AuguStar rounds out product lineup with new IUL

AuguStar Life continues to round out its product lineup with a new indexed universal life offering.

AuguStar launched Virtus Protection Indexed Universal Life Insurance earlier this month. The insurer is marketing the product as "protection-forward coverage with accumulation potential."

AuguStar Life and AuguStar Retirement are Constellation Insurance companies. Constellation rebranded the former Ohio National insurance company one year ago, promising an "innovative" product-focused approach.

Virtus Protection has index-linked interest crediting which operates with caps and floors, which allows the policyholder to potentially earn interest when the index increases, yet prevents the account from decreasing due to an index decline.

AuguStar hailed the following features in a news release:

• Low-cost death benefit protection. Virtus Protection provides "strong death benefits at lower costs than accumulation-focused IUL products," the insurer said. The product’s death benefit is paid to beneficiaries on an income tax-free basis.
• Extended no-lapse guarantee. This rider ensures that, depending on the client’s age at issue, the policy will not lapse for 55 years or until age 90, even if the cash surrender value is $0.
• Cash value growth options and protections. The policyholder can allocate any cash value in the policy among three index accounts and one fixed interest account, each earning interest in a different way. Each index account has a 0% “floor,” meaning negative index performance alone won’t reduce the death benefit or cash value. A 2% account value true-up is also built into the product to help make up for lost growth in the unlikely event the index account shows zero growth every year, AuguStar pointed out.

Additionally, a Virtus Protection IUL can help business owners fund a buy-sell agreement, provide capital for the business upon an owner’s death, equitably distribute a business owner’s estate or meet other needs, the release said.

“We’re particularly excited about this product’s ability to protect your policy as you age, thanks to robust protection and accumulation potential,” said Karl Kreunen, AuguStar Life vice president and chief distribution officer.

Kreunen answered some additional questions about the product in an interview with InsuranceNewsNet:

INN: What is unique about this product?

Kreunen: “Virtus Protection IUL represents AuguStar’s ongoing commitment to providing competitive products to financial professionals, helping them bolster their practices and meet a wide variety of client needs. For legacy-focused clients, this product lets financial professionals offer low-cost protection with a bundled rider that helps ensure that protection will be there for the long term, all with the flexibility that’s a hallmark of indexed universal life insurance products.”

INN: What does this product do for AuguStar?

Kreunen: "It rounds it out. If you look at the IUL space, the great majority of product is sold in the accumulation space. But there is a significant minority, anywhere from 15% to 20% in any given year, that's sold in the protection space. So, not having that type of product eliminates those sales from coming to us in the first place as a possibility."

INN: Is the product available in all 50 states?

Kreunen: "We don't do business in New York. We do business in 49 states, Puerto Rico and Guam."

INN: Who is this product aimed at from a consumer standpoint?

Kreunen: "I like to think about people who are mindful of what death benefit can do for them in the later years of their life. There are lots of reasons why you might want to have a death benefit, a substantial amount of death benefit for your purposes as far as estate planning is concerned. Oftentimes, you'll see a death benefit used to equalize an estate for a variety of different reasons. As an example, you might have a business owner and they have multiple children, but only one of them is really involved in the business. So, when they die or when they decide to pass on the business it's clearly going to go to that child. But that's a big part of their estate and so how do I equalize my estate? Well, one way to do that is through a life insurance policy. So, this might be a good fit for that."

INN: How will you distribute this product?

Kreunen: "We have two primary distribution arms for life insurance. We are relatively new in the [independent marketing organization] space and getting some traction in there, and we'll be distributing through that particular channel. Then we have our existing traditional agent channel, which is made up of what I would call a traditional general agency with agents working for them as well as individual producers and a [personal producing general agency] model."

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.