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Back to School - Lessons for the Year

Thursday, August 15, 2013

School is starting again, have you learned your lessons yet?  Let us reflect back to what happened over the last school year. There was a curriculum change with Acturial Guideline 38, UPIA & TOLI got served up as food for thought by FSP, we took a field trip to West Point for Best Practice Standards for Life Insurance Stewards, and learned a lot from our substitute teacher, Barry Flagg.  See below as we expand on our knowledge gained over the last year:

Curriculum Change: Who needs Common Core Standards when you have AG38? Actuarial Guideline 38 (AG38) is an actuarial regulation that sets reserve requirements for all universal life products that utilize secondary guarantees, typically referred to as no-lapse guarantee (NLG) products. While this regulation is focused on the pricing of guaranteed products, they are likely to impact the pricing of BOTH guaranteed AND NON-guaranteed products.  Due to the guaranteed nature of NLG products, carriers cannot increase rates on any affected in-force block of business. However, to comply with the revised reserving requirements on inforce business, and still meet profit objectives, some carriers will need to increase the rates on their current NLG products or discontinue those NLG products and/or create new products that will generally consist of increased pricing or modify other products lines to compensate for the increased costs with NLG.

Lunchtime Food for Thought: Peas & carrots go together like UPIA & TOLI. This Society of Financial Service Professionals’ panel of experts brings a level of knowledge along with their reputations for having a robust conversation of the duties assumed by trustees of Trust Owned Life Insurance that you should not miss. If you did miss it, make sure you are at the 48th Heckerling meeting in January 2014 to catch this session again.

Field Trip!! Always exciting to take a trip and learn something new. Earlier this year the Best Practices Standard for Life Insurance Stewards were finalized for public comment by seventeen industry leaders at West Point this past April.  In attendance were representatives of nearly every profession who has clients who own life insurance, including: the largest trust and estates law firm; largest third-party administrator of TOLI for institutional fiduciaries; the largest association of financial planners; one of the leading financial planning schools; and, most of the largest independent distributors of life insurance. If you missed it this spring, there will be another session this fall November 5-7, 2013 at West Point, NY.

Substitute Teacher:  The founder and inventor of Veralytic can often be found speaking to large groups or giving private briefings across the country on New Standards for Managing Life Insurance as an Asset.  Life insurance is a valuable tool for families that is too often comprised of a patchwork of policies purchased from an assortment of agents. It is often the last, largest and most-neglected asset on their balance sheets and in their estates where few clients know what they are actually being charged and costs inside their life insurance policies vary by as much as 80%. Barry addresses the role of the Life Insurance Steward, a new industry role that is dedicated to the coherent, holistic evaluation and management of life insurance assets. Click Here if you want to schedule a private briefing or need an expert speaker for your organization. You can even earn class credit (CFP CE Credit)!

All these lessons show that in this changing environment you should keep current with your school work above and it can help give you a jump on your classmates. 

Veralytic is simply the fastest, easiest, and most comprehensive and cost-effective way to independently verify to clients and their advisors whether or not the pricing and performance of existing or proposed life insurance is in their best interest. Only Veralytic is accepted for independent client representation, endorsed by the New York Bankers Association (NYBA) and compliant with industry regulations and established case law.

Use the Veralytic Reports to determine the appropriateness of pricing, the reasonableness of performance expectations for invested assets underlying policy cash values, and overall suitability for your (client’s) policies based on the 5 factors of suitability. Click here and get up to 3 Veralytic research reports under our NO-Risk trial subscription.

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