Two pieces of news provide a flicker of hope amid the doom and gloom.
By Cyril Tuohy
First Investors Life has introduced a new variable universal life (VUL) insurance policy with a flexible premium.
The policy also offers a death benefit and accumulates cash value against which policyholders can borrow to pay for expenses.
The ability to adjust premiums appeals most to policyholders with a long-term horizon as those VUL policyholders are most likely to have more pressing financial needs that come up during the time the policy is in force.
"What's so attractive about this product is that individuals have greater control," Carol Springsteen, First Investors Life president, said in a statement.
Flexible premiums give policyholders’ household budgets some breathing room. Instead of paying $150 a month to secure insurance coverage, policyholders can opt to pay less while retaining the policy’s death benefits.
In addition to flexible premiums, the new product, like many VUL policies, offers tax-deferred cash value accumulation and the ability for policyholders to invest part of the premium in stock, bond or money market portfolios, Springsteen said.
First Investors already offers two families of variable life policies: ISP Choice and single premium variable life.
The ISP Choice family, a series of level premium variable life insurance products, offers protection through different premium payment periods.
ISP Choice – 20 gives policyholders the opportunity to continue their life insurance coverage and pay no further premium after 20 years, according to the First Investors website.
ISP Choice – 65 allows policyholders to coordinate their premium payment period so as to pay no more premiums by their 65th birthday, according to the company.
ISP Choice – Whole Life offers the most life insurance coverage possible, the company also said.
VUL is a life insurance product that offers death benefits, but includes an investment feature. In a VUL, the policy's death benefit and cash value are linked to the performance of the underlying funds, and can therefore increase or decrease in value, which affects the benefit amount.
VUL sales are a bright spot in an otherwise flat life insurance market.
VUL sales of annualized premiums shot up 24 percent in 2013 compared to 2012, and face amounts increased 17 percent last year compared to 2012.
Total VUL policies sold also increased. They were up 12 percent in 2013 compared to 2012, according to LILMRA statistics.
Total annualized premiums for the four major life insurance lines – universal life, VUL, term life and whole life – were flat in 2013 compared to 2012.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at email@example.com.
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