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HomeMy WebLinkAboutM-86-0938o i CITY OF MIAMI. FLORIOA . 81 INTER -OFFICE MEMORANDUM p Cesar H. Odio °"�fi 007 23 P 15E: October 16; 1986 Filt: City Manager SUBJECT Insurance Policies Fl1pM• � :EFERENCES: Xavier L. Suarez 101686 /XLS Mayor NCLOSURES. I have reviewed the Finance Director's comparison of existing insurance policies with alternative ones. An interesting calculation is included -- in the case of life insurance -- which subtracts cash value from the five-year cost of the policies. The conclusion is that, "the projected net cost to the City of current policies is probably comparable to term insurance on a net cost basis. . ." Frankly, I fail to see what benefit is derived �y the City from the cash value of the policies. Please place this item on the agenda of the next regular Commission meeting. At that time, we should consider the following: 1. Whether term policies should be retained in view of their higher cost. 2. Whether long-term disability should be,retained and, if so, at what benefit levels and with what vesting period, if any. 3. Whether the existence of the policies have any tax consequences for fiscal year 1§86. 4. Whether the policies were validly obtained under our competitive bidding requirements. S. Whether the Commission can .approve these benefits for itself. XLS/jaa t #49 Ir/6 Al ss-s3s ._..•fir -� >,. •�wtw�,. .. *p '..h+MMi•i � ._ CITY OF MIAMI. FLORIDA INTER -OFFICE MEMORANDUM To. Honorable Mayor and Members DATE: Nov 5IWO „Lt of the City Commission SUBJECT: Life Insurance and Lon g Term Disability Insurance for Mayor b City Commissioners FROM: Cesar N. Q d i o REFERENCES: I City Manager ENCLOSURES: RECOMMENDATION: It is respectfuly recommended that the current policies placed with the Equitable for life insurance and long term disability insurance for the Mayor and City Commissioners be continued. BACKGROUND: In response to City Commission instructions the Finance Department requested the City's insurance agent, Johnson & Higgins (J&H), to seek quotes for life and long term disability insurance policies for City Commissioners. Although the life insurance section of the attached report did not include information related to the Mayor, its conclusions are considered valid for all members of the City Commission. The report limits some illustrations to Commissioners Kennedy and Plummer since their average age represents the average age of all four commissioners. J&H's report may be summarized as follows: Life Insurance Policies Cost comparison between the current policies for the four commissioners and the lowest cost life insurance policies available, term policies, over a five year period is as follows: Term Policies Cost Current policies cost $70,660.75 Less projected cash value 43,095.25 Current policies net cost $23,912.50 $27,566.50 Honorable Mayor and Members of the City Commission Page-2- From a cash outlay point of view, term insurance approach is less expensive. However, the projected net cost to the City of current policies, is probably comparable to term insurance on a net cost basis, assuming cash values develop at compounding Q 1/2 interest rates. In addition, if policies were changed, significant surrender (cancellation) charges would be incurred and commissioners Mould be subject to the administrative - inconvenience of submitting new evidence of insurability. Individual Long Term Disability Equitable policies were compared with two leading individual long term disability insurers. One of the quotes was lower than the Equitable plan, but it did not match the policy provisions of the Equitable. JAH concluded: On balance, we believe that the Equitable product is competitively priced and should be retained." Not included in the report is the fact that the City is now able to convert these policies in to a new series of Long -Term Disability Income polices from Equitable for professionals and executives at a cost of $15,450, or $2,000 less than the previous policies. 