Life Insurance and Mutual Funds

  • One company that I know of has now become very successful in selling a package of mutual funds and permanent life insurance.
    • It is a life paidup-at-65 contract. 

—  C. David Silletto

1967 – SOA – New-Company Problems, Society of Actuaries – 38p

  • 1976 – LR – Marketing Mutual Funds and Individual Life Insurance, by John P. Freeman – 125p
  • My remarks are not directed to new-company problems very specifically, but there is one remark that John Fry, the speaker from the Continental, made that led me to make this remark.
    • He said that there was some attractiveness currently for mutual funds to ally with life insurance companies, especially in view of the fact that the front-end load has been attacked through the SEC investigation on mutual funds marketing.
    • It seems to me that, if the mutual funds were to become no-load funds and were sold in conjunction with life insurance, the commission under life insurance might have to rise above its current level since more is sold than just life insurance.

—  Claude Y. Pauquin

1967 – SOA – New-Company Problems, Society of Actuaries – 38p

  • I am going to talk about Question B, regarding the sale of life insurance in combination with mutual funds.
  • This discussion is from the standpoint of an organization consisting of a management company–Insurance and Securities Incorporated that manages a large, established mutual fund–Insurance Securities Trust Fund–that in turn is invested almost entirely in the stocks of life insurance companies and fire and casualty insurance companies. This is one of the few organizations having its own full-time sales force and selling its own fund directly to the public.
  • Life Insurance Company of California was formed in 1963 as a wholly owned subsidiary of the management company and has achieved considerable success through the dual licensing of nearly all the men in the existing fund sales force to sell both funds and life insurance.
    • Our experience has been that a moderate proportion, perhaps 20 per cent, of these investment-oriented men will sell life insurance in significant quantities, another 20 per cent will have nothing whatsoever to do with it, and the remainder will sell life insurance only intermittently.
    • Nevertheless, this sales force has shown great stability, with very low turnover rates, and the result has been life insurance sales each year on the order of $100,000,000.
  • As might be expected, the bulk of the business has been term insurance, particularly decreasing term.
    • However, this was mitigated somewhat by our sales strategy, which was to feature a combination plan consisting of whole life and decreasing-term insurance to age 65.
    • Without this product our proportion of term insurance would have been much higher than the 70 per cent actually experienced.

—  Alan Richards, Life Insurance Company of California

1967 – SOA – New-Company Problems, Society of Actuaries – 38p