The latest Full Disclosure policy excerpts feature a record 99 universal life insurance policies including 19 indexed varieties. While traditional UL policies are expanding in number as companies seek diversification in the marketplace, much attention is being given to the resurgence of indexed policies. We used to call them Equity Indexed policies, but the new generation of these plans can be based on numerous indexes – not all of them the tied to stocks.
Traditional universal life is based on a current crediting rate that may or may not be directly based on a company’s investment experience (expense charges are also involved in what the policyholder’s policy performance actually is). Indexed UL crediting rates are a different story. They are typically based on the historical performance of the underlying index (usually the S&P 500 Index) at various durations. Complicating this is the crediting method that can have various durations looking back, an assumed participation rate and a hypothetical cap on the gains of the index credited to the policy.
If all this seems a bit cloudy, it is, but over time given the gyrations of the underlying index, these assumptions create an assumed rate that can create a current policy illustration that performs quite well. The challenge is to identify what goes into creating the assumed numbers. The indexed UL illustrations in this excerpt are a snapshot of how these policies are being presented in the market. Full Disclosure features information on their mechanics and how their assumed illustration rates are calculated.
There are 3 excerpts in this report taken from the latest Full Disclosure UL edition. The largest chart includes illustrated values on a current basis, and is accompanied by one featuring select minimum premiums necessary to guarantee the premium and death benefit to age 100 or for life. Another chart features 19 indexed policy illustrations.