Understand Guaranteed UL - (secondary Guarantee)

Hi,

Newbie trying to grasp how ULSG works (and I am trying to piece together how AG38 affects this but doing that in other threads).

What I think I understand so far is:

The [secondary] guarantee is basically carrier saying: "don't worry, if interest rate averages below ~*2%, we will guarantee that if you put in the amount that with ~*2%+ it would be enough premiums we will make sure it stays in force.

...So basically in addition to a regular UL policy you are buying insurance on the interest rate.

Is that right?


p.s. And I guess with AG38 - the regulators are saying that carriers are being to risky with that?
 
GUL - risk transferred from client to carrier. Most are designed with shadow account ($1 in shadow account means policy wont lapse). Correct re interest rate floor, also cost of insurance ceiling. Just make sure client knows one late payment equals guarantee won't last as long as projected and catchup provisions, if there are any, will be cost prohibitive. AG38 requiring greater reserve requirements - in low interest rate environment, carriers can't earn and reserve and will exit market or raise premiums to discourage business. If you have been relying on GUL as a staple, better get ready to pivot to current assumption products.
 
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