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Insurance Company Decreases Costs of Insurance

Friday, August 14, 2015

On June 15, 2015 Prudential announce “significant enhancements” to the PruLife Founders Plus UL product. These enhancements include improved costs for the no-lapse guarantee rider. Prudential claims that the improvement in costs of the no-lapse rider will improve the length of the rider generally ranging from 2-10 years.

The pricing of all products is a function of costs and interest. Payments of claims are referred to as the Cost of Insurance or 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 or decreased?

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 it1. 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 changed.

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, request a Veralytic Research Report now.  Just fax the detailed expense report along with the policy illustration toll free to 800-409-3222 or email to to request a Veralytic Report for your client's policy.  If the policy illustration is not available, download a sample Request for Information (RFI) letter to gather the necessary policy information. 

1.  Insurance News Net Magazine Oct. 2009 – “Tap into the 62%” Robert Threlkeld

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