86~93F e r GGI S TO Date Donald Dunlap, City of Miami September 10, 1986 .Assistant Finance Director CcesTo Herbert C. Achtmeyer, oJ�ohnson & Higgins, Miami, Vice President ANALYSIS OF UNIVERSAL LIFE AND INDIVIDUAL LONG TERM DISABILITY POLICIES ISSUED TO CITY COM1MISSIONERS EFFECTIVE DECEMBER 28, 1.985 You have asked us to seek competitive bids for comparable life and long term disability insurance to that which was provided to the City Commissioners effective December 28, 1985. Given the time constraints of the project, and the limited under- writing/plan design information, we are not able to perform as exhaustive a market research as we would have liked. However, we — believe our limited market search, together with an analysis of pertinent published material will clearly establish the relative — competitiveness of the current underwriter vis-a-vis the market- place. Background We understand that the individual coverages involved are life insurance, accidental death & dismemberment and long term disability policies which have been issued to each City Commissioner by the Equitable Life Assurance Society of the United States. For purposes of this analysis, we will confine ourselves to the life and long term disability coverages. Life Insurance The issued life insurance contracts are classified as "Universal" life policies (as opposed to "term" policies and/or "whole life" insurance policies). Each Commissioner is insured for $250,000 of life insurance benefit. From a funding point of view, the plan appears to operate on a "split dollar" arrangement wherein the �► policy is owned by the insured commissioner but apparently the premium is advanced by the City. Participants are provided with a generous death benefit (less, we assume, the City's premium advance) as well as receive the benefit of a modest tax shelter as manifest in the tax free accumulation of cash value within the policy. A "split dollar" plan is a popular vehicle which corporate employers use to fund supplemental life insurance benefits for executives. We do not have a description of how the City's split dollar plan operates; merely an indication that it exists. 8 Donald Dunlap, City of Miami September 10, 1986 The real question is how competitive the commissioners' split dollar universal. life policy is in relationship to other carriers. Attached Exhibit A is a copy of a Universal Life Insurance policy comparison and analysis prepared by Consumer Reports Magazine in its August 19R6 issue. You will note that the Equitable. places 18th out of 41 insurance companies surveyed. The article notes that many of the more competitive life insurance products are being offered by "little known" insurance companies and that by contrast the major life insurance companies (Prudential, Metropolitan and Equitable) offer somewhat mediocre programs by comparison. In an attempt to quantify the degree of competitive difference, we obtained a cost illustration from a. highly competitive A+ nest's Rated Canadian based life insurance company, Great West Life. (See attached Exhibit A.) This company is noted for its modest expense charges, and superior investment performance. In establishing a proper comparison, we assumed the same interest projections as used by the Equitable so that the only difference(s) would be reflected in the policy surrender charge as well as the policy projected cash value. Listed below is a comparative illustration pertaining to a Male, age 49: Projected Cash Value Build -Up (Assuming a 91% interest Surrender Charge assumption) Policy Year Great West Equitable Great West Equitable 1 $2,500 $1,368 $ 99 $ 1,163 2 2,450 2,619 3,140 2,612 3 2,000 3,008 6,393 5,118 4 1,750 2,578 9,851 8,645 5 1,500 2,148 13,565 12,385 6 19250 1,719 17,533 16,351 7 11000 1,289 21,784 20,553 8 750 860 26,319 24,975 9 500 430 31,172 29,123 10 250 0 36,466 34,501 11 0 0 42,009 39,181 12 0 0 47,803 44,103 13 0 0 54,033 499247 0I'i Donald Dunlap, City of Miami September 10, 1986 Note that the Great west values are only fractionally more liberal than the Equitable. Given the fact that the Equitable policies have already been issued and assuming that the Commissioners are comfortable with the Universal life/Split Funded concept, we do not recommend changing carriers because the City would incur the high early year surrender charges (which are applicable to all insurance carriers) and because the Commissioners would be subject to the administrative inconvenience of submitting new evidence of. insurability. Another funding possibility is, of course., the idea of replacing the current $250,000 universal life policies with individual term policies. For price comparison we obtained estimated quotations from a competitive term insurance underwriter, USF&G. Assuming that all of the commissioner participants