Two More Insurers Jump Into Expanding IUL Pool

By Cyril Tuohy InsuranceNewsNet

The addition of new indexed universal life products from two carriers is helping fuel a strong IUL market after an 18-month pause in sales as companies revamped their lineups.

IUL sales, measured by premium revenue, rose to a record $1.86 billion in 2016, according to Wink’s Sales & Market report which tracks the industry. But that increase was only a sliver above 2015 totals.

Boston-based John Hancock earlier this month announced the launch of a new Accumulation IUL product series that features a simple design linked to several indexed account options, including the Hong Kong market index Hang Seng.

For the first time, Hancock policyholders have access to international markets, John Hancock said in a March 14 news release.

Securian Financial, a competitor based in St. Paul, Minn., announced its new Orion IUL product on March 3.

One major point of differentiation for Orion? A short-term loan option, said by a company executive to be an industry first.

“People want access to their money for a short-term need and have access to it interest free beyond the death benefit,” said Andrea Mack, second vice president, Individual Product Solutions Group with Securian Financial Group.

The loan is interest free so long as the principal is paid back within 90 days, the company said.

Another first – at least for Mutual of Omaha – was the introduction last year of Income Advantage IUL, the company’s first foray into the IUL market.

Income Advantage IUL’s value proposition?

A guaranteed refund option rider allowing customers to surrender the policy in exchange for 50 percent of premiums paid at the 15th policy anniversary, or to surrender a policy in exchange for 100 percent of premiums at the 20th through 25th policy anniversary, the company said.

“We are excited about entering the IUL market,” said Joe Kenny, Mutual of Omaha vice president and actuary, in a news release.

IUL Activity No Accident

From market firsts, to innovative features to faster, less invasive underwriting protocols, the activity surrounding the IUL market is no accident.

New actuarial guidelines known as AG 49, which took effect Sept. 1, 2015, meant that insurers have spent the past 18 months recasting their IUL product lineups.

The rule added more consistency in how insurance companies illustrated IUL product performance over time.

While the IUL market finished 2016 with record sales, sales last year finished barely ahead of 2015, indicating a pause, industry analysts said.

But 2017 is expected to be a different story with sales on the up once more, said Sheryl J. Moore, president and CEO of Moore Market Intelligence and Wink Inc., publisher of Wink’s Sales & Market Report.

Investors like index-linked products because the potential interest to be earned is higher than what investors could receive from the safety of a comparable bank product weighed down by low interest rates.

Indexed annuity sales, the annuity-side cousins of indexed life on the life insurance side, are expected to finish 2016 with record sales, according to Wink’s.

LIMRA Secure Retirement Institute earlier this year reported record indexed annuity sales of $61 billion, an increase of 12 percent over 2015.

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

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].