Policyholder Options

  • <Mr. Lovendusky - ACLI> said:
    • the ACLI work group thinks that most confusion for consumers involves complex products like universal life, and not Simple products like term life.
    • He said consumers are mostly confused about options, guarantees and riders.
    • The ACLI work group was considering asking the life insurance and Annuities (A) Committee to narrow the charge to look at only products with options, guarantees and riders...
      • but Ms. Cude said she thinks that it is important to consider how the disclosures for all products could be improved.

2016 0403 - LIIIWG Conference Call, NAIC Proceedings

We also became more aware of the exercise of policyholder options.

  • This was not just through surrenders of annuities but also through options that we thought were safe, such as policy-loan provisions in ordinary life policies with fixed interest rates of 5% or 6%.
  • I remember Sylvia Porter, the financial columnist, writing about borrowing against your life insurance at 5% or 6% fixed interest and investing in a money market account at 15% interest.
  • Insurance companies experienced a cash-flow squeeze as money flowed out through the policy-loan feature.
  • There were some company failures at this time; Baldwin United was one of the most prominent.
  • Other companies suffered lesser degrees of financial stress.

--  DENNIS L. CARR

1994 - SOA - ASSET / LIABILITY MANAGEMENT (ALM): AN INTERNATIONAL PERSPECTIVE