“Recently an industry publication offered a headline that even State Regulators were confused about regarding chronic illness combo/hybrid policy offerings. That same confusion is rampant through the ranks of all concerned. As has been suggested previously in this column, there is little if any consensus on the balance of pricing assumptions.
We do seem to have come to understand that mortality and morbidity are both at play in one financial instrument. Some early SPWL product with limited chronic illness riders were based solely on mortality. Furthermore, it is accepted that premium, underwriting and administration expenses must be considered for either contingency.
The persistent low interest environment has seemed to help point the market in the direction of the intrinsic value of whole life promises guaranteeing premium and predictable benefit.”
Click here to read more, originally published in the January 2019 edition of Broker World Magazine.