1994 - Series of 3 Article on Life Insurance Sales, Illustrations, etc - Your Own Account, Feb. 27, March 6 and March 13
1994 0403 - Response from Ray Brown - partner in the Browne Company, an insurance firm in Philadelphia and Washington, and a former president of the Greater Washington chapter of the American Society of Chartered Life Underwriters and Chartered Financial Consultants.
1994 0227 - NYT - Your Own Account; What's Wrong With This Picture?, By Mary Rowland - [link-paywall-free]
Glenn Daily, James Hunt, Lapse-Supported, Guarantees Only, NAIC, Illustrations
1994 0306 - NYT - Your Own Account; Putting Life Insurance Into Focus, By Mary Rowland - [link-paywall-free]
Don Watson, an insurance analyst for the Standard & Poor's Corporation, decided a few months ago to buy an insurance policy as an investment for his young son's college education.
"They used a very reasonable assumption about the cost of education, figuring it would increase by about 5 percent a year," Mr. Watson said. "But in the same environment, they assumed that they would get 12 percent for their return on investment."
Mr. Watson protested, saying an insurance company portfolio, which is invested in bonds, some real estate and a smattering of stock, would have trouble achieving a 12 percent return. But the insurers argued "a double-digit return is very possible."
Mr. Watson ended talks with the insurers right there.
Most insurance experts acknowledge that the actuaries who put together policy illustrations are taking some liberties.
"One thing I've learned over the past couple of years is that one actuary's truth is another's pack of lies," said Judy A. Faucett, a principal at Coopers & Lybrand and head of the task force on policy illustrations for the American Academy of Actuaries.
Companies that use reasonable assumptions are penalized now because they look bad compared with aggressive companies.
... Pat Kelleher, an actuary and assistant vice president at Manulife. "We believe that if customers have a realistic set of expectations right up front, they'll be more satisfied," he said.
The Guardian, in New York, called the idea attractive but rejected Mr. Katt and Beacon as unknowns.
Robert Lehmert, second vice president for life marketing, said, "If it were Moody's or Coopers or Price Waterhouse, it would be a different matter."
1994 0313 - NYT - Your Own Account; Replacing a Policy May Be a Bad Idea, By Mary Rowland - [link-paywall-free]
1994 0403 - NYT - In Defense of Policy Illustrations - To the Editor, From Ray Browne - [link-paywall-free]
re: Mary Rowland Series of 3 Articles - Your Own Account, Feb. 27, March 6 and March 13
...partner in the Browne Company, an insurance firm in Philadelphia and Washington, and a former president of the Greater Washington chapter of the American Society of Chartered Life Underwriters and Chartered Financial Consultants.
In her series taking the life insurance industry and its agents to task for confusing and misleading policy illustrations (Your Own Account, Feb. 27, March 6 and March 13), Mary Rowland never told her readers that the universal life insurance policies she disparages were not developed out of a desire for profit on the part of life insurers.
These contracts were started in the late 1970's because of pressure from the Federal Trade Commission.
The commission complained that whole life policies provided consumers with too low a rate of return on policy reserves.
When the industry introduced universal life, it attempted to make clear to buyers that this new series of policies shifted the investment risk in the contract from the company to the policyholder.
Prospective purchasers tend to view life insurance policy illustrations as promises.
⇒ If subsequent performance is less than anticipated the policyholder may feel ill served.