are in good health and are non-smokers, the estimated cost of the term insurance over a five year period would be as follows: Female, age 41 $ 2,270.00 Male, age 31 1,607.50 Male, age 49 4,527.50 Male, age 61 15,507.50 $23,912.50 This compares to the cost outlay of the City of Miami for the Universal Life program over a five year period which would be as follows: Female, age 41 $5,287.50 Male, age 31 4,037.50 Male, age 49 17,335.75 Male, age 61 44,000.00 $70,660.75 On the other hand, when we subtract the projected cash value from the Universal Life the net cost appears as follows: Female, age 41 Male, age 31 Male, age 49 Male, age 61 . $ 2,557.50 $ 1,964.50 4,952.50 18,091.00 $27,565.50 �a 0 Donald Dunlap, City of Miami September 10, 1986 Please keep in mind that the projected policy values assume an interest compounding 9J% which may or may not occur over the forthcoming five years. The Equitable illustration which we have does not show the minimum cash value assuminc a 4% interest. We conclude that from a cash outlay point of view, the term insurance approach is less expensive. However, the projected net cost to the City, assuming the cash value development as described above, is probably comparable to term insurance on a net cost basis. Individual Long Term Disability We understand that the Equitable has underwritten individual long term disability policies on each of the commissioners. Essen- tially, the benefit provides a replacement ratio of 60% of compensation (which includes not only the income received from the 0% City but income from other sources as well) after a 30 day disability elimination period. We were unable to locate a published material which objectively compares and analysis the individual long term disability products of various insurers. We did, however, ask two of the leading individual long term disability insurers, the Provident Life & Accident and UnionMutual Insurance Company (both Best's A rated companies) to provide comparative bid estimates. Attached Exhibit C reflects the disa- ility income projection prepared for the City April 21, 1986 and compares it with the premium projections which we received from UnionMutual Life and Provident Life & Accident. In asking carriers to promulgate these quotes we assumed that all partici- pants are in good health. You will note that the UnionMutual submission is less expensive than the current Equitable plan. However, it does not match the policy provisions of the Equitable. In addition, there is a dramatic premium inconsistency on one of the commissioners which we suspect may be reflective of an underwriting condition. On balance, we believe that the Equitable product is competitively priced and should be retained. We hope that the above analysis provides the essential information that you require. We regret that time constraints did not permit us to do a more comprehensive analysis but hope that we have assisted you in meeting the City's objective. HCA/dmj 0- 86--936. F41F 00 10 0 t �.. • ,� � � Y; `.+.• e. r. ' ;�+'. -. . r • ; • o, ': r E :,t .l. -S • ,,.,.:R t » t. ��� .■.t �€.7� � fir.~ Q i� � ` `�'' -� , r IN fit. a yy yry q How to protect �r t-15 " T'hits rFpert cortcftrdc4 cntr three-jms•t series on lxie iniciaraince. In mart 1, published in June, we � yti..��>r„ Y� ya� r _Y r reported oRt the simplest qTe of life inpwance�-^rY.or- 'teritt insurance-^--prhich is the ty* we recommend formost families, � ��.`•+, `" � �. ,�. In Fort 11, published htstmonth; cve rated whole -'life policies••• —•for ycarp, the life -insurance industry'e bread-and-butter product. _ . - • This rnont:h; we? look at the new kid on the life - insurance bloc k-----universa l life. any companies t are pushing universal life hard, A universal-life- policy,certainly ofl'cra lots of flexibility. But it �• :� �: --involves iottte pitfalls as well. un nnce niversat life is the life- Until universal life came along, the �_ first time in the history of life insurance. insurance industry's cha- insurance industry had changed about as agents can do what they always wanted to meleon. Agents like to say much as the Rock of Gibraltar, the famil- do and that is use greed to sell insurance." it adapts itself to almost iar symbol of the Prudential Insurance Co. -says Robert MacDonald, president of ITT any insurance need. Year after year, the industry sold billions .. ;Life Insurance Corp: Want to build cash values? A