A New Landscape: Death Benefit Focused Products After the 2019 CSO and PBR Changes

  Driven by new CSO tables and Principle Based Reserving (PBR), year-end 2019 ushered in a host of life insurance product changes. These changes impacted both a substantial number and a broad diversity of life insurance products and pricing — especially death benefit-oriented "permanent" plans of coverage, a market where many of us spend considerable time promoting and selling. 

To assess what happened, we completed a survey of this market based upon the carriers Windsor represents.  While many of our observations were similar for single and joint life products, there were notable differences. 

Some high level findings are:

  • Many carriers remain in the single life guaranteed universal life (GUL) death benefit market.
  • The number of joint life guaranteed death benefit product offerings (SGUL) shrunk considerably, with a modest number of carriers currently offering products.
  • Due to continued low interest rates, lifetime death benefit guarantees have increased in price. Now may be a good time to lock in pricing on new sales and consider term conversions into these products.
  • Index universal life product selection continues to be robust, offering both simple and complex product designs, with varying levels of death benefit guarantees.
  • Variable universal life with death benefit guarantees are often excellent, reasonably priced alternatives for the guaranteed market and seem poised for continued growth. These products should be considered for any guaranteed death benefit sale.
  • There are some carriers that offer all types of products and chassis—Lincoln and Prudential being good examples—including single and joint life, in guaranteed death benefit, index, and variable life chassis.
  • Some carriers continue to offer underwriting table shave and crediting programs. There may be favorable pricing surprises for both single and joint life cases on several product chassis with certain carriers.

It is also important to note that while product selection for many death benefit sales continues to revolve around guarantees and price, other important factors to consider include:

  • Name brand recognition of carrier
  • Underwriting prowess
  • Capacity to handle the largest cases
  • Interest rate integrity, cap changes and prior cost of insurance changes
  • Riders, where available, such as long term care/chronic illness and return of premium

  Single Life Products

Guaranteed Universal Life (GUL)

  • Several carriers, including fourteen that Windsor represents, remain in this market. There continues to be good product selection.
  • With interest rates at historic lows, the cost of providing long term guarantees has increased. Rumors persist for additional price increases, likely in the very near future with some carriers.

Variable Universal Life (GVUL) with Death Benefit Guarantees

  • There is a small group of carriers providing product to this market.  Two carriers in particular, Lincoln and Prudential, dominate the few others that maintain market presence.
  • The continuing allure of these products is as a GUL alternative, with equivalent guarantees and often better pricing.  In addition to this, VUL offers market upside and cash accumulation potential—which GUL does not.
  • In addition, there are indications other carriers are looking to introduce products in this category.

Index Universal Life (IUL)—Protection Focused

  • Most product development activity over the past few years has taken place on an IUL chassis.  Many carriers, including fourteen that Windsor represents, remain committed to this market offering an array of product options.
  • IUL pricing is often a function of product guarantee periods, with many priced to life expectancy or shorter periods of time.  These provide varying levels of coverage certainty, with some on a more limited basis, and additional inforce policy management—especially if a policy is thinly funded.
  • A few carriers, notably Securian and North American, provide lifetime guarantees equivalent to a GUL, and like VUL are competitively priced alternatives that may also accumulate cash.

Joint Life Products 

This market has contracted greatly, with only a modest number of carriers offering any type of joint life product chassis today. The end of 2019 saw many carriers exit this product line completely due to lack of sales.  Also, due to internal resource issues and market demand some carriers are delaying updated product versions until later in the year or beyond.

Survivor Guaranteed Universal Life (SGUL)

  • The SGUL market has shrunk precipitously, with only four meaningful carriers left in the market.
  • Of the remaining carriers, one in particular, Prudential, is a cut above the rest in terms of product pricing and is dominating the market.

Current Assumption Survivor UL (CASUL)

  • Very limited shelf space.  John Hancock and New York Life are the remaining meaningful carriers in this market.

Survivorship Variable Universal Life (SVUL) with Death Benefit Guarantees

  • There is a small group of carriers providing product to this market.  As was the case with VUL, two carriers in particular—Lincoln and Prudential—dominate.
  • The continuing allure of these products is as a SGUL alternative, with equivalent guarantees and often better pricing than SGUL.  In addition to this, SVUL provides market upside and cash accumulation potential—a feature SGUL does not offer.

Survivor Index Universal Life (SIUL)—with Death Benefit Guarantees

  • This market has a limited number of carriers, including six that Windsor represents, offering limited to lifetime guarantees.
  • IUL pricing is typically a byproduct of guarantee length.  Many products are priced to life expectancy or shorter periods of time, and provide some level of coverage certainty, albeit on a more limited basis.  These products may also require additional inforce management, especially if thinly funded.
  • Penn Mutual provides lifetime guarantees equivalent to a SGUL, and like SVUL is a competitively priced alternative that may accumulate cash.

2019 ushered in a host of product and pricing changes for the death benefit market.  With COVID 19, continuing interest rate uncertainty, and market volatility, we expect more changes may occur in many carrier product lines. These include price increases, reduction in credited interest, index cap adjustments, etc.   Active policy management remains a critical factor to successfully navigate these turbulent times and beyond.  At Windsor, we partnered with Network Insured Connect (NIC), a multicarrier policy management platform, to help our producers accomplish this objective.  There are also individual carrier solutions available.

It is important to rely on a business partner who can provide the most up to date knowledge and trends in carrier selection, product niches, pricing, and underwriting.  At Windsor we have been in business for over four decades and have demonstrated our commitment to help you remain successful in your practice.

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