Full Disclosures Universal Life Report
By Roger L. Blease
Universal life insurance sales growth continues to be driven not only by the obvious consumer shyness over variable plans, but also by the ongoing proliferation of secondary guarantees.
These guarantees protect the death benefit and premium outlay in the event current credited interest rates fall. While this trend has been continuing for some time, the differentiation of these guarantees within each companys UL portfolio (and even within each individual policy) has picked up speed.
Mechanisms to include the guarantee (riders, premium levels or even automatically) continue to differ. But increasingly, wide variations in duration, prepayment discounts and other nuances are emerging. Companies are also seeing demand for death benefit guarantees that are issued on policies with an increasing death benefit.
Generally, guarantee premiums are only much higher when guarantees are extended to age 100 or the lifetime of the insured. “Dial-A-Guarantee,” “Whole Life Alternative,” and “Lifetime Security” (or combinations thereof) are increasingly creeping into the UL lexicon. Information on the maximum secondary guarantee period and the premium required to buy the guarantee, is included in this report.
Full Disclosure surveys leading insurers selling universal life twice per year. The charts in this report are an excerpt of our latest findings on products for sale on Jan. 1, 2003, or released soon after. These values are meant to be a snapshot of how individual UL plans are being illustrated on the street as a way to gauge their relative positions for our sample policyholder.
There are 73 contracts featured in the Full Disclosure database, with excerpts from 65 featured in this report. Companies were asked to limit the number of policies to two in each section due to space limitations. Not included were two each from American General Life and Protective Life, and one each from Canada Life, Midland National Life, New York Life, and Conseco Life. The policies not featured in this report are included in the regular edition of Full Disclosure.
Illustrations are based on a male age 40 paying a $7,500 annual premium and a $1 million 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.