Allianz refreshes fixed-index universal life insurance lineup

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.