Full Disclosure Survivorship Life Report

A careful analysis of the IRR measurements indicates which policies are designed (in an illustration at least) to build current cash values, guaranteed cash values, or death benefits. You will notice at the end of the SVL and SUL charts, there are columns showing how the policy would have performed under an increasing death benefit option. The cash value of an increasing death benefit policy, while not listed, would be lower because of the added costs of insurance. The whole life policies have naturally rising death benefits due to the paid-up additions dividend option.

The edition of Full Disclosure that includes the information in these excerpts was released in June with policy data current as of May 1, 2007. Standardized annual premiums are the same between universal and variable life illustrations, and the VL illustrations are based on a 10% gross rate of return with average subaccount expenses "netted out" of the projected values.

Because survivorship life products are designed for certain objectives, whether maximum cash accumulation or none at all, for example, we have summarized what each is designed for. Some have simplified underwriting, short-term values, living benefit riders, or many others. We not only examine a product's premiums and illustrated values, but try to get to what it is designed to do best. That is the key to any successful comparison in this time of product specialization. The market is also adding new hybrid, index, and guaranteed premium variations (of flexible premium products) to the mix. Often, simply looking at the numbers doesn't tell you enough.

Clearly, between sales and product development trends, survivorship life is becoming more entrenched after the back and forth over estate law changes. The way things are going in Washington, it looks as if the tax will be around for a long time. That's good news for the producers and companies offering a "pennies on the dollar" solution for paying it.