retirement annuities looks to be growing, increased diversity in demographic, lifestyle and consumer preferences is challenging insurers and benefit brokers and advisers to rethink their selling strategies and product offerings.

An underinsured U.S. market and increased number of individuals responsible for securing their own retirement income has left a great deal of opportunity for insurers that is not being fully realized, a new research report from  the Hartford, Conn.-based Conning Inc. says. Strategies that have ridden the wave of the baby boomers may not be up to date, as assumptions developed for that age group may not be in line with the changing diversity of our nation’s population, it adds.

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The U.S. population as a whole has become more ethnically diverse, which, together with generational change and differing overall needs for the products are “causing a shift in the industry’s product offerings and distribution planning,” says Steve Webersen, director of research at Conning.

Insurers and advisers selling their products “that can properly plan for and address the specific needs of more finely targeted market segments will find success in this fragmenting market,” he says. 

For example, opportunities exist to sell to baby boomers — who range in age from 50 to 68 years old in 2014 — in the life-long term care products, according to Conning’s report 2014 Life-Annuity Consumer Markets Annual. Meanwhile, retirement income sales to baby boomers may be skewed to later years because older members of this group are more likely to have defined benefit plans and younger baby boomers are more likely to have defined contribution plans.

Generation Xers, who range in age from 31 years old and 49 years old in 2014, are far more likely to need life insurance protection compared with older and younger generations, as they are most likely to have children at home, the report says.

Advisers should note that for Generation Xers the need for retirement savings competes with the need for life insurance protection, the report says. Gen X is also far less certain and secure in terms of retirement savings than baby boomers and need education about products and needs.

Cunning’s research also found three major cultural markets in the U.S. that are growing and becoming more important for insurer success, including Hispanics, African-Americans and Asian-Americans. Within these cultural markets, however, advisers need to recognize individual cultures and their distinctions, the report notes.

Top individual needs identified within these cultural markets include:

  • Hispanics: more life insurance coverage now, retirement products later
  • African-Americans: Increased retirement savings
  • Asian-Americans: Greater need for business-related coverage

All three cultural groups have a need for increased financial education and advice, the report adds.

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