Our last survivorship life report (see NU, Feb. 2, 2009) revealed that the number of survivorship life products in the marketplace had decreased dramatically towards the end of 2008. We anticipated that the universe of available products would improve somewhat and it has. (See below for charts)
The biggest factor in the decline was the 2009 deadline for companies to adopt the new 2001 CSO mortality table. Some companies had not brought out new or repriced versions yet, but were planning on doing so in the future. Due to the change, some insurers eliminated policies that overlapped others in their portfolios.
Variable life sales were particularly hard hit coming into 2009 as equity values plunged. As you can see by the graph on this page, the number of variable survivorship products available has literally been cut in half. Some of this may be due to the fact that most insurers implemented the new mortality table for variable products very close to the deadline. Whatever the reason, if product development teams were looking for time to more fully develop products with new pricing, this spring was an ideal time to take it.
Full Disclosure surveys survivorship life insurers twice yearly and tracks illustrated values and the benefits each brings to the marketplace. In addition to the contractual and qualitative data collected on each policy, we also look at how they are illustrating their products in the field. The edition of Full Disclosure featured in this issue contains policy data current as of May 1, 2009. While these charts are only slices of the Full Disclosure database, they give an idea of how these products perform on a prospective basis.
Three main charts feature illustrated values for whole, universal, indexed universal, and variable life survivorship products. These illustrated values are based on current interest or dividend crediting, expenses, and in the case of variable designs, a predetermined crediting rate. In addition to the main illustration tables, there is a chart featuring premiums for UL minimum long-term guarantee products. This increasingly popular use for flexible premium survivorship life insurance provides minimum annual premiums to age 121 with little or no cash value at maturity, but with low guaranteed annual premiums.