AXA is the latest in the ever growing list of life insurance companies to announce an increase to costs of insurance rates. This increase will affect certain Athena Universal Life II (AUL II) policies starting in January 2016. AXA announced this increase due to mortality and investment income expectations that were less favorable than anticipated when the COI rates were established. AXA has said that the increase will be significant and most pronounced to those above issue age 70 with a face amount of $1 million or more. AXA AUL II policies issued to those under age 70 or with a face amount less than $1 million are not affected by this adjustment. Inforce illustrations requested after September 28th, 2015 will reflect the changes in COIs.
The pricing of all products is a function of costs and interest. Payments of claims are referred to as the Cost of Insurance (COI) and are the largest single cost factor. With life insurance, COI charges can account for 75% - 85% or more of the total premium. Do you have clients who do not know what they are actually being charged for cost of insurance charges (COIs)? Would you know if the costs of your (client's) policies have been increased?
The National Association of Insurance Commissioner (NAIC) reports that 62% of people who own life insurance do not really know what they have or why they bought it. In order to reassure your clients that they made the appropriate choice in life insurance products and/or reveal when there are opportunities for improvement, it is important to inspect what you expect out of our client’s life insurance portfolios.
INSPECT WHAT YOU EXPECT! Use a Veralytic Research Report to measure policy expenses and know if a particular insurer is increasing or decreasing policy expenses. If you(r clients) do not know what they are paying for cost of insurance charges (COIs), fixed administration expenses (FAEs), cash-value-based "wrap fees" (e.g., M&Es) and premium loads in their life insurance policy holdings now, then there will be no way to know if or when such policy expenses are increased.
The appropriateness of a policy should be re-evaluated when the insurer announces product changes. In order to fully assess the impact of recent changes on your clients’ permanent life insurance portfolios, or to establish a baseline by which to judge the impact of future shifts in cost, Veralytic strongly recommends getting an inforce illustration every year.
Veralytic would like to extend an offer of 1 complementary Veralytic Report to the first 10 people to submit a compliant inforce AXA Athena II Universal Life illustration (including detailed expense pages). Simple send your inforce illustration with detailed expense pages to our toll free fax 800-409-3222 or email to email@example.com. If the policy illustration is not available, download a sample Request for Information (RFI) letter to gather the necessary policy information. Remember to submit the illustration that most closely corresponds to client expectations. Offer expires October 31, 2015.