A tale of two tables: product development by life insurers this year has been influenced by an unusual choice: two mortality tables.It is the best of times and the worst of times for life insurance manufacturers. It's the best because through next year, they can choose to base their product design on either the 1980 or 2001 CSO (Chief Security Officer) The person in charge of all staff members who are responsible for promulgating, enforcing and administering security policies for all systems within an enterprise or division. (Commissioners Standard Ordinary) mortality tables, whichever works better with the product involved. It's the worst because as of Jan. 1, 2009, all new products have to be on the 2001 CSO table, and making the transition is a big and costly task. A casual observer might expect insurers to jump at using the new table. The 2001 edition assumes that people will live longer, so insurers either can charge less for life insurance or keep some of the difference. That's exactly what they're doing for pure insurance contracts such as term life and universal life with no-lapse guarantees. And these policies are big sellers. But for products that are sold on their cash-value accumulation potential, the new table hurts. Internal Revenue Service regulations from the 1980s limit how much money policyholders can pump into these kinds of contracts and still have them considered "life insurance." The new mortality table limits those amounts even more. That's because if insurance is less costly, then the allowable cash value also must fall, due to the maximum ratio of cash value to death benefit. In other words Adv. 1. in other words - otherwise stated; "in other words, we are broke" put differently , once the new tables kick in, purchasers will have to buy more life insurance to park the same amount of money into the cash value side of their policies as they can under the 1980 tables. [GRAPHIC OMITTED] These products are mostly accumulation-oriented universal life, variable life and variable universal life, said Marianne Purushotham, research actuary actuary One who calculates insurance risks and premiums. Actuaries compute the probability of the occurrence of such events as birth, marriage, illness, accidents, and death. at Limra International. "There are a lot of issues companies have to look at to try to make those products look good under the 2001 CSO," she said." A lot of companies have been putting that off to the last minute because they didn't want to spend the time before they had to." Whole life falls in the middle, Purushotham said. "It depends on your product and which market it is geared towards." Purushotham also said there am many strategic issues for insurers. "I think it is likely that companies are going to be implementing product strategy in different ways for different reasons on different schedules," she said. "Not everyone will do term first, and then whole life, and then UL and VUL VUL Variable Universal Life VUL Vulnerability (unit) VUL Vulgar . There are different priorities that come into play here." Here is a sampling of products introduced in 2007 and the strategic considerations of each company: John Hancock: Mostly Converted to 2001 CSO Through mid-September, John Hancock Life Insurance Co. introduced 10 products this year, including repricings, said Naveed Irshad, vice president of life product development. * Seventy-five percent of life insurance premium comes from products using the 2001 CSO. * Hancock has been most pleased with its UL with secondary guarantees, but that line has experienced upward price pressure throughout the marketplace due to higher reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. costs and Actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin Guideline guideline Medtalk A series of recommendations by a body of experts in a particular discipline. See Cancer screening guidelines, Cardiac profile guidelines, Gatekeeper guidelines, Harvard guidelines, Transfusion guidelines. 38 requirements. * Protection VIAL vial a small bottle. , which has a secondary no-lapse guarantee and is on the 2001 CSO, is one of several "viable alternatives" to no-lapse UL introduced this year, Irshad said. The price point is about 10% more expensive than no-lapse UL, he said. * Hancock writes a lot of business on insureds older than 70, mostly through no-lapse products. Protection VUL attracts younger insureds. It is suitable for short-pay or dump-in, high-early-funding scenarios. * Protection Whole Life, on the 2001 CSO, is priced 15% to 20% higher than no-lapse UL. It provides "very strong" guaranteed cash values and is good for key-person insurance, Irshad said. * Hancock also offers a full series of cash-accumulation products. "For them, it's more advantageous to maintain 1980's CSO as long as possible," Irshad said. "The two key products, Accumulation UL and VUL, will remain so until the last possible time." In 2008, Hancock will tell consumers "to hurry up to make haste. See also: Hurry and buy." [ILLUSTRATION OMITTED] Axa Equitable: Out to Beat a Potential Filing Logjam log·jam n. 1. An immovable mass of floating logs crowded together. 2. A deadlock, as in negotiations; an impasse. Noun 1. A life industry product-approval logjam may be in the offing coming; arriving in the foreseeable future. visible but not nearby. See also: Offing Offing during 2008, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Michael Ferik, senior vice president of Axa Equitable's life marketing and product development. * "The industry knows this," Ferik said. "We all very much want to get things filed in the first half of 2008, if not in the first quarter, which means that in 2007, we're trying to get as many products as possible on the 2001 basis." * State product approvals currently take 90 to 120 days, but if a lot of companies file a lot of products, the approval process could lengthen length·en tr. & intr.v. length·ened, length·en·ing, length·ens To make or become longer. length  en·er n. .
