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life insurance companies

John Hancock’s High Performance Protection UL

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July 28, 2016

5:55 PM

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2016, current assumption UL or CAUL, John Hancock Life Insurance Company, universal life insurance


John Hancock recently sent out to life insurance agents and brokers an impressive comparison of its “Protection UL”, Universal Life product crediting rates compared eight other carriers, as well as a comparison of those rates 5 years ago.  Protection UL, a current assumption UL or CAUL, is currently crediting 5.05%.  The other carriers were much lower: two in the low 4% range, two the low 3% range and four carriers are at 3.00%. Back in 2011 John Hancock was crediting “Protection UL” at 5.20%.  Three carriers back then were in the 5% range; the fall off to current levels of all eight competing carriers since 2011 has been significant.  The continued narrative to justify these low rates and ongoing decreases has been the interest rate environment.  John Hancock uses the performance of its institutional investments to enable a better outcome.

The Castle Geyser, Upper Geyser Park, 1874, Thomas Moran, source Wikemedia Commons

 

Yet in evaluating cash value accumulation and policy values besides crediting rates there is cost of insurance (COI) to consider.  That’s harder to track, but this very useful article takes to task Banner/William Penn, AXA, Transamerica and Voya Financial for their huge rate hikes to COI in 2015.  Was that necessary?  John Hancock had better priorities.

Carriers clearly have other options, which protect rather than harm consumers. John Hancock, for instance, took a huge write-down in 2008-2009 that affected shareholders rather than clients. And since then, the company has been a prolific innovator of products and services that manage both interest and mortality risk. The latest example: John Hancock’s “Protection” series of policies, which offers a reduction of COI charges. This approach shows carriers can succeed by putting their clients’ needs above shareholder interests when necessary.

Having been so convinced, I made John Hancock’s “Protection UL” my recommended UL product.  There remains a lingering concern about the challenges to their long-term care insurance policy performance.

Keep in mind COI is a vital component to cash value accumulation for Indexed Universal Life (IUL) as well.  It’s much harder for agents and consumers to follow the trail of a company’s track record for cost of insurance charges, but it’s of a vital importance when choosing a UL or IUL, any products with non-guaranteed elements.

 

 

Sean Drummey

Survivorship Indexed Universal Life for cash value accumulation

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July 8, 2016

4:54 PM

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2016, Cash accumulation, Indexed Universal Life, maximizing cash value, Penn Mutual, Second-To-Die Insurance, Survivorship Life Insurance

In a quote comparison of Survivorship Indexed Universal Life (IUL) products with cash value accumulation as the objective, Penn Mutual outperformed the competition with their “Survivor Plus IUL” plan.

A Surviviorship Indexed UL, second-to-die benefit, will tend outperform an individual Indexed UL for cash value accumulation.  The cost of insurance on two lives for one death benefit is lower than on a single life, so it makes sense for a couple to consider a survivorship product.

Here were the parameters for this case study:

Premium Amount: $250,000
Solve For:  Minimum Non-MEC *
Death Benefit Option: Increasing
Illustrative Rate assumption: 6% (all years);  S & P 500 annual point-to-point
insureds:  both mid ’50’s, both preferred non tobacco
objective: cash value accumulation, downside protection

Penn Mutual was able to solve as a “3 pay”, dividing the $250,000 premium into three annual payments, and maintain competitive cash value accumulation to a 4 pay, which is unusual.  When evaluating  a limited pay scenario, one works down from a “7 pay” non-MEC structure to see where optional cash value accumulation occurs. A 5 pay or 4 pay is most common.  Penn Mutual’s cash value accumulation was superior to the competition looking at years 5, 10, 15 and 20 and on out in 5 year increments.  PennMutual’s has a 2% floor on both its fixed and indexed account, giving their product superior downside protection.

Each case is different in age, health, premium amount and objectives, so it’s not a hard and fast conclusion that PennMutual Survivor IUL will be the superior product, but the next time a cash value accumulation case comes up Penn Mutual will be serve as a benchmark.

  •  Non-MEC =  not a Modified Endowment Contract

Term Conversion to Indexed Universal Life (IUL)

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January 10, 2014

2:42 PM

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2014, Age 100, age 100 guarantee, Age 120 guarantee, American General Life Insurance Company, Cash accumulation, Cash Value, Conversion, current assumption UL or CAUL, current illustration, exchange, guaranteed universal life, GUL, in force illustration, level term, no exam life insurance, no medical exam, no physical exam, term, term conversion, term life, Universal Life, universal life policies with secondary guarantees

Buick_Convertible_1949

This week I was drawn by a client inquiry into analyzing the merits of converting a term policy into permanent.  A term policy’s ace in the hole is its conversion privileges.  Health conditions may arise as the decades go by. No matter how much one’s health may have changed for the worse, if still within the conversion period, a policy owner can convert all or part of the term policy to permanent without evidence of insurability at the original rate classification.  Be sure to ask about conversion when shopping for term.  It’s the second most important consideration after lowest premium.

