By Roger L. Blease
After seeing depressed sales through 2002, survivorship life sales growth picked up in 2003 and continued into 2004. The primary reason for this increased interest is the proliferation of secondary (death benefit/premium) guarantees that already had become popular in individual plans.
LIMRA International data from the first quarter of 2004 shows a 19% increase over sales in the same 2003 period. During this same time, survivorship universal life sales shot up 60%. Survivorship UL market share went from a little more than one-quarter of survivorship premium in 2001 to almost three-quarters.
Other factors, besides secondary guarantees and their perceived alleviation of interest rate and premium risk, have come into play. Equity markets on the survivorship variable side havent helped much aside from last years mild rally, even though secondary guarantees have become popular in these plans, tooparticularly in the earlier policy years when volatility within a VUL policy is highest. More importantly, I think there is also a general perception among wealthier consumers that, even if the federal estate tax goes away for good, wealth transfer always will be taxed at many other points, such as retirement accounts, and survivorship life is an excellent way to provide much needed liquidity for far fewer premium dollars than an individual product.
Again, forgetting about the “death tax,” survivorship life is an otherwise tax-effective method to fund needs, both financial and emotional, and the market is receptive to talk about those needs. Who, for instance, does not want to leave behind some sort of financial legacy? The names on campus buildings throughout the country testify that remembrance is a strong emotional pull. With survivorship life, you dont need the assets sitting in the bank, you just need to pay a premium at a substantial discount to the eventual benefit. Think about all of the other reasons for liquid cash at the first death of a couple, and you probably can fill a page of the good old “yellow tablet” at your next sales call on an affluent couple.