Allianz refreshes fixed-index universal life insurance lineup

Insurer will update an index and add a bonus in the eleventh year.
APR 20, 2015
A subsidiary of the insurance giant Allianz SE on Tuesday announced changes to its fixed-index universal life insurance lineup, offering a new underlying index and benefits to the product's fast-growing market. Two of the firms' products now will be available with a new benchmark, the Barclays U.S. Dynamic Balance Index II, that's used to calculate the interest the insurer will pay on cash balances. The index allocates to a bond proxy and the S&P 500. The changes apply to the Allianz Life Pro+ Fixed Index Universal Life Insurance and Allianz Life Pro+ Survivor Fixed Index Universal Life Insurance policies. Indexed universal life insurance policies, as they're also known, credit interest to the cash value of a client's policy based on the performance of a market index, up to a stated cap. The increasingly popular life insurance policies also buffer clients' cash value from downward movement in the event the product fails to perform. IUL policies aren't directly invested in the market itself. Instead, the performance of the index is used to calculate how much interest is credited to the cash value of the life insurance policy. The firm will also add what it described as a guaranteed bonus to the policy's accumulation of cash value, starting in the eleventh year after the policy takes effect. That bonus, worth 0.6 percentage points annually, is added on top of the percentage change in the index, which is calculated annually and used to determine what interest will be credited to the policy's value. An executive for the firm described the changes as putting the firm on par with competitors in the industry, while contractually guaranteeing policyholders the additional bonus. Offering such a bonus means more of an upfront cost during the first 10 years. The product is part of a fast-growing trend. In the first quarter this year, the latest period for which data is available, indexed universal life sales “drove overall” growth in the universal-life segment, according to Catherine Theroux, a spokeswoman for LIMRA, an industry group. The products now represent half of the premiums in the universal life universe, and nearly a fifth of the premiums across all individual life insurance products. New indexed universal life premiums were $2 billion, on an annualized basis, last year. Allianz Life Insurance Co. of North America, the subsidiary offering the products, said it would also lower, from a net 2% to 1%, the interest rate it charges on loans and withdrawals. Those withdrawals reduce the cash value and death benefits of the policy, and sometimes can force it to lapse.

Latest News

Financial advisors often see clients seeking to retire early; Here's what they tell them
Financial advisors often see clients seeking to retire early; Here's what they tell them

Wealth managers highlight strategies for clients trying to retire before 65 without running out of money.

Robinhood beats Q2 profit estimates as its business goes beyond YOLO trading
Robinhood beats Q2 profit estimates as its business goes beyond YOLO trading

Shares of the online brokerage jumped as it reported a surge in trading, counting crypto transactions, though analysts remained largely unmoved.

Dimon and Trump talk economy and Fed rates as meetings resume
Dimon and Trump talk economy and Fed rates as meetings resume

President meets with ‘highly overrated globalist’ at the White House.

NASAA moves to let state RIAs use client testimonials, aligning with SEC rule
NASAA moves to let state RIAs use client testimonials, aligning with SEC rule

A new proposal could end the ban on promoting client reviews in states like California and Connecticut, giving state-registered advisors a level playing field with their SEC-registered peers.

Could 401(k) plan participants gain from guided personalization?
Could 401(k) plan participants gain from guided personalization?

Morningstar research data show improved retirement trajectories for self-directors and allocators placed in managed accounts.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.