Allstate launches consumer-driven life insurance product with monthly payout

[Insurance Forums Staff]

Insurance Forums Staff submitted a new article

Allstate launches consumer-driven life insurance product with monthly payout

Now available as an alternative to traditional lump sum payment policies, “Monthly Income Term” billed as a highly customizable option for families.

Continue reading the Original Article.

 

[DHK]

Lol. Instead of teaching their agents how to do a better job... they change the product.

 

[Allen Trent]

There will definitely be some E&O claims if Allstate replaces existing policies that would have provided more freedom to the beneficiaries. Funny (not funny) part is that this can pretty much be done by utilizing the Payout Annuity tables for those beneficiaries that wish to have an income for X years or their lifetime. Now, with this product, they will be stuck with the income stream unless they commute the value & that math tends to not be real good for the person selling their income stream for a lump sum.

Keep in mind, Allstate owns E-surance, so this may not be as much of an issue of training it's agents as it may be more of a play to sell direct to consumer without having to compete price wise as there will be no easy way to compare to competitors 10,20, or 30 year term policies

 

[Tothetop]

I actually see this as possibly being a trend for a certain market of consumers. I have met people over the years who are against buying life insurance because they dont want to make their spouse rich, they dont want to make their children rich, or they have experienced love ones fighting over money of a deceased parent.

If they see it as a check to replace a check the household loss I believe there mightbe some folks, not much more but some more folks who might be interested in buying a policy.

 

[Allen Trent]

I actually see this as possibly being a trend for a certain market of consumers. I have met people over the years who are against buying life insurance because they dont want to make their spouse rich, they dont want to make their children rich, or they have experienced love ones fighting over money of a deceased parent.

If they see it as a check to replace a check the household loss I believe there mightbe some folks, not much more but some more folks who might be interested in buying a policy.

I tend to agree with that concept(a lot like how DI & LTC work), but many carriers already offer riders you can place on a policy to customize the payout. X % as a lump sum & the balance of the face amount spread out over X,Y or Z years that you customize at time of issue. The smaller the lump sum & longer the balance is spread out, the lower the premium for the face or the more face you can get for same premium commitment.

But, my concern is this type of product only serves the income need, it doesn't address all the other needs that a lump sum can take care of. So, I see a client still needing lump sum coverage policy & a monthly income policy if they go that route.

 

[WinoBlues]

I tend to agree with that concept(a lot like how DI & LTC work), but many carriers already offer riders you can place on a policy to customize the payout. X % as a lump sum & the balance of the face amount spread out over X,Y or Z years that you customize at time of issue. The smaller the lump sum & longer the balance is spread out, the lower the premium for the face or the more face you can get for same premium commitment.

But, my concern is this type of product only serves the income need, it doesn't address all the other needs that a lump sum can take care of. So, I see a client still needing lump sum coverage policy & a monthly income policy if they go that route.

Protective's IPO can do this.

 

[Tothetop]

I tend to agree with that concept(a lot like how DI & LTC work), but many carriers already offer riders you can place on a policy to customize the payout. X % as a lump sum & the balance of the face amount spread out over X,Y or Z years that you customize at time of issue. The smaller the lump sum & longer the balance is spread out, the lower the premium for the face or the more face you can get for same premium commitment.

But, my concern is this type of product only serves the income need, it doesn't address all the other needs that a lump sum can take care of. So, I see a client still needing lump sum coverage policy & a monthly income policy if they go that route.

Oh yeah I definitely imagined this as being marketed like an income protection product like how DI is marketed.

Sure there may be companies where you can take the proceeds, throw it into an annuity, and create an income stream but I would have to explain that to the client. Whereas Allstate is marketing upfront off the bat like "Hey, get a monthly check in case of death of a provider."

I know some people will believe a policy like that would definitely pay out vs. if I told them your husband dies and we will give you a check for a million dollars. Some folks get skeptical. Also for some its more palatable to hear they or a loved one will get a monthly check vs. a check for a million dollars.

I agree though that if a famlily has a mortgage for example, a lump sum policy is the way to go. This is not for everyone or every situation

 

[DHK]

I actually see this as possibly being a trend for a certain market of consumers. I have met people over the years who are against buying life insurance because they don't want to make their spouse rich, they don't want to make their children rich, or they have experienced love ones fighting over money of a deceased parent.

If they see it as a check to replace a check the household loss I believe there might be some folks, not much more but some more folks who might be interested in buying a policy.

 

[Tothetop]

You are thinking logical and economical. There are many buyers that dont think like that. Thats why there are so many underinsured folks and I imagine it would remain that way no matter how many intelligen agent/advisors there are.

Why do you think so many folks win the lotto and go broke?

 

[DHK]

And buying on price isn't logical and economical?

The problem is that most people get into "windfall" thinking, as though it's "raining money" (and that their beneficiaries would be happier without them).

So, they don't want that feeling, so they get a policy that "feels good" to them and is cheap enough to say "I did a good job"... even if it's less than half of what they should be doing.