Full Disclosures Survivorship Life Report
Full Disclosure is a policy benchmarking tool used in life insurance “competitive intelligence.” The term CI is used across many industries, but what is it in the life insurance industry?
Good CI is everything you can get your hands on. Illustrations, either through software from the companies or online, are easy enough to get, but comparative materials that break down a products makeup are necessary to get an idea of the policys positioning in the market.
A key to a competent product analysis is knowledge of what each product is designed to do. This may seem like a simple fact but one routinely overlooked. For example, an advisor brought into a large case may have to choose among many proposals with illustrations galore. To someone looking at illustrated values alone, price may win the day without consideration of the other policy dynamics in play. This particularly is true in big-ticket survivorship life sales where annual premiums may vary by tens of thousands of dollars.
Chances are you get certain product information from the issuing company directly or a brokerage or producer group operation. The competition or product support desk at carriers you use is an invaluable resource, though they are understandably eager to show their policy in the “best light” and will typically provide materials that do that.
But if, for example, the policy they are supporting performs well when highly funded, they may not provide you with a spreadsheet of illustrated values based on a minimum premium to carry scenario. Its up to you to find out where the product (by design) is or is not appropriate.
Look for materials that do not rely solely on illustrated values. Product strengths can be as far away from an illustration as you can imagine, and there is so much more to products than the numbers alone!
Look for features, flexibility and riders. For example, some policies loaded for business applications with things like accounting benefit riders or high early cash values. Some survivorship policies treat “uninsurables” as standard risks. Some companies specialize in older ages, and others may have interesting term blending or unique death benefit options. Policies are even beginning to offer “living benefits” that pay before death with nursing or long term care benefits.
Third-party materials are unbiased and may by available for free or at a reduced price from companies you deal with. The big plus is that you are getting more of the story than the highlights and a wide range of data. Look for illustrations run under varying scenarios, premium levels (minimum, to endow, and with secondary guarantees of premium and death benefit), ages and face amounts.
Critical is a rundown of current and guaranteed costs, specifications, features and anything else the policy offers. A description of the policys design objectives and its target audience are helpful. Additionally, third-party materials can be a “silver bullet” when a number of proposals are being considered by an advisor such as a CPA in a big case.
Twice per year the editors of Full Disclosure compile the life insurance industrys largest survivorship life insurance product database. Our research includes complete policy specifications and features, current and guaranteed costs and expenses, and a wide sampling of illustrations. The excerpts in this report feature illustrated values for whole, universal and variable life survivorship products from the leading companies in the market. And while these charts are only slices of the Full Disclosure database, they will give you an idea of how these products illustrate in the market. This report features a record number of policies.
Because policies are designed for specific outcomes, we usually run a Product Strengths section in these excerpts from Full Disclosure that includes editorial comment from our participating companies.
In this report, however, we have standardized some of these answers and added them to a section of the regular report known as Product Design Objectives, which are also repeated here. While not all of a products design objectives may be listed, you can see what market many of these policies are meant for. Some are built for low premiums, for example, while others are meant to generate major league cash values.
All data in this Survivorship Life excerpt from Full Disclosure are current as of May 1, 2003. We do not charge companies to be in Full Disclosure and strive to be fair through consistency maintained between all types in age combinations of insureds, product specifications, measurements of values and death benefits at various points.
Flat premium amounts are the same between universal and variable life illustrations, and the variable life illustrations are based on an assumed 10% rate of return net of average fund expenses.
Reproduced from National Underwriter Life & Health/Financial Services Edition, August 25, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.