Indexed Universal Life Insurance Income Comparison

BNTRS

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Index Universal Life Income Competitive Analysis

So my issue with most income projection comparisons is that they leave way too much variability among products.

Carriers cherry pick the products the want to compare their products to, and Blease let's them use the default interest rates.

So, we took several products that are relatively well known in the market place for IUL, set them up funded at the Guideline Premium (the way it should be done for cash accumulation and income) with increasing death benefits until we start income and held the assumed credited interest level at 6%.

We also what I've often regarded as a more reasonable income scenario, going all the way out to age 100.

We'll be doing more comparisons taking other premiums and other ages into consideration in the future, but I'd appreciate any feedback on improvements anyone can suggest on making this more complete.

One quick note, I do know that we're missing Pacific Life and Aviva, this was due to a software problem. I'm also missing Trans and Prudential, which I had originally intended to include.

I'm working on getting these to add to the list.
 
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Index Universal Life Income Competitive Analysis

So my issue with most income projection comparisons is that they leave way too much variability among products.

Carriers cherry pick the products the want to compare their products to, and Blease let's them use the default interest rates.

So, we took several products that are relatively well known in the market place for IUL, set them up funded at the Guideline Premium (the way it should be done for cash accumulation and income) with increasing death benefits until we start income and held the assumed credited interest level at 6%.

We also what I've often regarded as a more reasonable income scenario, going all the way out to age 100.

We'll be doing more comparisons taking other premiums and other ages into consideration in the future, but I'd appreciate any feedback on improvements anyone can suggest on making this more complete.

One quick note, I do know that we're missing Pacific Life and Aviva, this was due to a software problem. I'm also missing Trans and Prudential, which I had originally intended to include.

I'm working on getting these to add to the list.

This is an excellent and needed analysis. There are some interesting outcomes and I am looking forward to seeing the pac life product included in your matrix. Thank you for this.
 
This is an excellent and needed analysis. There are some interesting outcomes and I am looking forward to seeing the pac life product included in your matrix. Thank you for this.

Do you write much Pac Life?
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Index Universal Life Income Competitive Analysis

So my issue with most income projection comparisons is that they leave way too much variability among products.

Carriers cherry pick the products the want to compare their products to, and Blease let's them use the default interest rates.

So, we took several products that are relatively well known in the market place for IUL, set them up funded at the Guideline Premium (the way it should be done for cash accumulation and income) with increasing death benefits until we start income and held the assumed credited interest level at 6%.

We also what I've often regarded as a more reasonable income scenario, going all the way out to age 100.

We'll be doing more comparisons taking other premiums and other ages into consideration in the future, but I'd appreciate any feedback on improvements anyone can suggest on making this more complete.

One quick note, I do know that we're missing Pacific Life and Aviva, this was due to a software problem. I'm also missing Trans and Prudential, which I had originally intended to include.

I'm working on getting these to add to the list.


I see North American and Midland at the top right under Life of Southwest. Do you have a preference either one over the other.
 
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Nice work Brandon. A couple of points.

1. I would include Waiver of Premium since it is a benefit that's not found in other accumulation products. Even though WP isn't as comprehensive as a stand-alone DI policy and there's a bit of difference between companies and their rider definitions, I think it should be in the comparison.

2. It's tough to draw a firm conclusion from income stream alone, as in many cases the cumulative difference in income (35 yrs) between companies is nearly or more than offset by the remaining death benefit at age 100, which is surely to be paid out at some point. But look at how the remaining death benefit flip-flops between Lincoln and Nationwide, and it again shows that drawing a hard conclusion on product superiority is difficult without a crystal ball, knowing what was going to happen when.

3. Rate class. It's good to see a comparison on something other than best class. However, I was surprised to find the 2012 issued policy rate class breakdown for Ohio National (and I would think this is representative of other companies in the same markets) that of all ISSUED policies in 2012:

23% Super Preferred
24% Preferred
13% Select
25% Std NT
4% Select Tob
5% Std Tob
6% Rated

Based on this, I'd like to see the study based on 2nd and 3rd best class.
 
I see North American and Midland at the top right under Life of Southwest. Do you have a preference either one over the other.

Not really. Both are A+ quality companies in my experience. Midland does have a higher cap on their product, which would lend to a higher average credited interest rate theoretically.

But it's tough to argue with North American's results and their product does maintain a lower expense schedule.

We've been most disappointed with Penn Mutual's new IUL. The old product was great (was fun while it lasted) and we knew this was coming when we looked at the new product.


Nice work Brandon. A couple of points.

1. I would include Waiver of Premium since it is a benefit that's not found in other accumulation products. Even though WP isn't as comprehensive as a stand-alone DI policy and there's a bit of difference between companies and their rider definitions, I think it should be in the comparison.

2. It's tough to draw a firm conclusion from income stream alone, as in many cases the cumulative difference in income (35 yrs) between companies is nearly or more than offset by the remaining death benefit at age 100, which is surely to be paid out at some point. But look at how the remaining death benefit flip-flops between Lincoln and Nationwide, and it again shows that drawing a hard conclusion on product superiority is difficult without a crystal ball, knowing what was going to happen when.

3. Rate class. It's good to see a comparison on something other than best class. However, I was surprised to find the 2012 issued policy rate class breakdown for Ohio National (and I would think this is representative of other companies in the same markets) that of all ISSUED policies in 2012:

23% Super Preferred
24% Preferred
13% Select
25% Std NT
4% Select Tob
5% Std Tob
6% Rated

Based on this, I'd like to see the study based on 2nd and 3rd best class.

Thanks Larry.

1. I hadn't given a lot of thought to reviewing with Waiver of Premium, but now that you mention it, it does make sense to add.

2. Absolutely correct and we do have plans to go back and use a few different scenarios to compare (i.e. add a female comparison and do these for ages 30 and 50). It's still won't be definitive and it will always be at best a starting point to sort through possibilities.

Even though we have these, we'll still run tailored examples for all of our clients because it makes sense. It also helps illustrate the significance of any quirks (i.e. if Minnesota Life suddenly shows up on top, we have reason to spend a little more time looking at the situation).

It'll also help us evaluate changes in expenses over time providing the same policy exists, or (if policies are replaced) where a company is going with its new products.

3. I had thought a little about this. Chiefly a preferred best and standard version.

We actually want to get to a point where we have a methodology for comparing some of these finer points. The trick is in doing something that passes muster with carriers. We've spent time reviewing products on the Insurance Pro Blog, but slowed down late last year when one company had a hissy fit about something we said.

One counterpoint/question to the risk class breakdown. Does it not potentially make more sense to use underwriting field manuals to review knock out questions and infer underwriting leniency? One could argue that an issued risk class breakdown contains considerable selection bias as it leaves out all of the applicants who applied and decided to go elsewhere because they didn't like the offer. We could try to control is with the not taken data, but that's information I've never been able to get my hands on and have been told it's considered proprietary data no one is willing to disclose.

The only other problem we have to wrangle with is the variation in risk classes. To draw a concrete example on the whole life side (and we are working on this same idea on the whole life side) ONL has a Preferred Best, Preferred, Select, and Non-Smoker risk class, while Guardian only has a Preferred Plus, Preferred, and Non-Smoker.

Of course, we handle this by starting at the top and working our way down, but there is some nuance with respect to underwriting regarding this.
 
Great comparison. That chart is excellent to give you what's important to a client.

What's the key difference between the old and new Penn Mutual plan? You sound like it's night and day between the two.
 
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