Read the fine print when selling guarantees
Article Abstract:
Insurance agents should always distinguish between a guarantee of principal and a guarantee of market risk when selling annuities. A client's principal plus interest is guaranteed under a guarantee of principal, and the insurer assumes the market risk. However, insurers often use market value adjustments to avoid assuming the entire risk, which places a greater proportion of risk on the client. Companies typically use current policy interest rates to determine market value adjustments under a pre-set formula.
Publication Name: Best's Review Life-Health Insurance Edition
Subject: Insurance
ISSN: 0275-0988
Year: 1995
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Insurers' new dilemma: money managers or spread managers?
Article Abstract:
The life insurance industry has experienced a shift in focus from the sale of protection products to wealth accumulation products. Today, nearly two-thirds of the industry's reserves are comprised of annuities, universal life and variable products while protection products account for the remainder. This represents a reversal in product split since 1976 and is forcing insurance companies to focus more on managing their balance sheets.
Publication Name: Best's Review Life-Health Insurance Edition
Subject: Insurance
ISSN: 0275-0988
Year: 1996
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Bonus accident policy drives annuity sales
Article Abstract:
Life insurance companies are beginning to offer accidental death and dismemberment (AD&D) coverage with their annuities as a sales incentive. The AD&D enhancement is paid as a fixed sum or related to the annuity's current value. The marketing technique is expected to generate significant annuity sales, particularly with younger people. Many insurers are turning to reinsurers to manage risk.
Publication Name: Best's Review Life-Health Insurance Edition
Subject: Insurance
ISSN: 0275-0988
Year: 1997
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