The marketing environment for universal life sales remains tough. According to a recent LIMRA report, sales by premium volume were off 29% for the quarter. Results for the first six months of 2009 were down 27%. However, a particularly bright spot is that sales by policy count actually rose 8% for the quarter. We attribute the rise to increased popularity of low premium guaranteed death benefit policy designs and options. Low, guaranteed level premiums and coverage for life (for those not utilizing an accumulation/income strategy) are hard to ignore in these stormy times.
The editors of Full Disclosure periodically survey life insurers active in upper markets a wide range of product specifications, illustrations, guaranteed minimum premiums, and more. The second UL release of 2009 features 104 policies, including 75 fixed policies and 26 indexed policies. This excerpt is for traditional products only, with one following next month for indexed varieties. Of the 75 fixed policies presented here, 8 are brand new to the marketplace.
Universal life 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. Last year, in the editions of Full Disclosure covering UL products, we added a code next to each policy name in the excerpted charts denoting what that objective may be. These codes are:
GMDB-Guaranteed Minimum Premium/Death Benefit.
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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 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 towards 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.
A policy with a Flexible/General identification may be constructed to achieve different 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 that 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.
These are policies that do not fit in the above categories. For example, there is one policy so listed in this excerpt from Full Disclosure that is not medically underwritten. There are no policies in this category this time around.