From the July 2007 issue of Research Magazine • Subscribe!

July 1, 2007

XTF Strikes Variable Universal Life Deal

Exchange-traded funds are showing up in new places. Life insurance companies are now incorporating ETF solutions as sub-account investment options in both variable life and annuity products.

XTF announced that it is partnering with Pacific Life Insurance Company to provide target date ETF portfolios inside Pacific Life's variable universal life insurance policies.

"As one of the largest insurers in the country, Pacific Life's use of our ETF portfolios is a major breakthrough for XTF and for the ETF industry at large," says Michael Woods, XTF's CEO. "Some of the benefits that ETFs provide, such as diversification and the ability to manage and measure asset-class exposure, are now arriving in the insurance arena at a time when companies can utilize them to great effect. The fact that new industries are opening their offerings to ETFs also shows that these funds are winning over the hearts and minds of investors in all types of markets."

Pacific Life's VUL is a life insurance product that provides death-benefit protection and allows the policy owner to direct where his or her net premiums are allocated, whether it is to one of XTF's target date ETF portfolios or another investment option.

"As we researched the ETF market, we realized that XTF's portfolios made the most sense to integrate into our VUL platform because they aren't just standard passive investments, but rather include a tactical management style that other providers don't offer," says Alyce Peterson, vice president, Pacific Life. "We believe that many of our customers will want to allocate in XTF's target date portfolios which aim to achieve steady accumulation growth while seeking to protect our policy owners' cash values during bearish market cycles, particularly as retirement nears."

New York-based XTF's lifecycle portfolios are diversified portfolios of equity, bond and real estate ETFs that rebalance and adjust over time based on market and economic conditions, as well as time-to-maturity. As the portfolio moves closer to its target date, its equity exposure is lowered and the weighting in less volatile fixed-income investments increases. The target date ETF portfolios provide a simplified option for retirement investing with transparent, broad-based diversification.

XTF target dates are currently set in five-year increments beginning with 2010 and increasing in five-year increments until the year 2040.

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Ron DeLegge is the San Diego-based editor of www.etfguide.com.

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