Challenge to life companies

[Robert L. Barney]

In conjunction with an article I am doing for www.term4sale.com, called "Go Long on Term Life Insurance", I am challenging life insurance companies to create a series of level term to 65, 70 and 75 products. I have even suggested a brand name called "Term to Retire".

IMPORTANT: I feel so strongly about this idea that I am undertaking that Compulife will create Term to 65, 70 and 75 categories if ONLY ONE company introduces these products.

The product idea should be quite simple to price.

For example, a Term to 75 product is nothing more than a 10 year term for a 65 year old, 15 year term for a 60 year old, a 20 year term for a 55 year old, 25 year term for a 50 year old and a 30 year term for a 45 year old.

A Term to 65 product is nothing more than a 10 year term for a 55 year old, 15 year term for a 50 year old, a 20 year term for a 45 year old, 25 year term for a 40 year old and a 30 year term for a 35 year old.

As you can see, lots of these products are already available. Here what's missing:

1. The oddball years in between. For example, if I am 52 and I want a Term to 75, I need a 23 year term plan. It's currently not available.

2. People under age 45 cannot get term periods long enough to get them a level premium to age 75. People under age 35 cannot get term periods long enough to get a level premium to age 65.

It is the second area, and the lack of products for younger people, that needs to be addressed by insurers. It is why I am issuing this challenge and will be pushing this development concept over the next year.

For example, I have a son who is 26. I would like him to be able to get a Term to 65 policy which would require a level premium period for 39 years. Such a product is NOT available that I am aware of.

Having noted that Empire Life, before it ceased selling policies, did offer a no lapse U/L product where you could dial in the coverage period and get a premium guarantee. One of my other kids, who was 26 at the time, needed a Term to 65 and so we got a 39 year guaranteed no lapse U/L product. The premium wasn't that much more than a competitive 30 year term.

Are there other companies offering no lapse U/L on this basis? If yes, I would like to get my hands on no lapse premiums for level premium/coverage to age 65, 70 and 75. I would be happy to include those no lapse U/L products in the categories even if only one company provides me with the rates for this scenario.

Normally I don't do stuff like this but in my view, this is an area which needs to be addressed. Younger people cannot get term products with level periods that are long enough and I think introducing these product categories will put pressure on the industry to respond.

I also think it will give agents more expensive term for younger people, making sales of insurance to younger people more profitable without having to ignore the amount of insurance younger insurance clients need.

I think this is a great product concept - Term to Retire - because a lot of people will see the need for term insurance until people stop working at retirement. I suspect the media and most finanancial gurus will be keen on the concept.

And one last idea. I think Level term to 65, 70 or 75, with ROP is also a very sellable concept. Insurance until you retire, and some cash back for your retirement. Of course I would also like to see the option of a reduced paid up policy, in lieu of taking the cash, as an option.

So what about it life companies, anyone ready to take on the Compulife challenge.

What do you folks think?

[glenn]

I think that's the best idea you had since you licensed me to use your quoting engine . Which was of course a very very good idea.

This concept IMO has a huge punch with consumers. Sell it with all the benefits of term insurance. After it's been in force a while, I think it's got alot of the benefits of permanent in terms of lower lapse rates as well.

Now what happens to the policy at 65? Conversion anyone?

The marketing aspect is huge. Compare it to how well ROP has done recently, and that's a 100 year old idea that's been rehashed and is full of flaws. Websites spring up all over the place just to sell ROP, and consumers aren't even looking for it. A product like this, with a bit of a push, what's a consumer going to think? They're going to love it. And it's simple and easy to explain.

And agents are going to love it too. Easy to sell, an easy concept. And for younger folks, a longer term and thus a bit higher premium.

The income replacement calculator needs analysis ("Income from Capital Analysis" in Compulife) is a great fit with this as well - it's a perfect fit for selling more insurance. Want to replace your paycheck til retirment? The needs analysis shows you how much you need, this product answers to the penny how much you need.

And if any insurer doesn't understand how much traffic Compulife can generate on something like this, then.....well, you don't understand how much traffic Compulife can generate on this.

I love this idea -a lot. I can just hear my son saying "if you love it so much, why don't you just marry it". Well, maybe I will.

[Brad Howard]

AIG is rolling out such a product probably late April. You choose the term between 10 and 30 years........

[Robert L. Barney]

The problem is there are no rates for longer level periods than 30 years.

For example, younger people can't get a 40 year term.

You will notice with the current crop of level term plans, that the longer the level term period, the lower the maximum issue age. For example most companies cut off 30 year term at age 45 to 50 but 10 year term is usually available for ages up to age 70 to 80. The longer the period, the lower the maximum issue age.

