Overfund
Overfund
- (p5-7) – Section 2 – Introduction and Background
- The ultimate goal of this report is to raise awareness regarding the questionable sale of complex insurance products (overfunded UL insurance in particular) in specific circumstances, and to commence a broader discussion regarding specific actions that can be taken to increase adherence to FTC/ICP 19 and to mitigate the potential risk of poor consumer outcomes in the future.
2023 10 – FSRA – Report – Observed Practices in the Distribution and Sale of Universal Life Insurance — [BonkNote] — 15p
- Consider that there are really two parts to the fund value, at least for a policy that is “over funded” (i.e., has a fund value greater than the GMF).
- The first part is equal to the GMF.
- The second part we might call the excess fund, and it is equal to the excess of the fund value over the GMF.
- [Bonk: GMF – Guaranteed Maturity Fund]
— James W. Lamson
1988 – SOA – Update on Universal Life Reserves and Non-Forfeiture Values, Society of Actuaries – 36p
- If the maximum COIs were based on the select and ultimate table, policyholders paying guideline premiums based on the ultimate table could overfund the contract.
2002 – SOA – The New 2001 CSO: Implications for Universal Life Plans, by Nancy Winings, pdn0201 – Society of Actuaries – 6p
- 2019 0327 – Leimberg – Subject: Barry Flagg: New York Best Interest Rule for Life Insurance – New Requirements for Life Insurance Producers and Ethical Considerations for Other Estate Planners, by Barry Flagg – 27p
- [Bonk: Overfund-?] – Premium amounts paid into the policy in excess of this Base/Target Premium can, therefore, be viewed as “excess premium” above and beyond that required to cover the costs of maintain the death benefit.
- “Excess premiums” are typically intended to either create a cash value reserve as “pre-payment” of what would otherwise be future premiums and/or to grow the policy account for wealth accumulation, retirement planning, and/or asset protection
- [Bonk: Overfund-?] – Premium amounts paid into the policy in excess of this Base/Target Premium can, therefore, be viewed as “excess premium” above and beyond that required to cover the costs of maintain the death benefit.