Full Disclosure Survivorship Life Report

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 SUL and SVL charts that 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. The edition of Full Disclosure that included the information in these excerpts was released in June. Policy data is current as of May 1, 2006. Standardized annual premiums are the same between universal and variable life illustrations, and the variable life illustrations are based on a 10% gross rate of return with average subaccount expenses “netted out” of the projected values.

Because survivorship life products are designed for certain objectives–for instance, maximum cash accumulation or none at all–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 look at 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, indexed and guaranteed premium variations (of flexible premium products) to the mix. Often, simply looking at the numbers doesn’t tell you enough.

There’s a wealth of opportunities for a product at the critical juncture in time that is the death of the second spouse, including family business continuation, funding a grandchild’s education, providing for a special needs child who needs care after both parents die or boosting a charitable giving intention. The product is also a good way to leave a legacy of giving and opportunities to others via a school endowment, for example, that appeals to our need to know we can continue to do good even after we are gone.