On Monday, July 24th, John Hancock released the updated version of its Protection VUL, now designated as Protection VUL 17 and includes Vitality.
This new iteration introduces two important features: strong built-in primary guarantees and a persistency credit starting in policy year 6. Protection VUL reenters the field as one of the top contenders for the more conservative 6% illustrated rate in the protection-oriented market.
A significant reason for premium improvements is the inclusion of Protection VUL 17’s persistency credit, beginning in policy year 6. John Hancock indicates that the persistency credit is based on a variety of factors such as “how the selected investment options perform, the Cost of Insurance Rates, and policy owner actions, such as the timing and amount of premium payments, loans, withdrawals, lapse and reinstatement.” The rather complex persistency credit formula in the Protection VUL follows precedents already set by John Hancock’s Protection UL and SUL products. The persistency formula is guaranteed, that is, there will always be some amount of interest credited to the policy, but those amounts will change based on the gamut of factors in the formula.
With the release, John Hancock now includes strong primary guarantees. For 6% endowment at maturity scenarios, where premiums are higher, the average guarantee age across all scenarios is 80. Lower premiums at the 8% illustrated rate assumption fund a slightly weaker guarantee age, but still average to about age 75. Strong primary guarantees for VUL products have emerged as a common thread in VUL pricing this year; LifeTrends is currently considering the best way to evaluate this new trend.
Generally, cash surrender value substantially decreased in the first 20 years, but picked up later. This is most likely a factor of the new guarantees and bonuses.
Targets now find their way to almost the very back of the pack.
CLICK HERE to view the Official Announcement PDF
CLICK HERE to view the Protection VUL 17 Snapshots PDF
CLICK HERE to view the Protection VUL 17 vs Protection VUL 12
