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Swott Of Life Insurance

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SWOTT of Life Insurance

SWOTT is an analysis or comparison of “strengths, weaknesses, opportunities, and threats that helps executives formulate strategy”, according to Bateman & Snell (2004, p. 122). An industry must capitalize on the information gathered, accept what the data states, and then form a plan of utilization, counteraction, and alleviation (Bateman & Snell, 2004). The life insurance industry is no different in this regard than any other business. An examination of the strengths, weaknesses, opportunities, threats, and trends will be discussed from the external public’s view, commonly known as the policyholder.

Life insurance customers have two options: whole life and term. The strengths of whole life are: (1) upon death, a lump sum can be disbursed to the beneficiary or some companies offer a monthly allotment, (2) the premiums are set, (3) “cash value” will increase as the policy ages with the added benefit of a disbursement if the policy is surrendered, and (4) participation will earn dividends (Turner, 2008). Term life insurance has slightly different benefits: (1) the premiums are less, and (2) it is an ideal solution for younger adults with large debts that will be left in the event of their death (Acculife, 2008).

The disadvantages or weakness of whole life is the expense of the policy, especially initially and the premiums are higher than term as well. Term life insurance have many: (1) the obvious is payment is only made in the event of death, which most term life policy holders are a younger age, (2) the policy does not build equity, (3) premiums will increase at time of renewal, and (4) there is a risk of being “uninsurable” at the term expiration (Bell, 2008).

The opportunities of life insurance, both whole and term are twofold basically. According to J.D. Power вЂ¦Ð²Ð‚Ñœownership of life insurance has been declining severely over the past couple decades. Studies show that 40 percent of adult Americans have no life insurance whatsoever, and over 50 million people in this country lack adequate life insurance” (J.D. Power, 2008, Ð'¶1). First, affordability of insurance for more Americans is a must; term life can be obtained for healthy consumers for as little as under $1 a day. Secondly, education of the consumer has to be a priority. Again, J.D. Power is quoted as, “We work hard year-round to educate the public about important insurance topics, but September is our main focus because it’s Life Insurance awareness Month” (2008, Ð'¶4). The public as an interesting topic does not perceive life insurance and financial planning, but if knowledge of money and the consequences of optimal planning for the rest of one’s life were started in the public schools, a change could be influenced not only on the future generations, but also on the child’s family.

The main threat to the insurance industry is the overwhelming 40 percent of Americans



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