Wednesday, April 27, 2011

Worksite Woes

Many years ago, working class folks bought life insurance from companies specializing in "industrial" policies. No, this didn't mean that plans were forged from raw steel; rather, these policies had relatively modest death benefits, usually meant to cover final expenses. Rather than check-o-matic, premiums were collected (often weekly) by "the insurance man" working his debit (route).

Those days are long gone, but the need for these kinds of plans still exists, and that market is now served by so-called "worksite marketing" programs. Some are well-known (Aflac); many aren't. The basic idea, though, remains the same: small face amounts, simplified underwriting and easily-budgeted premiums (the agent collecting his debit has been supplanted by payroll deduction of premiums).

Unfortunately, even that affordable market is now facing a major challenge:

"U.S. sales of voluntary group insurance products and individual products sold at the worksite fell 2.9% in 2010 ... The drop between 2009 and 2010 “is the first decrease that we have seen in the industry since we began tracking sales in 1997."

Although life sales in general seem to have picked up, sales of these plans have plummeted: "The top carrier experienced a 5% drop in sales."

So what's behind this precipitous decrease? Well, if real unemployment stands at almost 16% (and it does), and folks are somewhat soured on the economy (and they are), and gas is approaching (or over) $4 a gallon (and it is), then something's got to give. And it doesn't seem a stretch to conclude that at least part of that something is more life insurance.
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