Lincoln Moneyguard III -When Just Okay Is Not Okay

[scagnt83]

Sure hoping treasury & interest rates go up so all carriers are not forced to reprice all products again so soon after the recent reprices for new mortality tables. A lot of people don't realize that some regulations require a mandatory reprice when a rolling interest rate benchmark is at or below a threshold for a consecutive period of quarters or years. Repricing is a pretty big undertaking for all life products, especially to make them less desirable.

Allen, I did not realize this. I thought it was just up to the carrier to meet state solvency guidelines.

Do you know what the main products are that are impacted by this? What is the timeline that forces a re-price?

 

[Allen Trent]

Allen, I did not realize this. I thought it was just up to the carrier to meet state solvency guidelines.

Do you know what the main products are that are impacted by this? What is the timeline that forces a re-price?

I am no expert on the topic nor what exact products are impacted by the regulations. I am told the regulations look at valuation rates & non-forfeiture rates over a rolling 36 month period. when those valuation rates go lower or stay at lower level for a period of time, you have a 1 year grace period to complete the reprice. at a minimum, I would say it would impact all WL, PUAR & ROP term as it pertains to nonforfeiture.

Supposedly, historically valuation rates and nonforfeiture rates had a regulatory floor (3.5% and 4% respectively) which we have been at for quite some time, but these floors were recently reduced for the first time in years. So this particular change was driven by regulators, but future changes will follow the pattern of reprice when the formulas warrant. Supposedly, the valuation rate is tied to a formula that uses interest rate averages over the past 36 months and over the past 12 months. So, interest need to come up substantially I believe over the next year to avoid the large projects of reprice

Again, I am far from an expert on this topic, but when I heard this from Actuaries, it made sense based on the overall interest rate market currently, but they were speaking way, way over my head & I didn't inquire if regular term or UL based products would be impacted more than they already are by interest rates. Or other LTC type products.

hope that helps, but if you have contacts at any carriers in Actuary, I am sure they can explain better than I.

lets hope for the best & interest rates improved, but I just don't see it happening with all the constant push toward 0% interest rates to keep an economy going or limping along

 

[scagnt83]

I am no expert on the topic nor what exact products are impacted by the regulations. I am told the regulations look at valuation rates & non-forfeiture rates over a rolling 36 month period. when those valuation rates go lower or stay at lower level for a period of time, you have a 1 year grace period to complete the reprice. at a minimum, I would say it would impact all WL, PUAR & ROP term as it pertains to nonforfeiture.

Supposedly, historically valuation rates and nonforfeiture rates had a regulatory floor (3.5% and 4% respectively) which we have been at for quite some time, but these floors were recently reduced for the first time in years. So this particular change was driven by regulators, but future changes will follow the pattern of reprice when the formulas warrant. Supposedly, the valuation rate is tied to a formula that uses interest rate averages over the past 36 months and over the past 12 months. So, interest need to come up substantially I believe over the next year to avoid the large projects of reprice

Again, I am far from an expert on this topic, but when I heard this from Actuaries, it made sense based on the overall interest rate market currently, but they were speaking way, way over my head & I didn't inquire if regular term or UL based products would be impacted more than they already are by interest rates. Or other LTC type products.

hope that helps, but if you have contacts at any carriers in Actuary, I am sure they can explain better than I.

lets hope for the best & interest rates improved, but I just don't see it happening with all the constant push toward 0% interest rates to keep an economy going or limping along

Thanks Allen!

 

[Steve-PA-Life-Guy]

I just ran an illustration on LMG -- hadn't done one in a year. It looks like they went through a major repricing. Any input would be appreciated.

 

[Allen Trent]

I just ran an illustration on LMG -- hadn't done one in a year. It looks like they went through a major repricing. Any input would be appreciated.

scroll up this thread a bit. I think some posters reference 2-3 rate changes in the last year or so on the Money guard product totaling 45%+ in increases

 

[ltcadviser]

I just ran an illustration on LMG -- hadn't done one in a year. It looks like they went through a major repricing. Any input would be appreciated.

Look at Nationwide, Securian today.