* All of Axa's term and UL products are on the 2001 CSO. Axa doesn't have a pure accumulation UL product. * Axa has deepened and diversified its product portfolio. This year, it launched a return-of-premium term product. "Five years ago, we were essentially just a variable life carrier," said Ferik. "When the equity market went bad from 2000 to 2002, it hurt our sales a lot." * In June, the company introduced its Athena Series. It includes a UL with lapse (language) LAPSE - A single assignment language for the Manchester dataflow machine. ["A Single Assignment Language for Data Flow Computing", J.R.W. Glauert, M.Sc Diss, Victoria U Manchester, 1978]. protection and a second UL with a traditional death benefit that allows flexibility. Both offer an optional living-care rider to cover long-term-care expenses. * In September 2006, Axa introduced a no-lapse VUL, Incentive Life Legacy, which is on the 2001 CSO. It complements its traditional accumulation VUL product, Incentive Life, which is on the 1980 CSO. Both carry the living-care rider. * New products under development are an Athena survivorship survivorship n. the right to receive full title or ownership due to having survived another person. Survivorship is particularly applied to persons owning real property or other assets, such as bank accounts or stocks, in "joint tenancy. product and a survivorship Incentive Life Legacy. Both will have guarantees, and Ferik said Axa is trying to design them under the 2001 CSO. * Diversifying the portfolio also opens up the broker channel, Ferik said. The extended no-lapse rider and the living-care rider "set us apart," he said. [ILLUSTRATION OMITTED] Nationwide Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. : Product Revamp re·vamp tr.v. re·vamped, re·vamp·ing, re·vamps 1. To patch up or restore; renovate. 2. To revise or reconstruct (a manuscript, for example). 3. To vamp (a shoe) anew. n. This Year and Next Nationwide decided to re-engineer its death-benefit-oriented policies to the 2001 CSO first. In 2008, it will introduce products as replacements for non 2001-compliant versions, said Michelle Benz, vice president of business development, individual protection. * This will be done one product at a time "to avoid confusion and give our sales force time to absorb all of the change," she said. * This process will be more than "swapping out mortality tables," said Benz. "We are using this as an opportunity to re-engineer processes, features and benefits, and to update technology." * To avoid confusion among customers and producers, the company will not offer similar products with different tables. * The most successful offering in 2007 is the repricing Repricing To change the price of an asset. In derivatives, it sometimes refers to the exchange of options of with different strike prices. repricing and relaunch Relaunch can refer to several things:
* Nationwide also introduced a new suite of YourLife term and whole life products that use an electronic, simplified-issue system. * Next in Nationwide's queue is Your-Life Survivorship UL, a second-to-die version of the ULtimate product. [ILLUSTRATIONS OMITTED] Transamerica OCCIDENTAL oc·ci·den·tal or Oc·ci·den·tal adj. Of or relating to the countries of the Occident or their peoples or cultures; western. n. A native or inhabitant of an Occidental country; a westerner. Noun 1. : Two-Year Replacement Process, Merger Transamerica Occidental Life Insurance Co. is in a 24-month process of replacing its entire portfolio as it prepares for a statutory merger with Transamerica Life at the end of 2008. Bill Tate, executive vice president and chief marketing officer, said the endeavor has been "a burden, but a positive thing" that has "pushed our organization." Transamerica companies are part of the Aegon Group. * The decision to merge in conjunction with the 2001 CSO product revamp "made sense," Tate said. * Product development historically has followed a process of pricing, Filing, administrative work and marketing but now, instead of filing one product at a time, the companies are filing several, he said. * Concerned about a filing backlog, the Transamerica companies probably are further along than others, Tate said. Transamerica has replaced at least half its products, he said. * The first products changed to the 2001 CSO have been among the companies' primary