Full Disclosure Survivorship Life Report

In addition to the guaranteed premium charts, 3 others cover current illustrated values for variable, universal and whole survivorship life. These illustrated values are based on current interest or dividend crediting, expenses, and, in the case of variable designs, a predetermined crediting rate. Full Disclosure applies the internal rate of return method to current illustrated accumulation values and current death benefits measured at policy durations 30 years dependent on age combination. The IRR of cash values rise over time, as the IRR for the death benefits falls.

A careful analysis of the IRR measurements indicates which policies are designed (in an illustration at least) to build current cash values, guaranteed cash values or death benefits. You will notice at the end of each chart (SVL & SUL), there are columns showing how the policy would have performed under an increasing death benefit option. The cash value of an increasing death benefit policy, while not listed, would be lower because of the added costs of insurance. The whole life policies have naturally rising death benefits due to the paid-up additions dividend option.

Full Disclosure software includes complete policy specifications and features, current and guaranteed costs and expenses, and a wide sampling of illustrations. Policy data in this excerpt is current as of May 1, 2008. Standardized annual premiums are the same between UL and VL illustrations, and the VL illustrations are based on a 10% gross rate of return with average subaccount expenses “netted out” of the projected values. Issue classes are likewise the same across the 3 policy types; however, we collect different classes and will likely change the issue classes shown in this excerpt in the future.

Because survivorship life products are designed for certain objectives, whether maximum cash accumulation or none at all, for example, we have summarized what each is designed for. Some have simplified underwriting, short-term values, living benefit riders, or many others. We not only examine a product’s premiums and illustrated values, but to get to what it is designed to do best. That is the key to any successful comparison in this time of product specialization. Also, the market is adding new hybrid, index, and guaranteed premium variations (of flexible premium products) to the mix. Often, simply looking at the numbers doesn’t tell you enough.

Please see the footnotes at the bottom of each table that may reveal important differences between products, or in ways that they were illustrated by contributing insurers. As mentioned earlier, some of the policies in this report are not designed for cash value accumulation, but for minimum long-term guaranteed premiums. It is on that basis primarily that any comparison to other products should be done.