Brandon Roberts 
Last time I talked about designing cash value life insurance as an asset class using whole life insurance, today we'll dive into how it works for universal life insurance.
Universal life insurance is often used by agents as a lower premium permanent life insurance option as compared to whole life insurance, huge mistake. As a product that seeks to establish a permanent death benefit, it needs adequate incoming money to build an appropriate reserve to ensure the policy's sustainability.
The Guardian Life Insurance Company of America has announced its dividend for 2013 on all participating policy holders. Guardian will pay out a total of $803 million in dividends to its policy holders, the largest dividend payout in the Guardian's history.
It occurred to me somewhat recently that all my praise for cash value life insurance has left some unanswered questions regarding execution. This is purely a function of precious little time and the needs for a more diverse range of topics. This week I'll be rolling out a two part series on the subject (two so that we can spend ample time sorting out how it's done with whole life and universal life insurance). And since whole life is way trickier, we'll start there.
This week we had two rather surprising announcements when Penn Mutual and Jackson National Life both announced limitations on new money to their annuity products due to annual capacity attainment.
This news comes at a time when several major carriers have announced roll backs and limitations on new premium for their products.
The Northwestern Mutual Life Insurance Company of Milwaukee, WI has announced its 2013 dividend. Northwestern Mutual will pay $5 billion in policy holder dividends, the largest payout in the company's history. To put a little perspective on that, Northwestern Mutual will pay its policy holders a sum larger than Lafayette Life (the highly promoted whole life insurer for the Bank on Yourself certified advisors) by a factor of two plus a little more. When I say larger than, I mean Lafayette's entire general account.
The Massachusetts Mutual Life Insurance Company of Springfield, MA has announced its dividend payout for 2013. Massmutual plans to pay a company record setting $1.39 billion in policy holder dividends.
Sometimes I just feel like being edgy, and throwing the words invest and Modified Endowment Contract about seems like a good way to be edgy. Of course this so called “edginess” is more a testament of my dork-dom–analogous to my saying, “I know my AGI is >$33,750 but screw form 6251.”
If you got that joke, I think I love you.
But in all seriousness a few recent events played out that gave way to this post. You see, It's been a long time since I thought real estate was a good place to invest. When I was in college I had a professor point out that the 30 year CAGR on real-estate in the United States was under 4%. Yikes! That was before the bubble popped, and let's not forget that real-estate can be super volatile.
Reliastar/ING has announced its plans to suspend all universal life products it issues that have secondary guarantees. In an announcement dated today October 17, 2012 ING cited difficult economic times and Actuarial Guideline 38 as a key reasons for its decision to suspend these products.
Jackson National Annuities Life joined the ranks of Prudential and Metlife this week when it delivered news that is would pull back on benefits from its variable annuity products. Jackson will continue to accept premiums for features that are going away, but they did employ the same tight time line Prudential rolled out a little more than a month ago.
Perhaps I should start a section on the Insurance Pro Blog called “Dumb Agent Tricks,” and it could be a new home for information on 7702 Private Plans and Investment Grade Life Insurance.
I realize the life insurance business is a tough one. What with all the talking about death and dying I realize just how popular an agent/broker can be at a family get together, cocktail party, etc. So, in a desperate move to spice things up, the industry has been concocting snazzy sounding marketing names for the sale of life insurance for a long time. And maybe…just maybe…the means are justifiable insofar as they accomplish an end that places a client in a better place by making the pill easier to swallow (clients are people, too–dumb just like the rest of us from time to time). But I'd sooner suggest that the financial services/insurance industry needs a good dousing of bleach in its gene pool before it goes out embracing this sort of thing.