For the American General term policy I was reviewing, they currently offered term conversion to either an Indexed Universal Life and a whole life product.  The indexed universal life product “AG Extend IUL” offers a no lapse guarantee rider to age 100.  That’s really great news for American General term policy holders: fixed premium and coverage guarantee to age 100. It would be better to have one to age 120 and beyond, but a lengthy guarantee is much better than not one of all.  It’s one step above the 5 to 25 year no lapse for other Indexed UL or current assumption UL products.

One of the problems with Indexed Universal Life is uncertainty on how it will perform over time.  Illustration shows non guaranteed projections, and they are very speculative in both the interest rate given, and how it’s shown at that rate for all years. An agent would be tempted to show the maximum interest rate allowed by the software. Carriers based those rates based on historical averages, as in the S & P 500 over the last 30 years. So an illustration may shows the S & P 500 annual point-to-point at 7.75% or 8.00% in all years.  Yes, each and every year.   The S & P certainly doesn’t perform like that in real life.  In all years for a 45 year old that projects a positive return, each and every year, for 75 years.   I run my IUL illustration a 5%. It’s more conservative projection but still a very uncertain projection because actual performance of the indexed may vary considerably and the carrier can change cap rates, participation rates and policy charges.

That’s why a lengthy guarantee on an Indexed UL like is “AG Extend IUL” is valuable.  Set the premium to the age 100 guarantee and then down the road the policy holder can evaluate actual performance and make changes accordingly to save on premiums if that age 100 guarantee is no longer necessary. So for example, start an Indexed UL at age 54 with premiums that guarantee coverage to age 100. Then when 75 year old  and in declining health, request an inforce illustration, and project how much premium the policy will need to have coverage to age 85.

If a Guaranteed Universal Life product is offered for conversion, generally that’s a better option to take, especially for those in their 60’s or 70’s.  If only a current assumption UL or Indexed UL is offered, funding it adequately, setting the premium high for plenty of cushion for cash value accumulation is well advised.  Have the agent show illustrations with coverage cash value to endow, or worth the face amount, at age 100.  Those run at target or $1 at age 100 might have more appealing premiums but might end up being underfunded for the long haul.

 

 

American General’s new Guaranteed UL has very good rates

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October 18, 2013

4:53 PM

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2013, 55 year old, 55 years old, 56 year old, Age 55, Age 56, American General Life Insurance Company, lapse protection guarantee, lapse protection rider, lifetime guaranteed death benefit, lifetime no-lapse guarantee, No-lapse guarantee, universal life policies with secondary guarantees

Guaranteed Universal Life, GUL, for life insurance coverage is a great low cost alternative to Whole Life with fixed rates and coverage available to age 120 and beyond.

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Looking over quotes for a client in his early 50’s, I found American General’s new Guaranteed UL, called “AG Secure Lifetime GUL II” has very competitive low rates.   Doing my latest revisions this week on permanent life sample quotes for 54 years old, 55 years old and 56 years old, American General has the lowest rates for female preferred best for $500k, $1m and $2m, and for male at preferred best $500k.  That is not a complete survey, it does not include for example the preferred rate classification, or age rates for those in their 60’s and 70’s, but it is an indicator that American General is now very competitive for certain face amounts and rate classifications and should be part of any comparison for permanent life insurance, no-lapse guaranteed Universal Life.  This product also builds guaranteed cash value and has a option surrender the policy after 20 years and with a guarantee to receive back 50% of the premiums paid.

Health Credits for Better Life Insurance Rates: Table Shave Upgrade to Offset Health Problems

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August 22, 2013

12:07 PM

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Aviva Life and Annuity Company, Aviva Life Insurance, AXA Equitable, Banner Life, credits, excercise, impaired risk, life insurance cost, life insurance rates, Lincoln Life, Lincoln National Life Insurance Company, Mutual of Omaha, Nationwide, Principal Life Insurance Company, Principal National Life Insurance Company, rate classifications, standard, Symetra Life Insurance Company, Table C to Standard, table reduction program, table shave, table shave program, Transamerica Life Companies, Transamerica Life Insurance Company, United of Omaha, Up to 2 Tables, Up to 3 Tables

 Kinnaur

Certain life insurance carriers allow standard rates for those with below average health.  It’s called a table shave program.  Carriers also will upgrade rate classification with health and lifestyle credits.  For those who have experience health problems, these rate classification upgrades can save a good deal of money on premiums, especially if a rated case gets to standard.

