Whole life premium increase

[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]

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.