The latest Full Disclosure survey of the leading sellers of individual variable life insurance reveals that companies are rolling out niche enhancements and improvements at a rapid pace. Upgrades of features and new options appeal not only to buyers but are tools that internal and external product wholesalers can use to gain shelf space in a super-competitive market.
While the basic marketing concepts used to sell variable life are ongoing–such as long-term accumulation and retirement income planning, asset transfer, and premium guarantees–there is more product ornamentation as a result of today's complex web of distribution channels for variable products.
A recent LIMRA study indicated that more than 80% of variable universal life manufacturers have internal wholesalers and that about 60% have external ones. These people supply sales support and competitive analysis, and explain new features to the brokerage market, financial planners, banks and broker-dealers that need to know why they should sell–or keep selling–a particular product. The last links in the distribution chain need continuous reinforcement of a product's strengths, and new features provide an answer when they ask: "But what have you done for me lately?" Keeping everyone happy is what ongoing product development is about.
Full Disclosure surveys variable insurers twice each year (variable survivorship products are included in a separate survey). The data in this excerpt is current as of Sept. 1, 2005. A sampling of noteworthy enhancements and options culled from the latest edition of Full Disclosure includes AXA's new Incentive Life '06 offering a Loan Extension Endorsement that provides protection against lapsation due to an overloan, and an elimination of Mortality & Expense charges after policy year 10. Nationwide's Protection FPVUL features a Long Term Care rider as well as a free Automated Income Monitor to manage the income process so the producer spends less time managing withdrawals. Nationwide uses a wholesaler component in its distribution strategy that provides competitive intelligence and support to producers.
In addition to the contractual and qualitative data on each policy collected, we also look at how they are illustrating their products in the field with an eye toward what each is designed for. There are charts for current illustrated values, guaranteed minimum premiums and scenario with maximum retirement income–an ideal use for variable life insurance. The main illustration chart also features the maximum duration the death benefit and premium can be guaranteed along with the minimum premium the policyholder would pay to obtain that guarantee.
Current illustrations are based on a Male Age 40 paying a $7,500 annual premium and a $1,000,000 policy. If our specified premium of $7,500 is too low to illustrate the policy for this age and face amount, the policy is blended with term insurance, if available. The death benefit type is level; however, a column is included with a true increasing death benefit for each policy. The class specified is best nonsmoker as long as the class represents at least 15% of the contract issued of each policy. Companies were asked to employ a 10% gross crediting rate that is then net of average fund expenses.
