2015 Whole Life Focused Company Cash Flow Trend Analysis

Operating cash flow is the cash generated by an insurance company prior to the inclusion of investment income generated by managed assets. Under insurance statutory accounting rules, this is profits generated after deducting operating expenses. Insurers that have issued participating policies can cover planned dividend payments with operating cash and/or investment income.

We look at operating cash as a secondary indicator of insurer operating health. I say secondary because it commonly affects policy performance far less significantly than investment performance on managed assets.

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Who are Our Clients?

After we published the no contest between whole life and term life insurance article a few weeks ago many of you apparently found a side comment I made very intriguing. We’ve received more emails asking about our typical clients than any other subject since that article went live.

I’ve resisted writing this post for years. My aversion stemmed from a desire to be open to all and I want to stress that I still feel that way.

However, inquiring minds want to know about our “typical” client and I suppose in many respects it makes sense to identify who exactly we’re talking about when we discuss the subject of insurance specifically speaking to life insurance as an asset class. So here goes…

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There is no Whole Life vs. Term Insurance Debate

An aspect of the financial services and insurance industries that has always bugged me is this notion that there is some sort of debate over which life insurance product someone should buy.

To set the stage, the discussion generally notes the differences between term life insurance and whole life insurance (mostly harping on “price” paid for premium) and then makes some esoteric argument about why one is better than the other.

The truth is and has always been, that there is no debate between whole life and term insurance products. They serve two completely different purposes and are bought for very different reasons without a lot of (maybe even dare I say…any) overlap.

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Life Insurance Has Weathered the Opinion Storm

Life insurance is a pretty unique financial tool. It’s no secret around here that we’re fans. Our admiration comes from personal observations and a lot of number crunching we’ve done to arrive at the opinion we have.

But not everyone shares in our high opinion of life insurance and the life insurance industry.

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Could Your Loan Rate on Your Indexed Universal Life Insurance Drive Your Cap Rate Down?

Recently there have been some rumblings in the life insurance industry. I know, big surprise. It seems life insurance agents and industry professionals love to disagree.

First, make sure you read last week's post, “Introduction to Indexed Universal Life Policy Loans”.

It's important for you to have context for the discussion below.

The particular disagreement in this instance relates to loans on indexed universal life insurance. What's been circulating is a rumor of sorts. And the rumor is that the fixed rate loan feature of indexed loans is going to be trouble.

For whom, you ask?

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Introduction to Indexed Universal Life Insurance Policy Loans

Indexed universal life insurance policies generally offer two types of policy loans. Though the language can be a bit intimidating to some, by the end of this introduction, you should have a solid understanding of what’s available and how the different loan options work.

Typically, indexed universal life insurance policies have two loan options. The first loan type is the traditional loan (sometimes referred to as the fixed loan option). The second loan type is the indexed loan (sometimes referred to as an “arbitrage” loan).

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Five-Year Whole Life Insurance Company Investment Yield Trend: 2015 Edition

Life Insurance Company Investment Yield

A life insurance company's yield on assets is a great metric to watch with respect to inferences concerning the cash performance within policies. Since life insurers use the yield achieved on managed assets to support policy benefits this statistic is of extreme importance to us especially when we focus on cash accumulation values within a life insurance policy.

We specifically look at the overall trend for this statistic to see if an insurer is improving or regressing in terms of yield on assets achieved.

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Paid Up Additions: How to Create Flexible Whole Life Insurance

Flexible Whole Life Insurance

The fixed premium in whole life insurance gives many people a fear of commitment. But, it doesn’t have to be this way. You need not approach whole life insurance with apprehension. The annual premium is not the massive financial commitment it appears to be.

If buying whole life, don't buy a policy that commits you to 100% of the premium each year it's due.  

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