Thursday, December 11, 2014
Total individual life insurance new annualized premium improved four percent in the third quarter, according to LIMRA’s Retail Individual Life Insurance Survey. However, the cost of doing business in the Guaranteed Universal Life (GUL) markets has risen as the interest rates have fallen. In 2009 the GUL market had increases up to 40%, 2010 increases up to 20%, 2011 up to 40%, 2012 up to 18%, 2013 up to over 100% and year to date in 2014 the GUL marketplace has experienced up to 65% increases in costs. There are some insurance companies that have taken multiple increases (on same product or through discontinuing and issuing new products) or have had to exit the GUL market completely.
In addition, these pressures apply not just to GUL but to all products. The pricing of all products is a function of costs and interest. When it is harder to make money on the interest side of the equation, the only options often become increasing costs or exiting the market altogether. Those with large GUL blocks, sometimes seek increases to costs and/or lower interest crediting rates in other blocks of business to make up losses on these lower performing blocks of GUL business.
Below are the changes published for 2014:
January 2014
Carrier in Top 8% - IUL repriced increase up to 14%.
Carrier in Top 26% - Reprice increase 6-65%, Discontinued NLG product.
Carrier in Top 19% - Fixed account increase 10-25bps, IUL repriced.
Carrier in Top 9% - Replaced UL with pricing increase up to 14%.
Carrier in Top 25% - Increases COIs on inforce illustrations but not on actual COIs.
Carrier in Top 10% - Replaced VUL, increase up to 43%.
Carrier in Top 13% - Decreased interest crediting rate, reduced on average by 0.25%.
Carrier in Top 14% - UL decreased crediting rate.
Carrier in Top 23% - UL-NLG – Reprice, increase on average 33%.
Carrier in Top 28% - Inforce crediting rates decreased.
Carrier in Top 40% - UL/SUL Fixed account rate decreased 10bps, closed all products to new sales.
Carrier in Top 8% - Interest crediting rates decreased 0.25 – 1%.
Carrier in Top 11% - UL Enhanced and repriced.
Carrier in Top 15% - Repriced and replaced IUL product with premium increases up to 12%
May 2014
Carrier in Top 42% -
Discontinued UL & IUL products
Carrier in Top 8% - Repriced and replaced VUL product with price increases up to 32%
Carrier in Top 44% - Increasing policy fees and Mortality and Expense (M&E) charges for VUL
Carrier in Top 13% - Decreased current interest rates credited to the general account
Carrier in Top 10% - Reprice VUL with premium increases up to 13%
June 2014
Carrier in Top
19% - Fixed Account rate decreased, Repriced and replaced SIUL product with premium increases up to 49%
Carrier in Top 13% - Repriced and replaced SVUL with premium increases up to 15%
Carrier in Top 11% - Improved term rider pricing for IUL product
Carrier in Top 7% - Reprice IUL with cap increase 1% each product
Carrier in Top 7% - Reduced the projected interest rate on SUL illustrations by .75, actual rate remains the same
Carrier in Top 11% - Minimum guaranteeed interest rate dropped 100bps for new VUL policies
Carrier in Top 13% - Reprice UL with premium increases up to 25%
Carrier in Top 11% - Reprice UL-NLG with premium decreases of -13% up to increases of 1%
Carrier in Top 11% - Reprice SUL-NLG with premium decreases of -23% up to increases of 10%
Carrier in Top 7% - New UL with offers to guarantee current policy charges after no-lapse period ends
INSPECT WHAT YOU EXPECT! Use a Veralytic Research Report to measure policy expenses and know if a particular insurer is increasing or decreasing policy expenses. If you(r clients) do not know what they are paying for cost of insurance charges (COIs), fixed administration expenses (FAEs), cash-value-based "wrap fees" (e.g., M&Es) and premium loads in their life insurance policy holdings now, then there will be no way to know if or when such policy expenses are increased. Now is the time to find out.
The appropriateness of a policy should be re-evaluated when the insurer announces product changes. In order to fully assess the impact of recent changes on your clients’ permanent life insurance portfolios, or to establish a baseline by which to judge the impact of future shifts in cost, request a Veralytic Research Report now. Just fax the detailed expense report along with the policy illustration toll free to 800-409-3222 or email to reports@veralytic.com to request a Veralytic Report for your client's policy. If the policy illustration is not available, download a sample Request for Information (RFI) letter to gather the necessary policy information.
As a Veralytic subscriber, you can request this e-news with carrier names at info@veralytic.com.