VOYA announced an increase to costs affecting the policies of nine universal life products sold in late 1990s early 2000s. This increase will range from 9% to 42% depending on the product. VOYA announced this increase due to reinsurance rate hike and low crediting rates and deferred this increase to the customer. For the guaranteed premium products only the current charges will be affected, for the other products the increase will be seen in as a percent of asset based charges, a percent of premium charges or an increase in cost of insurance depending on the product.
The pricing of all products is a function of costs and interest. Payments of claims are referred to as the Cost of Insurance (COI) and are the largest single cost factor. With life insurance, COI charges can account for 75% - 85% or more of the total premium. Do you have clients who do not know what they are actually being charged for cost of insurance charges (COIs)? Would you know if the costs of your (client's) policies have been increased?
The National Association of Insurance Commissioner (NAIC) reports that 62% of people who own life insurance do not really know what they have or why they bought it[2]. In order to reassure your clients that they made the appropriate choice in life insurance products and/or reveal when there are opportunities for improvement, it is important to inspect what you expect out of our client’s life insurance portfolios.
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.
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, Veralytic strongly recommends getting an inforce illustration with detailed expense pages PRIOR to September 28, 2015 and then another inforce illustration AFTER October 1, 2015, the effective date of the increase.
Veralytic would like to extend an offer of 2 complementary Veralytic Reports to the first 10 people to submit both a current inforce VOYA illustration on the affected products and a subsequent identical inforce VOYA illustration reflecting the changes after the October 1, 2015 effective date. Simple send an email to info@veralytic.com to secure your spot in the first 10, then send your inforce illustration with detailed expense pages to our toll free fax 800-409-3222 or email to reports@veralytic.com. If the policy illustration is not available, download a sample Request for Information (RFI) letter to gather the necessary policy information. Remember to submit the illustrations that most closely corresponds to client expectations and both illustrations must be identical to reflect the cost changes. Offer expires October 31, 2015.