Promises

Policy illustrations continue to be the dominant tool used within
the life insurance industry to compare the relative cost of death
benefit protection between various companies and products.

  • This is somewhat unfortunate, given that the only promise a life insurance company makes when it sells a product are the contractual guarantees.

Policy illustrations are not promises; rather they are hypothetical
illustrations of what might happen if certain, often undisclosed
assumptions come true.  (p8)

--  MEL G. TODD, PRESIDENT, CLARK/ BARDES, INC., DALLAS, TX - fellow of the Society of Actuaries and a member of the American
Academy of Actuaries and belong to the National Association
of Life Underwriters

1993 -  GOV - When Will Policyholders Be Given The Truth About Life Insurance? 

The promise has changed:

  • from "I will guarantee that the premium you see will provide the benefits you see, and maybe share future good times with you"
  • to a promise of "I will share the good experience I expect with you now, but if it doesn't happen you will have to pay me more than you may have expected to."

    -- BRUCE E. BOOKER

1988 - UPDATE ON UNIVERSAL LIFE RESERVES AND NON-FORFEITURE VALUES - 36p, Society of Actuaries

On perhaps the bad side, the potential buyer is now being subjected to sales illustrations from companies that look identical to him. Some of these have 7% current scale interest rates, some have 13%, some are front loaded, some are back loaded. He sees all kinds of different promises. How can he assess the credibility of these proposals? What promises are actually being made? How much risk is he taking and how much is he transferring to the insurer? Does he know what things can change and what things can't? How much should we tell him? How much does he want to know, for that matter? (p1558-9)

1988 - UPDATE ON UNIVERSAL LIFE RESERVES AND NON-FORFEITURE VALUES - 36p, Society of Actuaries