A client with a traditional
ULSG product may have zero value at age 90, while for less than 10% more in annual premium, a VUL may have hundreds of thousands of cash value.
For ULSG products, a significant gap exists between heretofore perceived economic reserves and theAG48 results, with theAG48 results being much closer to the statutory ULSG reserves.
Other insurers have gone as far as pulling their ULSG products from the market without replacement at this time.
In response, Genworth has introduced a ULSG and a term UL, both of which are structured to be affordable in this market.
Or, in estate plan and pension maximization cases, I might use a ULSG, being sure to lower the death benefit to make it affordable for the client.
Ten participants reported movement away from
ULSG products, with four of the 10 discontinuing sales of
ULSG.
Some life insurers have already pulled or repriced their return-of-premium (ROP) and
ULSG products, observes Buckingham.
This makes it very challenging to develop competitive premiums, as compared to recent
ULSG levels.
Specifically, the UL market took 46% of sales while
ULSG took 43%, with the remaining sales coming from accumulation UL designs.
This marks a milestone as the first securitization to finance the redundancy in statutory reserves underlying
ULSG products, where such reserves are calculated under Actuarial Guideline 38, otherwise known as "AXXX.
Genworth, one of the companies issuing the policies, has previously told regulators that rules-based reserve approaches like the AG 38 guidance do not work well for products like
ULSGs.
