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October 07, 2001 at 08:00 PM
- Current Universal Life Policy Illustrated Values
- Current Universal Life Policy Retirement Income Illustrated Values
In the latest round of universal life data collected for the Full Disclosure policy analysis software series, we have seen many upper market insurers move to their “next generation” universal life designs.
These products are increasingly distinguished by features such as a lack of a fixed maturity age (or automatic continuation of coverage after maturity date), broad customization of secondary guarantees on death benefits and premiums, and issue ages up to 90-years-old.
Unique designs can also include the addition of living benefits and, for business applications, a third death benefit option that not only provides the face amount at death, but also premiums paid on the policy. See the Product Strengths section of this report (on page _) for other policy developments.
In an era of specialization, policy designs are being optimized for specific sales situations. One of the things we find particularly intriguing with the new generations of products is the adjustment of policy cost structure to fit the most probable eventual use of the product. For example, in the old days (and this is still true for many companies) the policys cost of insurance (COI) would rise every year, reflecting, of course, that the older an insured is the probability of their dying is slightly higher.
Policies that are designed for maximum retirement incomes, an increasingly popular solution in upper market sales, may have COI structures that are lower in years when maximum income (and the higher cash value to fund it) is needed. These charges, rather than appearing as a straight increasing line, can look like a comparative roller coaster!
As the policies targeted towards specific markets proliferate, the number of all-around policies designed for general purposes is decreasing or offered as part of a portfolio of plans. In the drive for market niche, it is obvious which are now designed to generate accumulation values, death benefit for a low premium outlay, or some other specific purpose (substandard or standard markets is a good example).
