Full Disclosure’s editors periodically survey life insurers active in upper markets across a wide range of product specifications, illustrations, guaranteed minimum premiums, and more. The first universal life release of 2009 features 104 policies, including 78 fixed policies and 26 indexed policies. This excerpt is for traditional products only, with one following next month for indexed varieties.
Of the 78 traditional UL policies, all of which utilize the new 2001 CSO mortality tables, 22 are brand new. Over the last few years new product introductions have reinvented the industry’s UL portfolio. This is due not only to the new tables but is also a delayed effect of company consolidation. Companies have maintained separate product lines for multiple companies that had merged into one much earlier. The re-pricing required by the new table, along with ongoing competitive pressures, created a simultaneous period of retiring old products and introducing newer, yet fewer, new ones.
UL is an inherently flexible policy design. A policy can be customized in many instances to meet various policyholder needs. Products can be modified via options (such as adding a long-term guarantee) or riders, but a primary design objective, one that each policy is particularly suited for, is increasingly likely. In the last release of Full Disclosure covering UL products we added a code appearing next to each policy name in the excerpted charts as to what that objective may be. These codes are:
–GMDB (Guaranteed Minimum Premium/Death Benefit). These are policies that generate little cash value and are designed for long-term (lifetime) death benefits with a guaranteed minimum premium outlay.
DB (Maximum Death Benefits). These are policies that generally cost little to carry on a current basis and whose primary purpose is to provide maximum death benefits for a given premium.
AV (Maximum Accumulation Values). These policies are designed for maximum cash value accumulation with more of the premium going toward building values as opposed to growing death benefits. They usually are also designed for maximum retirement or other income and may feature “zero-cost” policy loans to do so.
F/G (Flexible/General Purpose). A policy with a F/G identification may be constructed to achieve different goals by selecting different options. For example, it could be either made to be a Guaranteed Minimum Premium/Death Benefit policy, or an Accumulation Policy depending on options chosen or funding level. An F/G designation could also mean it is what is sometimes called a “balanced” or “all around” policy. That is, it generates cash values and death benefits in somewhat equal measure.
S (Specialty). These are policies that do not fit in the above categories. For example, there is one policy listed in this report that is not medically underwritten.