Off-Track / On-Track

  • In essence, the model regulation <Universal Life Model Regulation> assumes that at issue, all universal life policies are permanent plans.
  • The r-ratio is meant to measure the extent to which the policy is "on track" as a permanent plan.

Statutory Valuation of Individual Life and Annuity Contracts | 5th Edition Claire, Lombardi and Summers

Mr. Wicka said the paper <Assurity White Paper> advocates for:

1) additional information to be provided to consumers regarding how the timing of their payments impacts the product; and

2) follow-up information to be provided to consumers at the time their payments go off-track so that consumers are aware of the impact to their policies.

201x, NAIC Proceedings

This was an optional idea that we called "Illustrations As Road Maps.

  • The concept is that instead of letting the actual performance of a Universal Life policy diverge over time further and further from what was originally illustrated, you could send policyholders a notice each year on the anniversary, if the results are below what was illustrated.
  • A letter would state the need to pay an additional amount to get back to what was illustrated, because interest rates are lower.
  • This would have two advantages.
    1. First, it would keep people on track with their illustrations.
    2. Second, it would help people understand the workings of their universal life policy.

-- John Keller

1991Illustrations - Society of Actuaries

  • ... in 2000 that the universal-life policy she bought in 1983 was financially off track.

2018 0919 - Universal Life Insurance, a 1980s Sensation, Has Backfired - Wall Street Journal, Leslie Scism