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VUL Option Offers Equities Growth Potential, Downside Buffer

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AXA Equitable Life Insurance Company says an option it has added to its variable universal life policies works to stabilize volatility through performance caps and downside buffers.

Called the Market Stabilizer Option, the feature is available on the insurer’s Incentive Life Optimizer VUL policy. It is a policy investment option with a rate of return tied to the S&P 500 Price Return index, up to a cap on growth, according to AXA Equitable, New York, a unit of AXA S.A., Paris.

The option also provides a “downside buffer” of up to 25% if there is a decline in the performance of the index, the company adds.

Example: If the S&P 500 Price Return index rate of return (excluding dividends) increases 15% or more, the option’s indexed-linked rate of return on the “segment maturity date” will equal 15%, the company says. If the same S&P index rate of return declines 30%, however, the option’s indexed-linked rate of return on the segment maturity date will decline by only 5%, the company says.

The option provides “a way to help shield clients from significant loss while also easing them back into equity-based investing,” says AXA Equitable Chairman Christopher Condron.

VUL equity stabilizers may offer a simpler alternative to the old “buy term and invest the rest” life insurance strategy, a company representative says.