sellers: term and fixed UL. Transamerica Occidental is very enthusiastic about a new product, TransACE, a single-life, no-lapse policy with competitive premiums and a return-of-premium rider. * Transamerica's strength has been protection products in the large-case market to mature buyers through independent general agency and broker general agency systems. More diverse products will open financial institution and direct-marketing channels, Tate said. [ILLUSTRATION OMITTED] Old Mutual Financial Network: Makeover Plan Under Way Old Mutual has one term policy, Saver's Select, and a no-lapse product, ValueMaster UL, under 2001's CSO, and is in the process of introducing others. "It's a big effort to reprice and redesign re·de·sign tr.v. re·de·signed, re·de·sign·ing, re·de·signs To make a revision in the appearance or function of. re products to the 2001 tables," said Jeff Suyematsu, vice president of life distribution. "We will have all of our products there by 2009." * The design of ValueMaster UL, which went to market in September, is based on input from distribution partners. The product offers four guarantee options: 15 years, 30 years, age 90 or age 121. (See table for cost comparison.) Suyematsu said the 15- and 30-year guarantees should compete with term products. * The product is designed for middle-age Americans with family incomes of $30,000 to $175,000. An enhanced catch-up provision for policyholders who fall behind on premiums increases the flexibility. * Old Mutual is in the process of converting the rest of its term portfolio to the 2001 CSO. * Introduced in May, MasterElite Indexed Universal Life is a cash-accumulation policy under CSO 1980. "We will offer indexed UL for as long as possible under the 1980 table," Suyematsu said. [ILLUSTRATION OMITTED] The Price of Guarantees $1,000,000 Policy Male Age 45 Preferred Rate Guarantee Period Annual Premium 15-Year No Lapse Guarantee $1,920 30-Year No Lapse Guarantee 3,480 Age 90 No Lapse Guarantee 6,000 Lifetime No Lapse Guarantee 8,760 Source: Old Mutual Foresters: Fraternal fraternal /fra·ter·nal/ (frah-ter´n'l) 1. of or pertaining to brothers. 2. of twins; derived from two oocytes. fra·ter·nal adj. 1. Of or relating to brothers. Benefit Society Launches Level-Premium Term Policy with Living Benefits Foresters, a Canadian fraternal benefit society, has launched Lifefirst, an unusual term life product, into the U.S. market under the 2001 CSO. Developed with Actuarial Development Services LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control and a select group of national marketing organizations, the product provides some coverage for health care, medical emergency, college costs, job loss and pay reduction, increasing debt and affording retirement. * Lauren Bradley, vice president of product management and marketing, said Lifefirst aims for the middle-market--customers with incomes from $35,000 to $75,000. * Standard product features include a family health benefit rider that provides up to $5,000 per family for the insured and immediate family members for ambulance transport to a hospital, and emergency-room care or hospital stay as a result of earthquake, typhoon typhoon: see hurricane. , hurricane, tornado tornado, dark, funnel-shaped cloud containing violently rotating air that develops below a heavy cumulonimbus cloud mass and extends toward the earth. The funnel twists about, rises and falls, and where it reaches the earth causes great destruction. , tsunami, volcanic eruption eruption /erup·tion/ (e-rup´shun) 1. the act of breaking out, appearing, or becoming visible, as eruption of the teeth. 2. or lightning strike lightning strike n → huelga relámpago lightning strike n (Brit) → grève f surprise lightning strike n (BRIT . Also provided is a death benefit up to two times the base coverage if the insured dies within 90 days of being injured in·jure tr.v. in·jured, in·jur·ing, in·jures 1. To cause physical harm to; hurt. 2. To cause damage to; impair. 