universal- of dollars of whole life insurance, a prod- The new product also gave many lesser - life policy can do that. Need term insur- uct invented more than 100 years ago, ;' known companies a chance to make a name ante? Universal life can act as a term and whose rate of return to consumers 'for themselves. Some of the industry's policy. Strapped for cash to pay your pre- was a paltry 2 to 6 percent. household names, notably the big mutual miums? Universal life lets you skip. a Universal life changed all that. For the 'campanies like Massachusetts Mutual and payment or twq• ,, first time, the insurance industry sold a Prudential,' stragglW belatedly into the Those are some of the reasons why, in :•. policy that paid rates competitive with :universal-Ve.inarket. When our reporter ; 'for, the last four years, sales of universal life other financial instruments. In the early. sbopped Lfe` insurance, she found have eclipsed sales of whole life. Univer- 1980s, that sometimes meant, rates as -, agents for those cornpartieidoing their best . sal life is fast becoming the industry's new high as 12 or 13 percent. -.to discourage • her from buying universal " bread-and-butter product, already Sales pitches no longer emphasized -.-fife.. fu our survey of universal life, policies accounting for nearly 40 percent of all fife insurance as death protection but insur- hem some, of the best-known companies insurance sold, ante as a lucrative investment. "For the . ', proved thtpoorest buys, r � s, �(, icy",� ,�. v . G . •,., r , 1 Unlike whole life, a universal -life policy is what interest rate the company credits to ".inonth, it deducts from that account the transparent. With whole life, you never your cash value. With universal life, you cost of. your insurance protection (As know for sure how much of your premium can see how all the elements of your pol-,' ' ° with other types of policies, the cost of has gone to pay for company expenses, icy —the premium; the death benefit, and --'-.,insurance protection increases as you get how much for the cost of your insurance the cash value —work. , - • The company may also deduct Protection, and how much for the policy's ■clderi The company credits your annual pre- • :: rharges.for its expense& What's left over ' savings component. And you never know mium to your cash -value account. Each -µhis Your cash value. which then accumu- . CONSUMER REPORTS ` AUGUST 1988 51 S. ..:i. ..tF:•�L-•rT'!t w.l`.'v:i>:'...".mil«. .. , SG-936 • WOW 14 mT -Witr ""11 0.0 We' � P �-rmerr No rmv m r1hrr;7# frWompm-i reir"d r—if-AR A--,4 r�­ in r?"­ A",fN Mar—w-T 0 tbe m9N-r*bi­. ba pe, 1—m- Pe "M,;. lt,!r prkn ". VWA Cr.-rimrT to MR&W to Y-M- ("i �'M h-7 rw Ar2jrijef :h4, R1,1 J-Vu rlir-j fi-34 P11 lbrAl '7 rhvorpr mn--? tbnt if r-11 fn pry eriv-pte Fp), jM ifT: Jn*."rppA "Mrivni" iptz?y9ur fiqVPr,: cj+ alierc Iri, JInrp _4 omor MO rg it, 11W_ *Nility_ro rVis 'r rZILZI, b the frt-r-w"t-ir lint it th-1 6f*4 it fn-mvtlo rrr­rit­hiArl—i in the rrinripl;fy chvrpw. withftw7lit ilk P NF PdV;anf-TVF n0vnirif.r- that )rqt Fre-A fn the cnjr?jrnrT whit. F*l C*norl VFh-* Ilk, off pl-nly of profit for tho cores the pm-1, jr-t the com.ppry rnigb t Larp . vlo�­Iif� 0 1 In 7 p::irv, "Wko I.-P the firli pgfmtR, prijeiF is p c,b;:rj7r you for 'ronriplity cmtf-, - poVKT pmrW_4k4't=xh-Jio_,r vfpw". T)vv.' j_ipFling art," ft.,-r* N-0,12 PuRi-, ;n prtii­ th-rf'q PfbinF to prrvent cy.rnpPnir_-.q y at Mfirrypn1i An Lifx. "We're grri F fn ptsb ralDe is rant. rased at it kfttniuliatm 'or I n frrm ch%rFinp the m:2r)mum, brit rno!zt cialy when Mi rit1drsw it,. At tbmt tirrK,; the rn-n!"ym rie cmf V—,Y Or PnellhrT." cn­np:%r6rF are ciirrently rb:erging jr�, yore have to MU_T�-_ only (M the pml-Krt 7111! p--it irulAr Mir F cnrrP-?r.v concert` F7p,-nr-.!- -chstrgrit. The, crprri.