The editors of Full Disclosure periodically survey life insurers active in upper markets across a wide range of product specifications, illustrations, guaranteed minimum premiums, and more. As indexed policies are often used to accumulate maximum values, we are including, for the first time, an excerpt from Full Disclosure software showing a maximum income stream at retirement.
As you can tell from some of the values, the income and accumulation values based on our parameters are somewhat uneven. Full Disclosure’s editors have verified them and they are correct.
The retirement income illustrations are based on Male Age 40 Best Nonsmoker with a guideline minimum death benefit at the beginning of the contract period (as long as it not a modified endowment contract). One of our new objectives in trying to get some kind of “apples-to-apples” illustrations was that the companies use either their lowest variable or fixed loan rate to produce the highest income stream at Age 65 using either surrenders to basis then policy loans, or straight policy loans. Limitation in companies’ illustration systems accounts for some of the disparity in values. The rest of the parameters we outlined to the companies during the data collection process accompany the chart.
With indexed universal life products, contract information (as opposed to simply considering illustrations) is paramount. This may be truer than with any other life insurance product on the market, especially at a time when companies are aiming to capture the hearts and minds of brokers and independent producers who may still be trying to get a handle on exactly how these plans work. It is sometimes too tempting to highlight the best parts of the contract while promoting products, while ignoring other elements that may place them on a more level playing field with competing contracts. A “whole contract” policy analysis shows how the puzzle pieces of indexing option, crediting method, participation rate, and caps on gains fit together.
In addition to the retirement income excerpt, there are 3 others in this report taken from the latest Full Disclosure UL/indexed 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 (or age 121). The parameters of the illustrations are included with the charts. Also included is a listing or product design objectives as stated by participating companies. This excerpt from Full Disclosure is for indexed products only. The portion featuring traditional UL varieties was published in the Sept. 29 issue of NU.