August 13, 2013 by Pat Lanigan
We have one question in this month’s Q&A with a detailed answer provided by Sheryl Moore, President and CEO at Moore Market Intelligence and authority on indexed annuity products.
Pat: How much consideration should we put into guarantees on participation rates, loan rates, account value enhancements, ect. when there is still moving parts in other areas?
Sheryl: One must always remember that with an unbundled insurance product, such as universal life, no one product feature determines the competitiveness of a product. Sure, the cost of insurance (COI) rates might be competitive, but the premium loads may be exorbitant. On the other hand, the loan rate may be very aggressive and the per thousand charges may be prohibitive. If there is one rule that all those dealing with UL should remember, it is that “the total is greater than the sum of its parts.” Evaluate these products in whole against one another, or you may be comparing apples to oranges.
Guarantees are backed by the claims-paying ability of the issuing company.