Insurance Agent Forum

[David C]

While reading newsletters on Muhlenkamp's Mutual Fund website he said he knew of several companies that raised the premiums on WL plans (I think in the 80's). The increases were necessary to keep the benefit level. I questioned him about this and he said absolutely true. He mentioned nothing of loans, or anything out of the ordinary. Am I missing something?

Is this a case of a well known money manager being ignorant of different financial instruments or an ignorant agent (me)?

[James]

Depends upon what type of WL? You have Interest Sensitive and Par plus a whole slew in between. Yet I never heard of a WL Premium going up, it is at the heart of the contract. I'm thinking that he is referring to UL's, some FP'ers are not real bright or informed esp. about Insurance.

[CHUMPS FROM OXFORD]

I never heard of one going up either.

[somarco]

Increases in new business rates or for existing policyholders?

Life rates have risen and fell over the years as new CSO tables come out, or carriers adjust for interest rates. We also had new reserve requirements a few years ago as part of XXX that had an impact more on term rates than anything.

Some companies got into trouble (notably Baldwin United, Mutual Ben, Executive Life) several years ago and their block was assumed by new carriers that may have adjusted premium rates on some policies.

Since any permanent plan, including ISL, UL, VUL etc. can be considered whole life, I suspect the newsletter refers to one of these plans rather than a non-par whole life plan with a fixed premium.

[senior-advisor-indiana]

Whole life is whole life. I have never heard anyonecalling UL's whole life.

[somarco]

I have never heard anyonecalling UL's whole life

You have now.

Life products with guaranteed premiums and guaranteed death benefits could certainly fit the definition of a whole life policy.

• A guaranteed death benefit, generally free from federal income tax
• Tax-deferred cash value accumulation
• Generally, the ability to borrow from cash value on a tax-free basis1
• A level premium that is guaranteed never to increase
• Permanent coverage that can never be canceled, provided that premiums are paid when due
• Eligibility to earn dividends as declared by the Company2
• The ability to customize the plan by adding optional riders

[David C]

He said for existing customers. I can only guess he was lumping all permanent insurance in with WL.

[somarco]

for existing customers

It has happened.

Mostly for flex premium products. Par whole life (fixed premium) saw dividend scales cut way back for some of the companies.

[senior-advisor-indiana]

Somarco, a UL policy has flexible premiums . A whole life policy has level premiums. Show me a UL policy that says the premiums will never increase.

[angwagner1974]

Originally Posted by senior-advisor-indiana

Somarco, a UL policy has flexible premiums . A whole life policy has level premiums. Show me a UL policy that says the premiums will never increase.

I know that quite a few companies offer ULs that keep the same premium to age 100. An example is Life Investors. The UL is still flexible premium but for the client it offers a premium and death benefit that are guaranteed to age 100. As the client ages, the cash value is used to offset the costs.

[senior-advisor-indiana]

I know that quite a few companies offer ULs that keep the same premium to age 100. An example is Life Investors. The UL is still flexible premium but for the client it offers a premium and death benefit that are guaranteed to age 100. As the client ages, the cash value is used to offset the costs.

Is that gauranteed?

[senior-advisor-indiana]

Sorry I am an idiot. I just re read your post.

[Newby]

The New York Life whole-life policy that AARP sells says in the small print that premiums are not guaranteed against increases of the entire class.

[angwagner1974]

Originally Posted by Newby

The New York Life whole-life policy that AARP sells says in the small print that premiums are not guaranteed against increases of the entire class.

right, people think that AARP is better for them and it comes out cheaper or very close a majority of the time. The problem is that they do not guarantee that the rates will not increase. That is usually enough to overcome their product.

[Joe Moore]

21 years ago, when I was a rookie in the insurance business
We sold a payroll deduction "Interest Sensitive Whole-Life", which sounded like a decent deal from the surface.
If you read the fine print, the premiums were not guaranteed.

Joe Moore
National Senior Benefits
Asurco Insurance Marketing
PO Box 1954
Morristown, TN 37816
1-800-226-1004
joe@asurco.com
www.asurco.com

[xrac]

If there is a premium increase on existing policy holders it is not a whole life policy but some type of hybird product mixing whole life and UL.

Here is what WordNet a lexical database for the English language from Princeton University says:

whole life insurance, [COLOR=#0000ff]ordinary life insurance[/COLOR], [COLOR=#0000ff]straight life insurance[/COLOR] (insurance on the life of the insured for a fixed amount at a definite premium that is paid each year in the same amount during the entire lifetime of the insured).

WordNet Search - 3.0

[somarco]

If there is a premium increase on existing policy holders it is not a whole life policy but some type of hybird product mixing whole life and UL.

Premium increases have nothing to do with it.

Either the product is designed to expire at a set point, as in term insurance, or it is designed to last your whole life.

Whole life is a phrase that was used before ISWL, ISUL, UL, VUL, VL and all the other combinations of permanent plans that exist today. It is generic as Q-tip or Kleenex.

(Almost) no one asks for a cotton swab or a tissue. They ask for a brand. They pour coffee in a Thermos, not a vacuum jug.

[bluemarlin08]

Whole life policies that are showing increasing premiums are typically policies that were designed with part whole life and part term insurance. The concept was that projected dividends would purchase paid up additions and replace the term insurance. The problem began when dividend projections were less than projected, therefor causing the policy to pay higher and higher costs for the term portion. This problem snowballs and eventually requires the policyholder to pay higher premiums. When one runs into an older WL policy with a term blend, in the majority of cases the policyholder is unaware of the potential time bomb they own.

[TRK3031962]

For those who don't know, this is called an Adjustable Whole Life policy.

[Newby]

Any policy that has a cash value component is whole-life.

If there is never any cash value, it is term.