Lincoln to Add Variable Universal Life-Long Term Care Hybrid

[Northeast Agent]

Lincoln to Add Variable Universal Life-Long Term Care Hybrid | ThinkAdvisor

Lincoln Financial’s MoneyGuard policies have been a major source of life-LTC hybrid coverage for decades. The older life-LTC hybrid policies have been fixed universal life policies.

Lincoln Financial says in product fliers that it plans to sell the new VUL-LTC MoneyGuard product alongside the old UL-based MoneyGuard products.

Lincoln Financial executives have told securities analysts that they’re trying to move away from products that expose the company to substantial amounts of risk related to low interest rates and changes in interest rates.

 

[scagnt83]

Lincoln Financial executives have told securities analysts that they’re trying to move away from products that expose the company to substantial amounts of risk related to low interest rates and changes in interest rates.

Translation: we are transferring more risk onto the policy holder.

 

[Tahoe Ray]

Translation: we are transferring more risk onto the policy holder.

Yep.

It's going on at almost every carrier right now, too. More and more marketing dollars, product design efforts, etc. are heading to the variable side.

 

[scagnt83]

Yep.

It's going on at almost every carrier right now, too. More and more marketing dollars, product design efforts, etc. are heading to the variable side.

Yeah, Ive noticed that over the past few years. The higher the market goes, the lower interest rates go, the more tempting it is to lean on market returns.

And consumers flock to that mindset as well, as we have seen lately.

All gravy until another 08/09 event. Then suddenly we will see the amount of variables products reduce in the market like they did then.

My initial reaction to this, is that lots of consumers are going to get screwed on this one.

And its mainly just a way to make these products attractive for money managers to sell, who traditionally are against large sums of money being taken away from their AUM.

 

[Tahoe Ray]

Yeah, Ive noticed that over the past few years. The higher the market goes, the lower interest rates go, the more tempting it is to lean on market returns.

And consumers flock to that mindset as well, as we have seen lately.

All gravy until another 08/09 event. Then suddenly we will see the amount of variables products reduce in the market like they did then.

My initial reaction to this, is that lots of consumers are going to get screwed on this one.

And its mainly just a way to make these products attractive for money managers to sell, who traditionally are against large sums of money being taken away from their AUM.

It's also reserving and other regulatory issues.

Guaranteed VUL pricing has been less than traditional GUL pricing for a few years now.

 

[scagnt83]

It's also reserving and other regulatory issues.

Guaranteed VUL pricing has been less than traditional GUL pricing for a few years now.

If I had to pick a single example of the biggest oxymoron in this industry, it would be Guaranteed VUL.

And that makes no logical sense at all as to the reserve requirements. Why would they be required to have less in reserves for a GUL vs. a GVUL? Its the exact same DB they have to guarantee. Is it the expectation that the VUL will have more CV and create higher reserve growth vs. normal GUL? Are they given some type of higher "benchmark" rate to use in VUL reserve calculations? Sounds shady af to me

 

[Tothetop]

And its mainly just a way to make these products attractive for money managers to sell, who traditionally are against large sums of money being taken away from their AUM.

This comment right here is so true.

 

[kpbdy99]

Yay... let's add even more unpredictability to a product that's regularly and unfairly slammed in the media for being too unpredictable.

 

[hunschuld]

VUL's today are very different from the original policies that were hammered in the 2000's.

Fees are lower and more competitive investment options,. Some offer index options like Penn. Those with guarantees limit what the investments can be to get the guarantees. Now with the 7702 changes about to come out VUL will most like surge in sales. They will be the path of least resistance when using insurance to build cash for retirement. Almost half the life insurance for the same amount of cash value means much better cash accumulation and the investment options will be more extensive than most 401k/403b plans.

 

[Tahoe Ray]

VUL's today are very different from the original policies that were hammered in the 2000's.

Fees are lower and more competitive investment options,. Some offer index options like Penn. Those with guarantees limit what the investments can be to get the guarantees. Now with the 7702 changes about to come out VUL will most like surge in sales. They will be the path of least resistance when using insurance to build cash for retirement. Almost half the life insurance for the same amount of cash value means much better cash accumulation and the investment options will be more extensive than most 401k/403b plans.

Don't get me wrong, VUL can be very powerful if correctly designed.

However, tying something like MoneyGuard to a VUL is just a terrible idea IMHO.