By Cyril Tuohy
Fidelity & Guaranty Life announced it has added some flexibility to its fixed index universal life product by offering another interest crediting option that guarantees an interest rate of at least 3 percent.
The option was made available to advisors and producers beginning Oct. 31.
With this latest announcement by F&G, Life-Choice policyholders and advisors now have four crediting options from which to choose, each tied to the benchmark Standard & Poor's 500 index. The crediting options are capped.
The first interest-crediting option offers an annual point-to-point crediting schedule, the second offers an identical crediting schedule but increases the participation rate, the third — announced last month — guarantees a 3 percent interest rate, and the fourth offers a monthly point-to-point crediting schedule, the company said.
Policyholders are free to allocate the entirety of the account value to the new index, or they can allocate the value between all four interest crediting options, the company said.
Insurance carriers, seeing life insurance sales hurt by low interest rates, are looking for ways to sell more life insurance. One way to do that is to make their policies more flexible. Adding a fourth interest crediting option for F&G’s indexed universal life product is an attempt to do that.
The latest industry statistics show universal life insurance sales lagging. Annualized premiums for individual universal life insurance sales dropped 8 percent in the second quarter of this year compared to the year-ago period, according to LIMRA’s U.S. Individual Life Insurance Sales Summary Report.
Sales dropped 12 percent in the first half of 2014 compared to the first half of 2013, according to LIMRA data.
Face amounts of individual universal life insurance policies in the second quarter dropped 15 percent compared to the year-ago period, and in the first half of this year they dropped by 17 percent compared to the same period in 2013, LIMRA data show.
The number of universal life insurance policies sold in the second quarter dropped 6 percent compared to the year-ago period, and dropped 8 percent in the first half compared to the first half of 2013, the LIMRA data also show.
In the second quarter, universal life sales were the worst performing category among the four life insurance products tracked by LIMRA: universal life, variable universal life, term life and whole life.
Total annualized premiums for all individual life insurance rose 1 percent in the second quarter compared to the year-ago period, and dropped 4 percent in the first half of the year compared to the first six months of last year, LIMRA reported.
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 protected].
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