It is one of the time-honored sayings in the insurance industry that the 2 major opposing concerns its products address are: living too long, thus outliving one’s resources, or dying too soon and not providing needed assets for survivors.
These concerns are no less true for the host of baby boomers now reaching retirement; there are only more of them worrying about these 2 concerns. Moreover, for the boomers, economic reality may preclude hedging the risks by buying both an annuity and a life insurance policy.
Issuers of variable life insurance policies appear to have recognized these concerns. In response, they are seeking to address them by offering a variety of new riders for their life insurance products.
These riders fall generally into the following categories:
What Your Peers Are Reading
–General no-lapse protection.
–Specific loan lapse protection.
–Death benefit guarantee.
–Surrender charge modification.
–Cash value protection.
–Minimum distribution guarantee.
–Minimum earnings guarantee.
Each company’s design has variations that make complete descriptions of these types of riders impractical.
It is relevant to note for this discussion that the loan lapse protection, minimum distribution, minimum earnings protections and cash value protection generally require initial or subsequent allocations, or reallocations to specific investment options and the general account.