-ke R tit: ofurn,of emin" whether a pnlky i! P grryl or charges apintt yrr.jr policy nor - the ;*d­1tqtt W] I t bid buy. J`10're'!r wlipf you should knfvw, ;n7l!v! do not rhpnp,7 orrr the. policy`` lifr_ clear, howevff,*1i,4mdr-T yrm mare to . pay pb-"jl the rnpi,7r irigredirnts- Cnrn.p-.nirq Ps�sq thfAc ch;rgpq either tapes on partial *itMr;ralr_ Inferifitpt rste, The intrrr" rate (rH-' with "fr­nndoxd,," "bAcklox1s," or ".b- ance 00u:WT thinks TMI dmn't.tj* TRS._'f_,jt#d to your (-z-b vOw! j4 th,- Flitter thrt With a frontlaPled policy, a company thinks you do. (Tax-revbnn bill. ft periftv. F'C'Ns the poky. F"Pch company gu;; r;zntr rq typically deduct, amywlicre from 5 to 9 in Cangrm my rr"hT tl* it *ill edit Your CP;Lh VPlue f.hat )f.A.Rt P prrccrit of r-iich premium for its cy.porn,"t Universal -life. com-P-0e amm" �h "minimum" intrx" 'ti�o ' v rate, tjTii—_lly 4 to be - it crrdits the premium to your cash Jore ' fines, cdk-.d 01 "_ A,'smd.Opdym,B_,'2 '411y pecenL But companies actually pay vahir. It usually deducts the ssrne amount Under Optx**A,�y . mv rxTivwt nmOry ant-0 rrsbly more. At the end of Nixrch, from each premium, though a few compa- only the face amotmt . of the policy, 7M to interest rates for the policirgwe Iceolco?d at ni—, make a larger deduction in the first they do with term air who"e policies, tanFed from 8114 to ) I percent. year and -smaller ones in later years. Od*4 Under Option D, tbcyT restive both the You may F,)mrtimcs find a policy that With a tjK-klwdcd policy, a company face anwant and your aocumulated cash pays a lower rate on, say, the first $1000 crrdit_%> the entire premium to your value. Option B costs bemu." the of cash value. That was a cortimcm, twist in mare_0&' account. But when you want to surrender company stands to pay a' larger •early univri-sM-life policies. Or you may your policy or, in some cases, make partial amount in the en(L W a company paying a slightly higher withdrawals, it charges you a hefty sum When acuaries.-prioe a W&CMI-We rare on very large cash values. for doing so. 'W policy they ruix. Wee . irariX6&T -&irripany's board Of directors usually In our study, we found that surrender �n"Q inrate paid (m the cash value; the detemines- the rate, and may change the charges can be as high as 150 percent of • cost of the death bens often called the. rate as often as once a month. Occasion- the first -year premium. That means if you mortality charge; and the i comp;mfs. -'ally,acornpany %ill tic the rate to an index cash in the policy after a year or two, sur- expensm 711V interest rate raiser your' such as the 52-week Treasury bill rate. render charges might swallow your entire cash value, while the mortality chuV.and Mortality charge. The mortality cash value. c6mpany pis lower.it -.: charge' pays for your insuranc# protec- The insurance company's expenses are N, 41, IM Of UZU11:00CE FACE ANKW P"UNS CASN VALUE Tom Paid on sane pok None. %A: yUlu 4171a w few le . WS UW lo, 4. No NA utsualy P*W on so" poid; P)S" s000"A toh ,nay b* L". W 6040Sw onWnXSot M can TYPICS4 Mo. Grows at variable rate • -W�yt= Wnb) at on at f. 17 ot klckj the 4W - PQdsCyhokW.. cash vahw which the AbW Chart *%oW4%"PD*V "_'00" UfAMW f. C t.1fnSL to tirris 516 t^ CONSUMER REPORTS AUGUSTIM or -S f .z - ' s�' - r.,i,• :i.,: .; ti it�: �� � ,t'd•.�i-�@! !- -� � f MPS .jm•',• � 'u .`_�" 7' .." 'f•w ..n. .. . . • - ' - .. J NSF I,cf its th, t2rlr y"ra of th¢ palley, fnr s whilre. p�,liri-. vith frtmtt'rods r-t^r, ohlti r`rptre.p_+Cl-W ta°tnr�ny ms1 t,h sl limp crate and apf�trs' Co'rtertie. wc.rE faehinnsh!a. 1�+,+t aQet c ca*rpirin t Fts epr crncsar�+o•re Irith high i!rtr^pci pnnT* are high. If yott d't t't each in tbR that rnncurnrri chivd ;Pa -Pr `ys•oro 0writrii 1r±°P..rfct thrq'F* pf4ie�r for rnznr years, th6 hoc thx.t had hiph €t�r"ca charppc pat.inq v-p paying tl impeming high churr, 4 fir F; platy of tints to Tie m_ip itt f,,T of nr€9, c+l, their prrmiltm5, lrlclw• P► Wlirirc vjth h�mrlr- fR "n wflfl 1ratnrt2Vq rfWA, %�►ds!I? F .' for mart of th, l rkinade¢d pnlicice 70, loa'.is are in vogite. Consumes don't cos ;,'&Mp>afrry rrmy p7r rrp-nee 1 krttpd Pt., PmTndrr charges gradu?1ly thnsp charges until thry with4raw• p<ri of jfhvrprF And mfi-• hIT. cst-t-, hoot ofirr f dtmirstsh, tdraspp€wring fomew•ber, their cash glue or surrfneIrr their p'tlt• ' lor^tntereFt rat, Mths' cash 171tw" betv"m the tenth and the fiftf-,Pnth y"r cies. The charges are there nonsthelesc.. OrtR of the tricks is to h;qe a MrKT the policy is in forsr. In a f€a• caeec, wve '• Some companies also charge a on -time' ` .ihat I,"kf Ford ti th- tsmc+-arn,`-r at the NoW surrendf--r charges rising after, the policy fee" that can t? as high as $ 50, _ _paint he t+trys rt icndkn>'s pf"I to the cheer f:.rsit year And remaining high for a f€or and some charge ongoing Mminirtrativr _pony at cttcry paint," cays Szm Tumpr, ? yeorr before pradually tapering off. • I fees of, s%y, $•5 a month. There mry be a "pr•csident of Life of Virginia. "The totally With policies that have Mth fmntln?d. special feF, usually g25, for makinppprtial• . .roust _ policy.