Debatable

Illustrations – Problems We’ve all heard a lot about the junk bond crisis. Is the next crisis going to be junk illustrations? — Judy Faucett 1991 – SOA – Illustrations, Society of Actuaries – 20p The number one perceived problem is that buyers simply do not understand the nonguaranteed nature of life insurance illustrations. Also, it is…

P1P2 P1P2 – Grid P1P2 – Actuarial P1P2 – Legal Case – Maloof v John Hancock P1P2 – NAIC P1P2 – NAIC – Life Insurance Buyer’s Guide Start – Policy Cash Flow Mechanics P1->P2->SIV P1->SIV->P2 Roger Strauss (Iowa) said a fundamental issue was that the consumer realize that the premium is being paid from someplace. …

Starters – Why is Universal Life Insurance sometimes called Whole or Permanent? Universal Life Insurance Model Regulation Universal Life as Adjustable Life (Walter Chapin’s Version) Company Taxation – 818(c) That is definitely an important consideration. Many companies are selling these plans <Universal Life> side by side with permanent insurance plans. — MR. SIBIGTROTH 1979 – FUTURE TRENDS…

Optional Federal Charter 2007 1214 – CRS – Insurance Regulation: Optional Federal Charter Legislation – 16p 2004 – AP – Consumer Ramifications of an Optional Federal Charter for Life Insurers, Sheila Bair – 273p Chart – p262 2008 – SOA – Optional Federal Charter (OFC)—Another Acronym, Another Concern, By Norman E. HIll – 5p “OFC proposal”…

Fairness Now we want to make sure that the consumers are treated fairly and reasonably and have sufficient information upon which to make a decision. (p318) — James P. Corcoran. , Superintendent of Insurance, State of New York 1984 – {April 11, May 3, 10, June 28, September 13} – GOV – Competition in the…

Universal Life Insurance does not “Fit” into the existing regulatory framework This regulation is designed to address those areas where universal life insurance does not “fit” into the existing regulatory framework. (p1) NAIC – Universal Life Insurance Model Regulation – MDL-585 – 22p New York reports that they have determined that Section 216 and 208,…

People Can Disagree There is bound to be a controversial element in anything that enlightens the public to these differences and gives them a more intelligent basis for choice than they have at the present time. — Ernest J. Moorhead 1977 – DEBATE, “RESOLVED. THE LIFE INSURANCE BUSINESS, AS TRANSACTED TODAY, IS IN ITS TERMINAL STAGES, Society…

Coverage Period Coverage Period – Examples As long as you pay the premium g. Clarifying “Coverage Period Description” The Working Group discussed what information is intended to be included. Mr. Yanacheak said this is intended to capture how long a policy’s term is—a term of years or for life. Mr. Birnbaum said it is intended…

Q: Universal Life – Who wanted this? In more modern times, insurance products became considerably more complex (e.g., universal life type products with various forms of guarantees, various forms of renewable term, etc.). These products arose from a significant rise in interest rates in the early 1980’s and a wave of consumer demand for products…

Universal Life – Commissions Mr. Douds – I know that one of the problems with the new products when they were first introduced was that agents didn’t feel that they paid high enough commissions, and since that time, companies interested in marketing those products have tried to adjust their compensation plans accordingly to make their…

Illustrations – Problems

P1P2

Q: Why is Universal Life Insurance sometimes called Whole or Permanent?

Optional Federal Charter

Fairness

Universal Life Insurance does not “Fit” into the existing regulatory framework.

People Can Disagree

Coverage Period

Q: Universal Life – Who wanted this?

Universal Life – Commissions