Premiums, Costs and Benefits

  • In the case of true Universal Life...the product is modular and adjusts instantaneously to changes in benefits, premiums, and experience.

--   George R. Dinney:

1982 - SOA - Programs to Conserve Traditional Life Insurance Policies, Society of Actuaries - 18p

New Products and Special Markets

A. Modern computers make it feasible to consider marketing a flexible policy under which the premiums and benefits could be changed to meet the changing needs of the policyholder.

 --  Ardian C. Gill

  • Computers may make it feasible to produce a highly flexible policy with benefits and premiums that vary with the policyholder's whim.
  • Whether it is desirable to do so is another question.
  • The truth probably is that the general public neither needs nor wants a great deal of flexibility.
  • Any attempts on our part to anticipate his changing needs and to build into our policies the necessary flexibility may well be futile for the run-of-the-mill policyholder.

1967 - SOA - Individual Life and Health Insurance, Society of Actuaries - 62p

  • 1988-2, NAIC Proceedings
  • (p434) - Project No. 4a "Universal Life - Review Regulators Problems with Model Adopted, Review Product of NAIC (A) Task Force on Universal Life"
    • ATTACHMENT TWO-B - Draft 4/11/88 - RE: Proposed Regulations Concerning the Valuation of Universal Life Insurance Plans - A proposal for a revision of the valuation section of the NAIC Model Universal Life Regulation is embodied in the draft of a regulation currently being considered by the California Department of lnsurance
      • The Standard Valuation Law assumes that future premiums and future benefits are fixed, and then establishes the reserves as the present value of future benefits less the present value of future premiums, in other words the premium shortfall.
        • Since future premiums and benefits for universal life plans are unknown the formula breaks down and requires restatement.
        • The purpose of the regulation is to establish such a restated procedure for universal life plans.

2018 0319 - NAIC - (LIBGWG) Life Insurance Buyer's Guide Working Group - Conference Call NAIC Proceedings

  • The Working Group discussed some language that was hard to understand referring to premiums and benefits. 
  • The Working Group agreed to include "premiums or values vary from year."
  • The Working Group agreed that language comparing different types of policies should be included in the next draft.

1988 Proc. II - Universal Life Model Regulation - Citations (ULMR) (MDL-585)

Section 8. Disclosure Requirements

Commissioner Hager of the Universal & Other Plans (A) Task Force stated that there appeared to be disclosure problems with universal life plans and that the identification of these items should be placed on the Actuarial Task Force agenda.

  • The main concern was that an unsophisticated buyer purchased a policy and did not know what the coverages, benefits and limitations were. 

Some of the items identified which should be disclosed:

  • (2) adequate disclosure of the fact that a premium quoted will not support the contract for the whole life if the policy is a Universal Life policy; 
  • Chairman Reed: That is, in your notion, too, about simplifying, et cetera, the Consumer Financial Protection Bureau, and Professor Schwarcz mentioned this, has now modeled mortgage sort of language.
    • I presume that you are working toward, your comments, sort of model language for disclosures, for transparency. Is that——
  • .....
  • Ms. Terri VAUGHAN (NAIC CEO / IA) - And that is—this working group is discussing how to do that.
    • I have to say, my suspicion is it is going to be a little harder in insurance given the variety of the products.
      • It is a little more complex than it is in the mortgage area.
  • Chairman REED. Right.
    • But I think for that reason also it might be even more necessary so that your efforts are appreciated and should be expedited.  (p19-20)

2011 0914 - GOV (Senate) - Emerging Issues in Insurance Regulation - Senator Reed (D-RI) - [PDF-51pVIDEO-Senate] 

Committee on Banking, Housing, and Urban Affairs - Subcommittee on Securities Insurance, and Investment Regulation 

  • ACLI
    • 1982-1, NAIC Proceedings - 1981 0831 - ACLI - Statement of the American Council of Life Insurance Before the NASAA NAIC Joint Regulatory Insurance - 10p
      • They <Universal Life Policy> merely afford purchasers greater flexibility in designing their contracts so as to meet their individual needs.
    • 1982-1, NAIC Proceedings - Statement on Behalf of The American Council of Life Insurance to the NAIC (A) Committee's Task Force on Life Insurance Cost Disclosure, December 15, 1981 - (p399)
      • The council has now developed a recommendation for universal life insurance, which we would like to present for your consideration.
      • The essence of the proposal is that universal life insurance be treated for cost disclosure purposes as a life insurance plan with a nonguaranteed cost element.
        • Thus, the policy summary would show for the prescribed policy years the anticipated premiums and, both on the guaranteed and currently illustrated bases, the death benefits, cash surrender values, and endowment amounts, if any.
        • An additional item of information that is recommended to be required in the policy summary is the point at which the policy will expire based on the policy guarantees and the anticipated premiums shown in the summary.
    • 2013 0423 - Legal Case - Johnston and Johnston v Conseco, 13-30010_Documents ACLI Amicus Brief - 48p
    • 2015 0930 - ACLI to NAIC Letter -
      • Life insurance policy illustrations contain important and useful information to consumers so they can make informed decisions about the policy they are considering.
      • The NAIC Life Insurance Illustrations Model Regulation was designed to make sure illustrations represent an accurate depiction of the policy and its benefits, foster consumer education and make illustrations more understandable. 
    • 2019 1109 - ACLI - Michael Lovendusky - Life Insurance Illustrations Working Group (NAIC)
      • ...completely Dynamic services and policy opportunities for their customers to purchase and to elect a variety of options.

􀁸 How much do the benefits build up in the policy?

􀁸 How will the timing of money paid and received affect interest?

2018 - LIBGWG - Cude Letter / Markup Life Insurance Buyer's Guide - Revised 2-9-18 for discussion on conference call 2-22-18

  • The personalized information in the Policy Overview is the premium for the policy – based on information known to the producer or insurer at the time and subject to change based on additional or revised information – and that information can be provided prior to purchase.
  • If an insurer can produce an illustration for a complex, investment type life insurance product prior to the consumer purchase, it is clearly possible for an insurer to provide the premium for a policy prior to purchase.

2019 0830 - NAIC - Life Insurance Illustrations Issues Working Group - Birny Birnbaum, CEJ Letter - 12p