Many ULs Serve Up Lifetime Guaranteed Premiums, With Catch-up
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"Lifetime guaranteed premiums" and "catch-up provisions" are key features being touted in many of the universal life policies that have been rolling out in the past six months.
The wave of new ULs comes at a time when UL is surging in sales popularity after weathering many sluggish years. By year-end 2002, individual UL represented 28% of premium volume for all life insurers tracked by LIMRA International, Windsor, Conn.
In the fourth quarter of 2002 alone, individual annualized UL premium grew by 46% compared to the previous years fourth quarter, says LIMRA. (And, fourth quarter 2001 UL premiums were 25% over the fourth quarter in 2000.)
Many new ULs look a lot like ULs of yesteryear but with one key difference. They are being built–and marketed–to put the emphasis on guarantees and predictability, not flex premiums or liquidity.
The products still offer flex premiums and liquidity, developers stress, but the products focus on lifetime guaranteed premiums–and guaranteed coverage for life.
Following are a few examples that arrived at National Underwriters new products desk in the past few months.
Priority Max UL from Mutual of Omaha is "very much like a whole life policy," says Brent Bench, product manager at the Nebraska insurer. It offers a "lifetime guaranteed premium" up to age 100 plus extended death benefit to age 120, when the policy endows.
A "minimum premium" option and a "target premium" option are also available–the first offering a 15-year premium guarantee and the second, a 20-year premium guarantee. But the price differentials between the three options are so small as to make the lifetime premium choice almost inevitable, Bench says.
The company built the policy to attract rollover business from older ULs that may be close to blowing up, or from 1035 exchanges, he says. If the owner pays the lifetime guaranteed premium, he says, "the policy is guaranteed not to blow up, regardless of account performance."
If insureds age 75 and up have older outstanding loans that threaten the policys ability to stay in force, Bench adds, the "LapseGuard" rider, available after the 15th year, converts the UL to paid-up status.
The UL market is definitely moving toward making UL more like whole life, agrees Michael Harris, vice president and head of fixed life product development at ING in Atlanta. Consumers today are looking for assurance, he explains, alluding to the stock market downturn, the collapse of Enron and other current business upsets.
Producers, alert to those concerns, have been asking for ULs that have lifetime guarantees, he continues.
