By Cyril Tuohy
Lincoln Financial Group announced it has tweaked to its advisor-sold LifeReserve Accumulator indexed universal life policy to allow for more diversification, better crediting methodologies and lower volatility as a way to boost the policy’s income and growth potential.
The changes include two new indexed accounts, the company said.
In one account a higher percentage of index growth determines the interest credited and is subject to a cap, providing higher return potential when the index returns are lower.
The other account uses a lower percentage of index growth but removes the cap to provide a higher return potential when the index is at its highest.
One of the drawbacks to index accounts is that investors can’t benefit from the market’s maximum gains because of caps.
Mike Burns, senior vice president of insurance solutions for Lincoln Financial Group, said the changes to the LifeReserve Accumulator help diversify a portfolio to “preserve and grow assets.”
“Protecting wealth, while planning for retirement and navigating the often-changing tax landscape, requires advisors and clients to implement financial strategies that balance current and future needs,” Burns said in a news release.
Linking returns to the investment portion of life insurance policies has become more popular over the past two years as the stock market has performed well, and as interest rates remain low. This makes it hard to generate extra yield.
LifeReserve Accumulator indexed accounts use a one-year point-to-point crediting method tied to the Standard & Poor's 500 index, and a dollar-cost averaging account automatically allocates premiums to reduce the impact of the index’s fluctuations, the company said.
The 2014 iteration of the Lincoln LifeReserve indexed universal life maintains the living benefits rider of the previous version, the company said. The rider pays out a portion of the death benefit in the event of terminal illness or for permanent nursing home care.
Lincoln Financial hopes the changes will help it sell more individual universal life policies.
Universal life sales had a difficult year in 2013. Annualized premiums fell 7 percent last year compared to 2012, and face amounts in 2013 fell by 19 percent over 2012, according to LIMRA.
The number of individual universal life policies sold also dropped, by as much as 16 percent last year compared with 2012, LIMRA also said.
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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