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% and year to date in 2013 the GUL marketplace has experienced over 100% 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 2013:

January 2013
Carrier in Top 18% - Reprice with premium increases 2-42%
Carrier in Top 40% - Repriced NLG Rider increases 2-4%
Carrier in Top 8% - Replaced NLG Product with increase 6-40%
Carrier in Top 26% - Reprice increase 6-65%, Discontinued NLG product</>
Carrier in Top 6% - Discontinuation of rider
Carrier in Top 11% - Reprice with increases 2-10%
Carrier in Top 12% - Pricing increases over 100% on NLG UL, Repriced NLG rider on IUL & SIUL up to 20%.
Carrier in Top 8% - New current assumption UL replaces UL with a premium increase up to 10%
Carrier in Top 14% - Discontinued Term, IL and SUL products

February 2013
Carrier in Top 10% - Both increasing and decreasing cap rates on IUL products
Carrier in Top 6% - Discontinued Continuation Rider in NY on UL and SUL products. Increased underwriting on Term products.
Carrier in Top 12% - Replaced VUL with premium increase up to 5% over the replaced VUL.
Carrier in Top 10% - Repriced NLG UL with increases up to 5%

March 2013
Carrier in Top 18% - New mandate that Indexed UL policies carry to age 100 on a current assumption basis, replaced IUL product.
Carrier in Top 40% - Removed NLG rider on SIUL product.

April 2013
Carrier in Top 36% - Repriced NLG UL up to 5%.
Carrier in Top 8% - UL minimum interest crediting rate reduced to 2%, IUL fixed interest crediting rate reduced to 2%
Carrier in Top 6% - NLG UL rider and joint NLG SUL rider discontinued in all states.

May 2013
Carrier in Top 27% - All interest sensitive UL products credited interest rates reduced by 10bps.
Carrier in Top 8% - UL & SUL crediting rate decreased by 15bps, IUL fixed account rate decreased by 20bps, VUL & SVUL crediting rate decreased by 20 bps, UL crediting rate decreased by 20 bps. Replaced UL & SUL products with premium increases up to 15% over replaced UL & SUL.
Carrier in Top 10% - Replaced NLG UL & SUL with premium increase up to 34% over the replaced NLG UL & SUL.
Carrier in Top 8% - UL & VUL 15 bps decrease in fixed account crediting rate. Repriced NLG UL increases up to 10%.
Carrier in Top 10% - Repriced NLG SUL up to 10%. Repriced NLG UL up to 5%. Guaranteed minimum effective annual crediting rate reduced from 2% to 1%.

June 2013
Carrier in Top 14% - Replaced SUL with reprices of up to 40%
Carrier in Top 27% - All interest sensitive UL products – crediting rate reduced by 10bps

July 2013
Carrier in Top 26% - Carrier completely withdrew from the life business and sold its inforce holdings to Resolution Life
Carrier in Top 6% - Decrease credit rate on UL 0.50%
Carrier in Top 8% - SUL (NLG) reprice increase up to 21%
Carrier in Top 14% - UL (NLG) reprice increase up to 40%, removed guaranteed rider on UL product
Carrier in Top 10% - UL (NLG) reprice increase up to 12%

August 2013
Carrier in Top 18% - Repriced NLG SUL up to 27%
Carrier in Top 10% - New SVUL introduced
Carrier in Top 14% - SUL (NLG) stopped accepting applications due to material error in premium calculations on certain death benefit options
Carrier in Top 12% - UL/IUL/VUL  decreased crediting rates on inforce and new business

September 2013
Carrier in Top 10% - Fixed Account Rate was reduced by 1%
Carrier in Top 14% - VUL 10% decrease in COI for policy year 21-40
Carrier in Top 14% - UL Decreased crediting rate on inforce and new business
Carrier in Top 10% - UL (NLG) reduced non-smoker rates by up to 20%

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 800-409-3222end_of_the_skype_highlighting 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.