Lincoln Financial Introduces IUL Product With A Twist

Lincoln Financial Group has announced the introduction of an index universal life insurance (IUL) product with a new twist - the death benefit is equal to the policy face amount plus premiums paid.

The IUL, branded as Lincoln WealthAdvantage and sold by advisors, is available immediately in states where the product has received approval.

Three death benefit options are available with Lincoln WealthAdvantage. One of those options, where the death benefit is equal to the policy face amount plus premiums paid, previously was unavailable on Lincoln IUL products, the company said.

Michael Parker, vice president of life product management with Lincoln Financial Group, said in a news release that the latest addition to the company’s family of IUL products offers a “cost-efficient death benefit with cash value flexibility.”

The death benefit is the primary reason for the purchase of life insurance. But insurance companies need to make the investment portion of universal life policies attractive as well, as baby boomers retire and look for secure investments in which to store some of their assets.

Cash accumulates in WealthAdvantage through three one-year point-to-point index account options tied to the Standard & Poor's 500 index, the company said.

Another feature of the IUL waives the surrender charges to allow business owners to reposition their company assets to buy life insurance, “while maintaining the majority of the premiums paid as a surrenderable liquid asset,” Lincoln said.

Lincoln also said the “surrender value enhancement endorsement” is targeted at executive bonus plans, key person insurance and business continuation planning.

Index life products seek to balance the protections offered by the death benefit and the accumulation offered by the cash value. As boomers move further into retirement, life insurance carriers need to adapt their products to offer protection from market downswings.

Battling for clients and capital against banks and mutual funds, and struggling with low interest rates to boot, insurance carriers are doing all they can to spruce up their products by piling on features and riders.

Insurance companies recently have had success selling IULs.

Index life sales for the fourth quarter 2014 were $498 million, an increase of 24 percent compared to the year-ago period, according to Wink’s Sales & Market Report. Fourth quarter index life sales were up nearly 34 percent compared with the previous quarter, Wink also reported.

Separately, LIMRA’s Individual Life Insurance Sales Summary Report shows that IUL premium market share has grown to 52 percent of universal life premium, an increase from only 15 percent of universal life sales in 2009.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].