Protective Product Overview: NEW Indexed Choice UL

Overview:

  • This was Protective’s first shot at entering the indexed universal life market place, and we were very pleased that they entered with a BANG. Premiums for the Indexed Choice UL product are some of the lowest in the market place, the primary guarantees are some of the longest (highest), and the cash accumulation grows at a solid, positive rate (even when minimally funded).
  • We will begin our overview by looking at the minimally funded $1 CSV @ Maturity solve, where the Indexed Choice UL comes out swinging. Upon first glance, you wouldn’t think the product stood a chance with a very low cap of 9.5% and a max illustrative rate of 6.28% (the lowest in the market).However, even with this limitation, it scores well when considering it against competitor products being run at the 7% illustrative rate. This is especially true for males, ages 30 to 60 for full-pay solves.It is this spot where the Indexed Choice UL product consistently ranks within the top 5, managing to grab the lowest premium against others using a 7% interest rate. Once you drop the assumed rate to 5%, Indexed Choice UL smokes everyone, positioning themselves as the #1 ranked product almost across the entire board for males, underpricing the market by up to 13% in select cells.
  • Now, staying with the 5% illustrative rate, we’ll move on to one of the best parts of the story… Indexed Choice UL’s Primary Guarantees. While John Hancock, AXA and Pacific life have historically created, owned and occupied the medium duration guarantee space, Protective steps it up to a very comforting level.
    • EXAMPLE:Male, Age 45, Best NT Risk Class, $1MM DB @ 5%
      • John Hancock boasts a strong competitive premium of $7,753, while Protective shows a premium of $7,638.
      • John Hancock has a Primary Guarantee to age 80 or 35 years of guaranteed death benefit, while Protective goes to AGE 105!
    • When using Indexed Choice UL @ 5% illustrative rate, most of the primary guarantees for premiums extend beyond age 90, and a fair number cross over age 100. THIS is unheard of in a current assumption product.
    • See attachedfor further detail.
  • And finally, time for the cherry on top… with such a low cost premium and such strong primary guarantees, wouldn’t you think cash accumulation would suffer? Not with this product!As of late, there have been three new entrants into the IUL market, all of which have specifically released products designed to fulfill death benefit protection versus income distribution. Principal, Genworth, and now Protective have bucked the trend of stripping out all of the cash and therefore, they all build a great ROP-like story. While the IRR’s are hardly any long-term investment strategy (returns at or around 1% for 20 years), they are something very worthwhile to consider as an exit strategy.See attached for further detail.
  • Unlike other carriers who have stepped into the market with an IUL-GDB hybrid product, Protective’s Indexed Choice UL is different and very appealing. It has a purpose, an objective and we believe that it has a story that will give producers that much needed bridge to cross, one that should provide comfort when transitioning away from guaranteed universal life.

The attached analysis includes all of the products we benchmark (18 Products Considered):

  1. Ranking for $1 CSV @ 121 – 5%, $1,000,000 face amount (single, short & full-pay scenarios)
  2. Percent premium is above best rate for $1 CSV @ 121 – 5%, $1,000,000 face amount (single, short & full-pay scenarios)
  3. Percent premium is below next best rate for $1 CSV @ 121 – 5%, $1,000,000 face amount (single, short & full-pay scenarios)
  4. Ranking for $1 CSV @ 121 – 7%, $1,000,000 face amount (single, short & full-pay scenarios)
  5. Percent premium is above best rate for $1 CSV @ 121 – 7%, $1,000,000 face amount (single, short & full-pay scenarios)
  6. Percent premium is below next best rate for $1 CSV @ 121 – 7%, $1,000,000 face amount (single, short & full-pay scenarios)
  7. Ranking for $1 CSV @ 121 – Max IR%, $1,000,000 face amount (single, short & full-pay scenarios)
  8. Percent premium is above best rate for $1 CSV @ 121 – Max IR%, $1,000,000 face amount (single, short & full-pay scenarios)
  9. Percent premium is below next best rate for $1 CSV @ 121 – Max IR%, $1,000,000 face amount (single, short & full-pay scenarios)

Other attachment includes:

  • – We have included this product in both the IUL $1 CSV @ Mat (5%, 7% & Max IR%) and the No-Lapse Guarantee (A90, A100 & Lifetime) benchmarks. We believe the best positioning is described above, and this product should be considered as a low-cost, death benefit protection option for $1 CSV @ Maturity.

Rates were updated on the LifeTrends website on Tuesday, January 14th.