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June 1 column by Bob Veres in Financial Planning (link below) talks about a new policy illustration app from a new company co-founded by John Lefferts, former AXA Advisors President and Founding CEO of broker-dealer Lion Street.
Much more in the article, but here is an excerpt…
I see the potential for greater transparency in the form of a new app called Assurance, which turns insurance policy illustrations into comparison charts that even a financial columnist can understand.
“We’re trying to take a very complex product and make it more visual, which the insurance industry has never done,” says company co-founder John Lefferts...
Assurance pulls data for virtually any life product directly from WinFlex, the insurance industry’s comprehensive database of life insurance policy data. You input a face amount and WinFlex provides the annual target premium policyholders are expected to pay — which, if paid, will guarantee that the policy will stay in force.
You can specify an assumed rate of return on the cash account, and Assurance calculates, from the policy illustration, the various costs that will be deducted from the investment account, including the annual COI based on the client’s most likely underwriting risk class. Everything is visible in graphs, so you can do what you already do with mutual funds: run side-by-side comparisons of different contracts over different time periods.
Initially, I expect fiduciaries to use Assurance for replacement calculations — that is, to compare that variable-universal policy a new client purchased from his brother-in-law with a lean fiduciary-friendly contract from, say, TIAA-CREF, with an eye to possibly doing a 1035 exchange from the former into the latter. So you call up the current policy and look at the illustration at, say, a 7% rate of return, compared with the no-load policy.
In the most important graph, Assurance will show you the internal rate of return on the cash value in the policy, after fees and COIs, assuming the annual investment return specified. Obviously, the higher IRR will reflect a leaner, less-expensive policy, assuming everything else is equal.
https://www.financial-planning.com/opinion/increasing-transparency-for-the-life-insurance-industry
Thoughts? In John Lefferts’ blog from April 25 (link below), he says this about what Assurance is doing:
The firm is taking the Intuit Turbo-Tax technology and applying it to the complex life insurance business to format illustrations that not only help the financial professional comply with new regulations, but renders the proposals digitally in a graphic, easy to understand way, viewable on any device (computer, tablet, cell phone) rather than thump down multiple confusing 20 page illustrations on the desk.
John Lefferts' Blog
Much more in the article, but here is an excerpt…
I see the potential for greater transparency in the form of a new app called Assurance, which turns insurance policy illustrations into comparison charts that even a financial columnist can understand.
“We’re trying to take a very complex product and make it more visual, which the insurance industry has never done,” says company co-founder John Lefferts...
Assurance pulls data for virtually any life product directly from WinFlex, the insurance industry’s comprehensive database of life insurance policy data. You input a face amount and WinFlex provides the annual target premium policyholders are expected to pay — which, if paid, will guarantee that the policy will stay in force.
You can specify an assumed rate of return on the cash account, and Assurance calculates, from the policy illustration, the various costs that will be deducted from the investment account, including the annual COI based on the client’s most likely underwriting risk class. Everything is visible in graphs, so you can do what you already do with mutual funds: run side-by-side comparisons of different contracts over different time periods.
Initially, I expect fiduciaries to use Assurance for replacement calculations — that is, to compare that variable-universal policy a new client purchased from his brother-in-law with a lean fiduciary-friendly contract from, say, TIAA-CREF, with an eye to possibly doing a 1035 exchange from the former into the latter. So you call up the current policy and look at the illustration at, say, a 7% rate of return, compared with the no-load policy.
In the most important graph, Assurance will show you the internal rate of return on the cash value in the policy, after fees and COIs, assuming the annual investment return specified. Obviously, the higher IRR will reflect a leaner, less-expensive policy, assuming everything else is equal.
https://www.financial-planning.com/opinion/increasing-transparency-for-the-life-insurance-industry
Thoughts? In John Lefferts’ blog from April 25 (link below), he says this about what Assurance is doing:
The firm is taking the Intuit Turbo-Tax technology and applying it to the complex life insurance business to format illustrations that not only help the financial professional comply with new regulations, but renders the proposals digitally in a graphic, easy to understand way, viewable on any device (computer, tablet, cell phone) rather than thump down multiple confusing 20 page illustrations on the desk.
John Lefferts' Blog