Top carriers 

Table 3 to Standard  (permanent plans only)

Aviva
Lincoln
Principal

Notable for Carrier Credits 

AXA          Good Health Credit Program
Banner      InTOUCH Underwriting
MetLife
Mutual of Omaha      Fit Program    (United of Omaha)
Nationwide
Symetra
Transamerica

Credits may include:

Preferred or better build; regular preventative care; optimal blood pressure control treated or untreated; lifetime non smoker; history of non-tobacco use, no tobacco in the last 10 years; no family history or death from disease prior to age 70, both parents surviving to age 75, family history of longevity; cholesterol/HDL ratio less than or equal to 5.0, or less than or equal to 4.5; regular exercise; cancer screenings such as colon cancer, and other routine preventative age and gender screenings such as pap smear, mammography, prostate exams; negative cardiac testing; recent negative treadmill; lifestyle changes and improved health habits.

Please contact me for a free and confidential quote.

sean's profile picLicensed Agent:  Sean Drummey
phone:  (910) 328-0447
email:    spdrummey@gmail.com

Boomer Esiason: life insurance awareness from personal experience

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August 15, 2013

11:32 AM

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American General Life Insurance Company, Pruco Life Ins. Co., Prudential life insurance

Former NFL quarterback and long time NFL announcer Boomer Esiason is this year’s spokesperson for life insurance awareness month in September. Great choice. Boomer has an appealing unassuming demeanor on broadcasts.  He’s well known for his support in research to find a cure for cystic fibrosis with the Boomer Esiason Foundation.

Boomer’s mom died of cancer when he was 7 years old, and she did not have life insurance.

 

Life insurance is important for parents, especially those with young children, to cover the cost of child care.

Boomer Esiason’s mother was a stay at home mom.  A homemaker isn’t required to have earned income to qualify for life insurance.  Carrier guidelines vary on how much a non working spouse can qualify for, so it’s best to compare if shopping for a larger face amount. Non working spouses can qualify for the same amount of coverage as working spouses with Prudential. Other carriers like American General offer coverage with face amount limits depending on household income.

 

 

Cash value life insurance vs. term and invest the difference: is that the only choice?

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August 12, 2013

4:14 PM

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1 year point-to-point, 20 year term, cash benefit, Cash Value, cash value insurance policy, chronic care benefit, hybrid life insurance policies, hybrid long term care insurance and life insurance, In Your 20's or 30's, Indemnity Benefit, indexed life insurance, Indexed Universal Life, life insurance and long term care, life LTC hybrids, Lincoln Life, Lincoln National Life, Lincoln National Life Insurance Company, long term care life insurance hybrid with return of premium, preferred rate, reduced paid up life insurance, Return of Premium Term, Return of Premium Term, ROP term, S&P 500, SBLI, SBLI of Massachusetts, Universal Life

Last week Seeking Alpha posted an article where a 38 year old man, presumably an investment broker, passed on his life insurance agent’s advice for a permanent life insurance product with a $5,000 annual premium, and instead choose term coverage for $600 a year. He took cash value life insurance to task with the self-serving advice to buying term and investing the difference.

OK.  No real argument there. At age 38, or for that matter for any working age person, term offers more bang for the buck, and that’s the most affordable way to replace lost income and thus protect a spouse or dependents.  But did this gentleman get enough coverage?

Term: How much and how long
He’s to spend $600 a year in premium.  Let’s review the most competitive rates and see what $600 a year buys.  A male preferred non-tobacco with SBLI (Savings Bank Life Insurance of Massachusetts), $800,000 of 20 year term is $596 a year. 25 year term $525,000 face amount is $600.75 a year with SBLI.  The rule of thumb is had 7 to 10 time one’s annual salary in life insurance. If he has children, there’s a college fund to consider.  Whether this individual got sufficient coverage depends on how much he makes, but keep in mind the goal is to get an adequate amount, and if affordable extend coverage to retirement age or to a point the children would be expected to have finished their secondary or post secondary education: age 22 or age 26.

Term and Permanent:  Two Plans – Two Purposes
Term verses permanent life insurance is a fallacious argument, as if it’s either one or the other. You can set up two policies: one term to replace lost income during your working years and a permanent for estate planning and to build cash value.  For this 38 year old, instead of a $800k 20 year term, how about a $100,000 of permanent life insurance and $700,000 in term?  A $100,000 Indexed Universal Life “Lincoln LifeReserve Indexed UL Accumulator” with Lincoln National, increasing face amount, targeted to endow at age 100, is $1,511 annual for male, age 38, preferred. That quote assumes 5% interest on S & P 500 index, annual point-to-point. At 5% that projects $33,803 cash surrender value and a $133,803 death benefit after 20 years.  Add a $700,000 20 year term with SBLI for $529 annual, that comes to $2,040 annual total cost for the two plans, and the Indexed UL is a very flexible premium, up or down depending on index returns or personal finances. This way after 20 years this person, now in his late 50’s, doesn’t have to encounter much more expensive choices in establishing permanent coverage for estate planning and with the right plan a chronic care or LTC rider in case LTC is needed.

