Full Disclosures Variable And Variable Universal Life Report
Full Disclosure surveys leading variable and variable universal life upper market insurers twice a year. The charts in this report are an excerpt of our latest findings on products for sale in September or released soon after. And while many variable products and their prospectuses are released in May, there is no shortage of new material in this latest installment.
These values are meant to be a snapshot of how individual life variable plans are being illustrated on the street as a way to gauge their relative positions for our sample policyholder. We champion the fact that policies are designed to accomplish certain objectives. And while these illustrated values are helpful, a comprehensive analysis is the only reasonable way to draw comparisons.
There are 51 contracts featured in this report, with all but two having a universal life chassis. The others, Northwestern Mutuals Variable CompLife and Guardian Life & Annuitys Park Avenue Millennium series feature level guaranteed premium structures.
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 policies are 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.
Not all companies use the same averaging method to calculate the fund expenses used to calculate the illustrated values in variable policies, so we have added a column at the end of the VL chart to delineate those using either a regular arithmetic average or a weighted average.
Under weighting, the average is tilted toward larger subaccounts with usually lower expenses, thus reducing the average expense charge and benefiting the final illustrated values of the policy.
We have also indicated what methods are available within each policys illustration system. Many now offer a choice, and a few of the companies have indicated which they have chosen. For those that have not, its a safe bet that they used a weighted average if they have it.