3. on a common carrier. * Optional features are: an accelerated death benefit for reasons of critical illness; an accident-only disability income rider; a waiver of premium Waiver of premium A provision in an insurance policy that allows payment of insurance premiums to be permanently or temporarily stopped in the event the policyholder becomes incapacitated. rider; a children's term rider with conversion privileges conversion privilege See exchange privilege. ; and an accidental death rider not limited to a common carrier. * As a fraternal benefit society, Foresters also provides five benefits of membership: a lump sum Lump sum A large one-time payment of money. for diagnosis of a life-threatening illness; an interest-free loan of 75% of the face amount for terminal illness; scholarships; orphan orphan: see adoption; foundling hospital; guardian and ward. See widow & orphan. Orphan See also Abandonment. Adverse, Anthony finally, at middle age, discovers origins. [Am. Lit. scholarships; and young-family-member benefits paid to legal guardians to care for children up to age 18. Bradley said a three-child household could collect up to $72,000 in scholarships and $162,000 in young-family-member benefits should the children be orphaned or·phan n. 1. a. A child whose parents are dead. b. A child who has been deprived of parental care and has not been adopted. 2. A young animal without a mother. 3. . * About 53% of Forester's premium income is in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , 7% in Canada, and the rest in the United Kingdom, Bradley said. * Since 2005, Foresters has changed its career agents into an independent network called Foresters Financial Partners. It distributes products through seven additional independent channels, including National Agents Alliance. * The News: Life insurers can base new products on their choice between two mortality tables until Jan. 1, 2009. * What It Means: Executives face hard choices deciding which table better suits their new products. * What's Next: With one table expiring at the end of 2008, all new products must be converted to the single remaining table by then. Learn More John Hancock Life Insurance Co. A.M. Best Company # 06601 Distribution: Career and independent agents, other third-party producers Axa Equitable Life Equitable Life may refer to:
Distribution: Career agents, securities firms, banks, broker-dealers, financial planners Financial Planner A qualified investment professional who assists individuals and corporations meet their long-term financial objectives by analyzing the client's status and setting a program to achieve these goals. Nationwide Life Group A.M. Best Company # 70350 Distribution: Broker-dealers, wirehouses, financial institutions, financial planners, Nationwide P/C agents Transamerica Occidental Life Insurance Co. A.M. Best Company # 06848 Distribution: Career agents, financial planners, banks, brokers, independent agents, direct marketing Old Mutual Financial Network A.M. Best Company # 70403 Distribution: Managing general agents, banks, brokers For ratings and other financial strength information visit www.ambest.com. A Sampling of Recent Product Development Life Product Company CSO Table Protection VUL John Hancock 2001 Protection Whole Life John Hancock 2001 Lifefirst (term) Foresters 2001 ValueMaster UL Old Mutual 2001 MasterElite Indexed UL Old Mutual 1980 TransACE UL Transamerica Occidental 2001 TransACE Survivor UL Transamerica Occidental 2001 YourLife Whole Life Nationwide 2001 ULtimate UL Nationwide 2001 Incentive Life Legacy VUL Axa Equitable 2001 Athena UL-Death Benefit Axa Equitable 2001 Life Product Purpose Protection VUL No-lapse death benefit Protection Whole Life Guarantees ... Lifefirst (term) Low-cost death benefit ValueMaster UL Low-cost death benefit MasterElite Indexed UL High safe cash value TransACE UL No-lapse death benefit TransACE Survivor UL No-lapse death benefit YourLife Whole Life Choices, guarantees ... ULtimate UL No-lapse death benefit Incentive Life Legacy VUL No-lapse death benefit Athena UL-Death Benefit Low-cost death benefit Life Product Consumer Allure Protection VUL Potential to grow cash value Protection Whole Life ... of DB, premiums, cash value Lifefirst (term) Offers multiple living benefits ValueMaster UL Choice of DB guaranteed periods MasterElite Indexed UL May grow faster than a UL TransACE UL Low-cost with guarantees TransACE Survivor UL Guaranteed DB on second to die YourLife Whole Life ... of DB, premiums, cash value ULtimate UL Low-cost with guarantees Incentive Life Legacy VUL Potential to grow cash value Athena UL-Death Benefit Lowest cost, no guarantees |
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