There is also return of premium (ROP) term.  $800,000 20 year ROP term is $3,072 annual with American General for a 38 year old male at preferred.  In 20 years that guarantees $61,440 cash back or $170,218 in paid up life insurance.  After 20 years that paid up life insurance might be an appealing choice.  You could do a mix of ROP term and regular level term to lower that cost.

Please contact me for a free and confidential quote.  Many more options available.

sean's profile picLicensed Agent:  Sean Drummey
phone:  (910) 328-0447
email:    spdrummey@gmail.com

Trigger Method Fixed Indexed Universal Life (IUL) with Allianz

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May 30, 2013

10:36 AM

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0% Floor, 1 year point-to-point, 2013, Allianz, Cap, Cap Rate, crediting method, crediting strategy, EIUL, Floor, Index Cap Rate, Index floor rate, Index Segment, Index universal life, Index universal life insurance, indexed life insurance, Indexed Universal Life, IUL, S&P 500, trigger method

Henryk_Weyssenhoff_Spring_1911

Allianz recently announced enhancements to their Fixed Indexed Universal Life (IUL) product Life Pro+.  Why does Allianz call it fixed?  Well, that’s their terminology.  Known mostly as Indexed Universal Life (IUL) or sometimes as Equity Indexed UL (EIUL), the name may differ, but all these Indexed UL products have interest returns tied to a market index, most commonly the S & P 500 Index, and have a floor guarantee of at least 0% as downside protection against losses. That’s why Allianz presumably uses the word fixed as opposed to Variable UL which does not have a 0% floor.

One noteworthy feature in Allianz’s enhancements is a trigger method of interest crediting. If the S & P 500 Index annual point to point hits anywhere greater or equal to zero, will trigger 9% credited to the policy. This Trigger Interest Rate is subject to change on an annual basis but is guaranteed never to go below 2.50%. In years the S & P goes below zero, the floor crediting rate is 0%, and if the index measures in that annual point to point above 9%, the credit remains at 9%.

Most of the Indexed UL product caps are currently in the 11% to 13% range and in this strong market those higher caps make them a more alluring crediting strategy. Historical data does not show that 0% to 9% range to be as prevalent as 10% or higher. Allianz still offers the higher capped S& P 500 annual point-to-point option. Their trigger method is an added option in times when S & P 500 performance expectations were not very high.

Best Life Insurance for Other Nicotine Products

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May 22, 2013

10:13 AM

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Cigar, e-cigarettes, electronic cigarettes, John Hancock Life Insurance Company, nicotine gum, nicotine patch, pipe, Pruco Life Ins. Co., Prudential life insurance, smokeless tobacco users, Tobacco Users


Prudential has the best life insurance rates for those who use cigars, pipes, chewing tobacco, electronic cigarettes, nicotine patches or nicotine gum.  If the applicant has not used cigarettes in the last 12 months, and admits on the application the use of a tobacco or nicotine product, “Non Smoker Plus” rates are available.  That rate classification, generally called standard plus, is only rate class above the preferred non tobacco rate.  John Hancock allows their Standard Nonsmoker rate for non cigarette users in the last 12 months, smokeless tobacco or other nicotine product users, but e-cigarettes are not included in that category.

What separates Prudential and John Hancock out from the competition is that the applicant can test positive for nicotine on the paramed exam and still qualify for the non tobacco rate.  Some carriers allow an occasional use of a non cigarette tobacco product, but the nicotine test result must be negative.  For occasional cigar use with a negative paramed test result, several carriers allow preferred best rates.

e-cigarettes

Electronic Cigarettes:  The Early Days

The FDA in an advisory has come out against electronic cigarettes.  A non smoker rights website believes e-cigarettes are not a safe alternative and has a useful compiler of news articles.  For some e-cigarettes may be a legitimate avenue to quit smoking cigarettes.  The ins and outs of the health issues won’t deter some from cashing in on its strong market potential.  The downside potential is that “vaping” will suck in some young or not so young people down the rabbit hole of abuse or addiction and use these devices as starter or bridge drug or favored delivery method for an alternate drug.

Please contact me for a free confidential quote.

sean's profile picLicensed Agent:  Sean Drummey
phone: (910) 328-0447
email:  spdrummey@gmail.com