PPI recently launched two individual life insurance products – universal life and term insurance – tailored to the needs of its clientele.
PPI and the insurers that are underwriting these products – BMO Life Insurance and Assumption Life – have structured these products to extend the usual life span of a term product and to reduce the permanent product’s vulnerability to low interest rates and capital requirements. Available as term or permanent insurance, LifePhases targets the middle class, and is underwritten by Assumption Life. Its cost is midway between a T10 and a permanent product. Underwritten by BMO Life Insurance, Signature Life is a low-fee level cost universal life product aimed at an affluent clientele. Both products are based on a formula designed to reduce the insured capital at a specific age.
The term version of LifePhases is meant to counter policy lapse by policyholders who find the renewal premiums, which can reach up to six times the starting premium, prohibitive, Yves Bergeron, president of PPI Advisory told The Insurance and Investment Journal in an interview. LifePhases has a 50% premium increase every 10 years, and coverage gradually decreases to zero between ages 65 and 75. Advisors receive a 55% commission. The permanent version comes with a fixed premium and coverage that declines from 100% to 75% of the initial amount between age 70 and 80. After that, insured can stop paying premiums on their life coverage.
This policy offers advisors lifetime renewal commissions. Signature is available in three forms of level cost UL insurance, with decreasing coverage. The option Protector 50 offers level coverage until age 70, which decreases to 50% of the initial value at age 80. Protector 25 provides level coverage until age 70, which falls to 25% of the initial value at age 80. Lastly, another option called Investor includes level protection for three years, but the amount drops to zero by age 85. “This policy offers much lower management fees than the competition, with an interest bonus of 0.50%. Also, amounts deposited in the accumulation fund can be withdrawn at no charge,” Mr. Bergeron points out.