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 - 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