Factoring adds fairness to non-garnished elements
Life insurance illustrations are designed to provide some perspective to customers how their policy can perform over time, depending on unchanged beliefs. However, perceptions are naturally variable. Let’s take a look at the indexed universal life insurance policies and some factors involved in which you can level the playground.
Art of illustration
Since the interest credit is a sales point and a concept is considered by most customers, it is usually used as a way to compare carrier and as a discrimination on pictures. We run a depiction by using beliefs based on the current environment. However, environmental assessment and appropriate assumptions are open to interpretation.
In fact, no one knows what the future is. Credit rates are not guaranteed and it will vary unexpectedly over the long term. But interest credit is not the only non-reserved element of a policy. Policy fees and charges may also vary. In fact, many carriers have recently been taken to increase non-garnished fees on in-arms blocks. You do not now know how long the current fee will apply or how often they will change. What do we know that today there are maximum fees permitted by fees and policy.
As a result of these factors, paintings are required to involve various scenarios to help paint the picture. Shows the display of policy based on each illustration:
- Interest rate assumptions and current charges
- An alternative landscape of level account with the current fee
- Current and guaranteed fees and middle-point value
- Minimum credit and maximum fee guaranteed
Customers need you – their agents – to help explain all this and compare their options. How can you ensure that you are comparing apples to apples with instability and allegations of interest credit?
A more balanced approach
Over time, cash can be compared to surrender values, which can be a tool to help level the playground and provide more purpose of products, given the nature of non-garnished elements. To prepare a scale and formula:
- Consider a cash surrender value that is equal to the account value of the current laser, earns a score of 100.
- If the surrender price is half of the account value, it earns a score of 50, and so on.
- 10- And add scores for the available, guarantee, optional and middle-point scenarios, using a weighted average in the 20-year period.
- Mix the cumulative results of two durations for the total score for comparison.
Let’s take a look at how it starts with it to see how it looks like the use of various products on the market today. Global Atlantic’s Lifetime Builder EliteThe higher the score, the more susceptible cash surrender value will have to change in non-geniusable beliefs.
The next time you are introducing an Iul product for a customer, try this little use to a more balanced approach to compare policies. For more information, please visit www.globalatlanticlife.com,
Tom Doruska, FSA, MAAA, Senior Vice President in Global Atlantic, Life Products, and Chairman of ACLI IUL Task Force.
