Category: Penn Mutual Life Insurance Company

Long term care type benefit with Protective Life

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May 30, 2012

2:17 PM

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Protective Life has a long term care services rider available on their universal life insurance product “Centennial G II”. This allows the life insurance benefit to accelerate out when the insured is certified by a licensed health care practioner as chronically ill, meaning unable to perform two out six activities of daily living or severe cognitive impairment.  This LTC type benefit is a very valuable added plus to include in a life policy.  It’s there just in case, and if not needed or if only some benefits are needed, the remaining death benefit goes to the beneficiaries.

Payouts with Protective’s plan are an indemnity payment method, full direct benefit payments, which is much preferable over the reimbursement method, repayment of bills or receipts.   Maximum is $8,500 per month, and the benefit can be 100% of the policy value.  Lump sum payment is also available.

Protective’s $8,500 per month maximum accelerated benefit is better than most carriers, but a few competing plans are based on percentage of the policy benefit which allows a higher acceleration.  For example, Penn Mutual allows 24% of the policy benefit, maximum $240,000 accelerated per year.

Indexed Universal Life (IUL) index rates: how to request quotes to compare carriers

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February 27, 2012

2:04 PM

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Lincoln has changed the name of their Indexed Universal Life (IUL) product to “Lincoln LifeReserve Indexed UL Accumulator”.  They changed their default quoting rate on the S & P 500 annual point-to point to 8.22%.  This is based on a 30-year historical Lookback rate.  Before this Lincoln’s default rate was 7.75%.

Using a higher rate seems counter factual considering the S & P 500 was a flat 0% for 2011, despite so far enjoying a much better 2012.  Showing a higher rate reflects competitive pressures.  One carrier’s current default rate on the S & P is 8.30%.  A carriers competitiveness could suffer when another is showing higher rate on the exact same index and crediting period.   The rate quoted and the calculation method depends on the carrier.  Penn Mutual is currently illustrates 7.92% for the exact same S & P 500 annual point-to-point.   Tranamerica gives 7.93%.  Allianz  gives 7.22%.

The important consideration from a buyer’s point of view is to take all these rate assumptions with a grain of salt.   Sure the S & P could average 8% or above over the next several decades, but it could also average lower.   Request quotes with the exact same rate assumptions for a closer apples-for-apples direct comparison.   With Lincoln, North American and Penn Mutual, I use Penn Mutual’s 7.92%.   It would be nice to level them all to an even 8%, but most carriers including Penn Mutual won’t allow plugging in a rate higher than their default rate.

Depending on the index, the default index rates are in the 7% to 8% range.   It’s prudent to request a quote illustration with interest rates several points lower,  for example 5% or 6%,  to see how those hypothetical results would affect your goals.