On Monday, May 1st, 2017, Mutual of Omaha introduced their first protection-oriented Indexed UL product, Life Protection Advantage IUL.
On Monday, May 1st, 2017, Mutual of Omaha introduced their first protection-oriented Indexed UL product, Life Protection Advantage IUL. Life Protection Advantage IUL offers two main avenues for consideration – as a lower cost, non-guaranteed product with minimal secondary guarantees or as a more expensive premium with mid-range guarantees (to age 85). Bucking the industry trend, the Life Protection Advantage IUL is one of the only products in recent memory not to include an interest bonus.
Overall, the low-cost option of Life Protection Advantage IUL has varied low-cost competitive success. Its definitive sweet spot flows from premiums considered at an assumed 6% illustrated rate, usually landing into the fray within the first quartile, even with a maximum illustrated rate of only 5.82% (9.5% cap). When considering 5% or maximum illustrated rates, however, it falls mostly towards the middle of the pack.
The downside to its relative success as a lower-cost product is the loss of secondary guarantees. To maintain policy guarantees to age 85 comes at a sharp cost. The guarantee is a premium threshold amount, so the assumed interest rate is not regarded. The premiums run roughly 10% higher than the assumed 5% IR premiums, and about 27% higher than the Max% IR premiums. Given that some of the top competitors in the market also have longer inherent guarantee years, the higher premiums place the Life Protection Advantage IUL at a slight disadvantage in the upper echelon of the competition.
There are several post AG49 trends (see LifeTrends Industry Responses to AG49 released on April 12th, 2017) that have crept into IUL product design since the introduction of the regulation. The most prominent of these is the interest bonus in its many forms. The simplicity of the Life Protection Advantage IUL’s design and the lack of an interest bonus may speak well to those who are selling against the continual evolution of complexities within the index universal life product world.
As with Mutual of Omaha’s Income Advantage IUL, Life Protection Advantage IUL offers the Guaranteed Refund Option (GRO), which is included with every policy at no additional cost. This unique rider is advantageous in any cases where accumulated cash value does not exceed cumulative premiums paid into the policy.
Employing Mutual of Omaha’s Age Last Birthday Advantage can significantly improve competitive positioning. For the already strong 6% illustrated rate, Age Last Birthday gives premiums just enough of a bump to dominate much of the full-pay market.
Targets tend to hover towards the back of the pack.
CLICK HERE to view the Life Protection Advantage IUL Snapshots PDF
CLICK HERE to view the Life Protection Advantage IUL ALB Snapshots PDF
CLICK HERE to view the Life Protection Advantage IUL vs. Income Advantage IUL PDF
