By Cyril Tuohy
Prudential has announced new options to a pair of popular universal life (UL) insurance policies as the company looks to make the policies more attractive in an era when low interest rates continue to dampen life insurance sales.
The company said in a press release that its PruLife Founders Plus UL product will benefit from a broader range of interest crediting options.
New to Founders Plus is the Plus 100 feature, which credits interest based on 100 percent participation in the performance of the Standard & Poor's 500 index, the company said.
Mark Hug, executive vice president, product and marketing, Prudential Individual Life Insurance, said that the changes to Founders Plus were implemented “in response to feedback” for more affordability, flexibility and a broader range of account options.
Low interest rates have hurt insurance sales. Tweaking life policies with more crediting options at a time of strong market gains is seen as a way to spur sales.
Annualized year-to-date premium for universal life policies decreased 8 percent in first three quarters of 2014 compared to the year-ago period, LIMRA’s U.S. Individual Life Insurance Sales Summary Report shows.
From the advisor and policyholder point of view, the crediting option offers the potential for a higher return.
The company also announced that it has made its BenefitAccess Rider available on its PruLife Index Advantage UL product. The rider is already available on Founders Plus UL.
The living benefit rider, which requires additional premiums and underwriting, unlocks funds available through the insurance policy’s death benefit.
Policyholders suffering from chronic or terminal illness can use the money to pay for expenses not directly related to the illness: home modifications, income replacement or keeping up with mortgage payments, the company said.
Advantage UL also may provide supplemental retirement income by offering two interest crediting options to allow for more growth potential of the cash value while offering protection from market downturns, the company added.
In a separate interview last week with InsuranceNewsNet on trends in the index universal life (IUL) category, Sean Grady, a financial professional with Prudential in Portland, Maine, said that crediting options and protection from downturns appeals to many people who saw their investments take a hit during the financial crisis.
“IULs give policyholders clarity,” he said. “You know where you stand. You have a cap and a floor. You know what your range is.”
Life insurance investors see living benefit riders as an attractive option “especially when I see people being declined for long-term care coverage — to get a benefit like that,” he said.
Grady said that while Prudential hasn’t offered IUL for long, the product has sold well. “I would expect it to grow,” he said.
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