Banner Life has and has had for some time the most competitive no lapse guarantee universal life products available. It has been a standout product in the industry because it not only guarantees a death benefit to age 121, but at no lapse UL prices it also has a cash value accumulation feature not unlike whole life insurance.
I have been all over indexed universal life insurance companies that guarantee 1% to 2%, but illustrate and sell based on 8% to 9%. They don’t guarantee the higher rates which leaves about a 7% gray area. Like the universal life of the 1980’s, these policies are being sold as investments and retirement planning vehicles. Personally and professionally I believe planning for the future based on assumptions is foolish, so how about something with a substantial guarantee?
Banner is poised to increase the rates of the product mentioned above starting with any applications received after August 16, by “no less” than 9%. As much as I dislike tying cash value to life insurance I mention it in the context of this product only because it is a stand alone product in that respect. Without cash value it is still the leading no lapse guaranteed universal life product on the market. If you buy it now, as opposed to after August 16, the premium will be a minimum of 9% lower. I don’t believe in using smoke and mirrors, but if you can save 9% by buying something you need now it truly is no different than getting a 9% return on your investment when the price goes up. Paying less for a lifetime guarantee is a good thing.
Keep in mind that the product is still going to be very competitive after the increase, but if you are considering buying permanent life insurance for business or estate purposes and buying at a fully guaranteed, yet substantially lower rate would mean something to you over the long run, it’s time to consider whether it’s time to consider. We’ve gone through this a lot over the years and I’ve been surprised that announced future price increases don’t create more buzz, more buying, not across the board but just among those that are considering the purchase anyway.
I don’t want to turn into a sky is falling kind of guy, always throwing out bad news about products. We’ve been there as an industry, just like our country has, a lot over the last 12 years. From XXX (the year 2000) when term insurance rates were supposed to jump dramatically to the fact that they actually continue to drop. From companies like Genworth and West Coast Life getting rid of term (going to term/UL) so that they could get rid of conversion and save themselves from deep sixing, to companies like Banner and Prudential who continue to lead the industry in term and UL products, but give fair warning that the cost of those products for new customers will be going up.
We will see an adjustment upwards in the cost per thousand for long term guarantees, whether 30 year term or lifetime guarantees, but that is what should happen. It needs to happen. The last thing we need is an insurance industry hanging on to unrealistic pricing too long.
Bottom line. So, good for Banner. Realistic is a good thing and fair warning is actually going further than most companies go. Again, if the purchase of some amount of permanent life insurance was in your thinking in the near term, consider what spending 9% more than you need to would mean over a lot of years. If you have any questions or comments, call or email me directly. My name is Ed Hinerman. Let’s talk.