In that regard you would expect a 40 year term to have a maximum issue age of 35 to 40 (based upon the trend I just noted). Most would not create a product like that, because the maximum issue age appears to low.

But this is not an issue if the actuary is pricing the product as level term to 75. Here are examples of the level term periods for each age:

Issue age

18 - 57 year term
19 - 56 year term
20 - 55 year term
21 - 54 year term
22 - 53 year term
23 - 52 year term
24 - 51 year term
25 - 50 year term
26 - 49 year term
27 - 48 year term
28 - 47 year term
29 - 46 year term
30 - 45 year term
31 - 44 year term
32 - 43 year term
33 - 42 year term
34 - 41 year term
35 - 40 year term
36 - 39 year term
37 - 38 year term
38 - 37 year term
39 - 36 year term
40 - 35 year term
41 - 34 year term
42 - 33 year term
43 - 32 year term
44 - 31 year term
45 - 30 year term (product already exists)
46 - 29 year term
47 - 28 year term
48 - 27 year term
49 - 26 year term
50 - 25 year term (product already exists)

One company has already gotten back to me to say they will be providing me with no lapse U/L premiums solved to guarantee coverage and premiums to ages 65, 70 and 75. That's great, we'll get that in the system as soon as we get the numbers.

One actuary commented that if this was done with term products that they would still need YRT tails - that's OK too. Who cares? What we want is guaranteed level premiums and coverage to 65, 70 and 75. If the coverage can be continue beyond that initial level period - no problem.

I think Glenn is right, this idea is just so obvious and precisely what many consumers need that it has to take off.

[Brad Howard]

Agreed, if this takes off the way you say, and I think it would, they would certainly consider looking at longer terms going forward.........or it seems they would. The MP market place could do good things with this also, many applications where this would be the best fit........

AIG also has a "dial a UL" product too. I think it's their ContinUL and that can be set to a specific year out to age 120. ING has one too on the UL side I'm told Robert........

[Todd Simpson]

There are many companies with Guarantee UL products that you can dial in a specific number of years for the coverage and make it look like level term to whenever you want it. That's the main reason I don't think you'll see many companies wanting to put time and money into pricing a term product like this. Here's the underlying problem, the companies aren't sure how long they can sustain selling the guarantee ul's at the current pricing - if you look at these products, they are lifetime term. Not alot of motivation for companies to be putting our longer term products. I do think the idea of dial-in term up to a 30 year level (depending on age) is a good idea and you will see several companies try it, but that's as good as it's going to get. Most of the companies selling ROP term right now are not building a large enough block of business to keep these products going if consumers don't catch on the the concept soon. These are at best "niche" products at this point. Some of the term sales guys wil want to shoot me, but younger people shouldn't be buying term - while being in the best health of their lives, they should lock in on some good cash value products while they can. We sell 70% WL/UL vs Term in our Agency and specialize in impaired risk and jumbo cases. 90% of the older age clients we are selling bought term at a young age, let it lapse, didn't do anything about it until the point where their business or estate had grown to a large amount, are now in poor health and realize they now need several million of life insurance for business continuation or estate planning. We must educate as well as sell our clients.

[Todd Simpson]

We just go notified from one of our companies that they now have a term product to fill in the these years. They start with 10 ylt and go up to 30 ylt and you can pick certain term periods in between, like 12 yr, 15, 16, 17 and 18 and so on.

[Robert L. Barney]

The product is Select-a-Term from AIG. We just included the product in the May edition of our Compulife comparison software which went on the Internet today. We have also included the odd year options in our new level to age 65, 70 and 75 comparison categories. The product is very competitive.

If you want a free, no obligation trial of Compulife you can request it here:

http://www.compulife.com/trialrequest.php

[Robert L. Barney]

We have added the new categories of:

to age 65 guaranteed
to age 70 guaranteed
to age 75 guaranteed

to

www.term4sale.com

I have also added a link to explain what's going on and Compulife's hope that life companies will step up to the plate.

[14U2C]

I would be very careful about putting the term to the ages you are talking about on your website. The NAIC would love to make an example out of you to make themselves look like heroes to the adopted states. Not to mention a hungry commisioner on a power trip looking for cudos. There are no admitted products titled as such with any carrier. This is only a concept designed by you and nowhere on your site is that explained. I suspect that your competitors would turn your site over to them in a heartbeat. Anyone can take a UL and dial it down to take the coverage to the desired age on a guaranteed basis. Lots of time and money was spent developing these products so that carriers (in part) could avoid further reserve requirements. Not to mention reinsurance ramifications.

So, in short, Insurance carriers would need ENORMOUS reserves to guarantee term insurance for longer than 30 years. Been there in 2000. Where were you?