6 December 2012 0 Comments

Insurers Add Reserve Power

IF YOU DIDN’T SEE THIS WHEN I RAN IT ON NOV. 9, 2012, THEN LOOK AT IT NOW.  YOU MAY STILL HAVE TIME TO LOCK IN LOW, LIFETIME GUARANTEES THAT WILL SOON BE GONE.  CONTACT ALAN AUGST AT  800-229-2140 FOR DETAILS.

Actuarial Guideline 38 (AG38) has been finalized by the National Association of Insurance Commissioners and will be in full effect on Jan 1, 2013.  This guideline defines how insurance companies must reserve for the long term guaranteed death benefits that have become so popular in Universal Life Policies.

The net result to consumers is that the premiums for these guarantees will increase by as much as 20%.   Don’t panic about policies you currently own with these guarantees—they will be honored.  But, as for new applications, some insurance companies have already pulled their policies with these long term guarantees from the market.  There could be a few companies who do not increase premiums for this type of policy, but these will be the ones that were not competitively priced in the first place.  Others may continue for a short time without changes, but the resulting drain on surplus will ultimately come home to roost and premiums will go up.  I am told that increases for most carriers will range from 11% to 20%.

Many insurance companies that are still accepting applications for their current long death benefit guaranteed UL policies will insist that the policy be fully underwritten approved, issued and paid for prior to Jan 1, 2013.  Those with more lenient practices might accept applications for their current contracts through Dec, 31, 2012 as long as policies are dated no later than Dec. 31, 2012.

The point to take home:  if you need a permanent life insurance policy with the lowest premiums for lifetime guarantees, you must act now!!

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