Investment Risk

In the ACLI's view, there is no investment risk to the consumer since the product typically carries a guarantee which includes principal plus four percent..."

-- Mr. <Gary> Hughes <ACLI> briefly discussed "universal life" type products.

1982-1 NAIC Proceedings

  • One corporate reason is that several big life insurance companies got a nasty shock in the late 1970s and early 1980s when they found their bond portfolio down by about 30-40 percent and a negative cash flow.
  • They're unhappy with their investment risk and happy to pass it on to the policyholder.

  -- Michael R. Tuohy

1985 - VARIABLE UNIVERSAL LIFE INSURANCE, Society of Actuaries - 22p

  • In addition to transferring investment risk to policyholders, universal life insurance also requires the policyholder to assume the risk of shifts in mortality rates.


1986 - Academic Paper, A comparison of universal / variable life insurance with similar unbundled investment strategies

  • Stephen P. D'Arcy - College of Commerce and Business Administration, University of Illinois at Urbana-Champaign
  • Another area of concern relating to solvency is investments by insurers.
  • Recently, some states have expressed concern over investment by life insurance companies in high yield /high risk obligations, referred to as "junk bonds."

-- STATEMENT OF NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS - John Washburn , Director of Insurance for the State of Illinois and Vice President of the NAIC

1987 - GOV - Developments In State Insurance Regulation - 511p