The editors of Full Disclosure periodically survey life insurers active in upper markets across a wide range of product specifications, illustrations, guaranteed minimum premiums and more. The first universal life release of 2008 features 120 policies, including 33 indexed UL contracts. This excerpt from Full Disclosure is for indexed products only. The portion featuring traditional UL varieties appeared in the March 24 issue.
The companies entering or reentering this market, and those updating existing lines, are becoming more imaginative and creative with product designs and pricing as they try to achieve market share in this emerging environment. The survey reveals increasing numbers of indexing options beyond the S&P 500, as well as multiple crediting strategies. And while the goal in each of these policies is to minimize losses in down equity and other markets, the way in which the pieces of the puzzle fit can be wildly varied. These puzzle pieces include indexing option, crediting method, participation rate and caps on gains.
With indexed UL, contract information (as opposed to simply considering illustrations) is paramount. This may be truer than with any other life insurance product on the market, especially at a time when companies are aiming to capture the hearts and minds of brokers and independent producers who may still be trying to get a handle on exactly how these plans work. It is sometimes too tempting to highlight the best parts of the contract when promoting products, while ignoring other elements that may place them on a more level playing field with competing contracts. A "whole contract" policy analysis will fill in the gaps and allow for more accurate comparisons.
As with traditional UL plans, companies are eager to incorporate the new 2001 mortality-based pricing and roll out new generations of products that are not only more competitive, but more specialized than in the past. Specialized policy types include minimum premium/maximum death benefit policies, accumulation policies for maximum cash values and income for the insured in the future, business policies that may include high early cash values and return of premium death benefit options, and policies that aren't designed to produce much cash value at all. Their goal is minimum guaranteed long-term premiums. The release features a separate section for those products and the premiums of each across a range of ages and issue classes.
There are 3 excerpts in this report taken from the latest Full Disclosure UL/indexed UL edition. The largest chart includes illustrated values on a current basis, and is accompanied by one featuring select minimum premiums necessary to guarantee the premium and death benefit to age 100 or for life (or age 121). The parameters of the illustrations are included with the charts. Also included are product design objectives as stated by participating companies.
