Any Feedback On The Nationwide Insurance IUL?

[Allen Trent]

I'm pretty sure that Trans tried to on an old UL block and got sued over it (and lost).

They settled, but I don't believe they reversed their COI increase

 

[Allen Trent]

Allowed to increase but not to the max.

And interest rate pressure is the same as mortality rate pressure or overhead expense pressure. All can lead an insurers to bankruptcy court.

And a 40% increase is not even close to the max. Depends on age but for a person in their late 70s or 80s the max charges are often 300-500% higher than current COIs.

It's why UL policy guaranteed values almost always have 0s in the later years. You cannot put enough money into the policy (corridor limits) to overcome the maximum COI expenses without losing life insurance classification.

To the carrier, interest rate miscalculations at time of pricing may cause the same net result as worse than expected mortality. However, that isn't necessarily valid justification to raise COI when they were having better than expected mortality. Captive single state PC carrier I work for actually lowered the COI on inforce UL about 15 years ago & also did same on inforce term contracts at the time.

Max COI on the ULs I mentioned are charging about 65 cents on the dollar of the max charges in the contract, so a 50 % increase would actually be raising to max. I think you may be surprised that some of those 1980-1990s ULs would be close to raising to max with 40% increase. Really similar when you look at old term compared to more recent term. The old term has much smaller difference between current projected rates after initial level period & max rates that could happen. New term have a much, much larger difference be between current projected & worst case guaranteed

 

[scagnt83]

To the carrier, interest rate miscalculations at time of pricing may cause the same net result as worse than expected mortality

The issue I foresee in the IUL world is extreme underpricing. Carriers are buying business, plain and simple. Its very obvious with some of them. Cap decreases are just the begining.

They intentionally underprice because it captures business on the front end, and they have every reason to raise expenses on the back end because they will lose money if they dont... and its perfectly legal, and there is not a damn thing the regulators can do to stop them.