Product News


 

 

 

Transition Guide to product changes as of September 2016

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LincXpress and TermAccel Level Term  (May 2016) Streamlined TeleApp process and no paramedical exam for faster turnaround plus a new Tele-App Term product, non med and lab free, for ages 18 – 50 and amounts up to 500,000.

Genworth (February 2016)

After a review of its U.S. Life Insurance businesses, Genworth has decided to suspend sales of all their traditional life insurance and fixed annuity products, including Total Living Coverage, as of March 7, 2016, subject to applicable transition rules and required regulatory approval. This change is effective for all states except Arkansas, South Dakota and Texas, where sales continue until appropriate regulatory notice and/or approval periods have run. Subsequent information will follow for these states. ALIRT Report on Genworth, Genworth Bulletin

Index Universal Life (IUL) Changes (April 2015)

A level playing field is here with the phased implementation of new regulations for IUL illustrations (AG49). Read about it here – New IUL Illustration Rules. While the focus is on regulating how the product is illustrated, it has already caused sweeping changes in IUL product development with more new product launches to follow.

Why? Some products were being illustrated at rates in excess of 10% and many carriers permitted >8%. For most products, maximum illustrated crediting rates will now be limited to rates of under 7%, depending on how the product works. Thus, all of the product complexity found in most existing IUL products designed for crediting high rates when markets rise won’t matter much: You can’t sell what you can’t illustrate. So the next wave of products will be IULs that perform well at lower assumed rates. To accomplish that, carriers are bringing back some old product features from the 1980s and 1990s. Expect new products to feature persistency, mortality or related bonuses which credit higher interest rates or lower charges in future years. For example, Lincoln has introduced a new product which features a guaranteed persistency bonus in year 16+ of 55bp plus a guaranteed cap reduction “bail-out” feature. Also, expect lower early policy loads and lower early expense charges in new IULs that are more “protection” focused. So while “max funded” sales will continue, the end result of the new changes is likely to be intense competition for lowest premium rather than highest cash value. But, be careful. Some features will be guaranteed while others will not. Remember: A mostly non-guaranteed IUL is only as good as the carrier offering it says it is! And we should not forget what happened in the 1990s when UL and VUL products were sold at “minimum” premiums…

So, the game of “race to the top”, based on touting the highest interest rate, is shifting to a “race to the bottom”, where low expenses and premiums will become the norm. We expect that carriers may choose to make more frequent cap changes than they have in the past and may compromise their corporate ROE targets for the product line for tactical sales advantage.  We have been tracking these ongoing developments so contact us for assistance with making good choices for your clients.

Summary

  • Standard lookback and historical percentile methodologies
  • Reduced maximum illustrative rates
  • Required “alternate scale” assumed rate ledger
  • Dissuades designs that select an index account primarily for its ability to illustrate high returns
  • Limits illustrated loan leverage

September 1, 2015 AG49 implementation

  • Illustration defaults and maximum illustrated rate, including “guardrail” calculations
  • Removal of historical ledger
  • Carrier AG 49 Bulletins

March 1, 2016 implementation

  • “Alternate scale” ledger
  • Maximum loan leverage of 1%
  • Historical percentiles

For a primer on IUL and the reasons behind the upcoming changes, please read this AALU Washington Report Newswire from October 2014 on Developments in the IUL marketplace.

 

MoneyGuard II now available in California effective August 31, 2015

New Process Change for MoneyGuard in California (February 2015)

Lincoln introduces Deferred Income Annuity  Now in CA as of January 2014

Transamerica TransACE Suspension of New Sales (February 2015)

This is a great chance to talk to your clients who have been on the fence about getting guaranteed UL coverage. There are only a few carriers that still offer it in today’s market and the number seems to be dropping quickly. Symetra is the leader in most cells and Lincoln Treasury IUL is a viable alternative in this space with a flexible, affordable lifetime guarantee! Other carriers are looking at either raising GUL premiums or following Transamerica’s exit from GUL.

Symetra has created a Rapid Response Plan to expedite the transfer of formal policies in process at Transamerica to Symetra. See the attached flier to see how Symetra can help with your Transamerica approved or currently in process application.

Launched October 28 2013 – Even lower rates on National Life Group’s Life of the Southwest (LSW) level premium term with guarantees available up to 30 years. LSW is the currently only one of three carriers offering an ABR with terminal, chronic and critical illness on their entire term product series. Plus, they feature a minimum of 50,000 face – a rarity these days. Convert to any of the permanent products. Click LSW Term Rollout Presentation for details.

As of January 15, 2014 – Ohio National has new, lower term rates for the “Basic” and “Plus” products. Their new rates place their term products in the top three for low price 100 percent of the time, when compared to 31 select term competitors across 630 pricing cells.

 

 

Useful product research for making sense of the latest product innovations.

 

 

Does ABR = LTC? When to use traditional LTC insurance, Lincoln MoneyGuard, Accelerated Benefit Riders, Enhanced Accelerated Benefit Riders and Long Term Care Benefit Riders.