—'wht*re the cornpary it andd barrK"ds, the loads ve typically .: withdrawals, indifierept as to it"ho.hrr yoga lapse the kwer, and vanish more Quickly than on Comp -,nice stress d'Ifi€-rent ingredients' ,• priky or StIty. itfn it -d rs't eanist any - policies that have only one kind of load, of the pricing mix, depending on their w h! re." Unlike whole -life premiums, universal -fife policy 'will behave much like 'a garden . ;,sheltered money-trtasket fund.) pretiums are not cast in concrete. You variety whole -life policy, F - 'With a univet sal lde policy, you can also an change the premiums from time to Sometimes you can pay somewhat less �incream your coverage, within limits, if ` time depending on your circumstances, a than the target premium, say one -thud to you wish, you can often keep on paying flexibility that makes universal life easy to one-half ksa, still accumulate some cash "'the. same premium you were paying will as the only policy you'll ever need. value, and receive the same amount of •-.I:'beforc. If you do that, however, your cash "People don't object to buying insurance, insurance coverage you'd receive- iVyou---_ya1=_i%'ill _buiM up -snore slowly than they object to paying for it," says Michael had paid the higher premiums. ,before - Wilcox, a Union Central Life agent in With some policies, you can pay much There's nothing magical about any of Toledo, Ohio. Wilcox says if an agent can less than the target premium. Your policy , t these arrangements: paying less than the show • Sustomers flexible insurance pay- will then behave like term insurance and ` Ztarget• premium, skipping payments, pay - meats, "they love it." According to Wil- build no cash values. Most companies.-—tng more than the target premium, or ' cox, universal life allows him to snag 19 don't like to sell universal life this way. 4 " ;increasing coverage,• Insurance isn't free. sales out of every 20 sales pitches. When If you've paid the. target premiums ,You pay for the coverage one way or - - ' be used to sell whole life, he thought 10 ' faithfully, you might be able to skip a pay- i out of 20 was good. .. ;• ment or two in years when your budget i1. �` ::The cash value functions as a reservoir ... :Most of the time you Can pick the pre: tight. And if you pay more than the -target ;` fronr=whicli the company drains off the - + mium you want to pay. ` •.. " premium, perhaps by depositing the wind- _,'money to. pay for your mortality charges y You can pay what the company calls a' fall you've inherited from rich Uncle Joe, ._ - °aiiii expertse charges. If the cash value of "target" premium, which is designed to • you may never have to pay another u:erit ;y your policy grows too slowly, either beep the policy in force for your entire on the policy. * ; ,,; ,;,;-because: your premium. payments have f ' life. That premium may allow you to accu- (You can't just throw, a million dollar�i `;;been small or intermittesnt or because the mulate a rather substantial cash value. into your policy, though. The tax code, -.i -company pays louver interest than you Target premiums are usually similar to says that the amount you put in must bear •; :' "eiipected.• the • day' will come when the rt -premiums for competitive nonparticipat- some relationship to the amount of• iasur=.._ '-."company a3ki- for nxire money. You'll ing whole -life policies. If you pay the ance you're buying. That's to keep people ',';.have to come, up with extra cash, or your target premiums year alter year,.,yonr from using a universal -life policy as a tax.k. policy wri1llapsej: . 1 hi.ike a thameleoh, a uuniverssl-life po licY ; pe d'row*showing ; cotni titors.tnakc projections using ititex;' y also y ~ bycash. a n fool you. Here are some of the ways a .'. est rates that can't be sustained in today'; i` aloe accumulations' based can a higher n universal -life policy can tarn out to be less it .-.: climate of falling rates.. •,'? •" +1 ', ,i, . rite Ilia theemnpany is currentlyp3yblz When attractive than appears. customerst find ourthat the high dos• example,.whee our reporter stopped - 1 1 A company could entice you with a sky-" interest rates that lured them to sign up:,'; foi.lnsaraac� �agtat told her that The •tp'; high interest rate today and switch to a have: vanished, "this industry is going _, +.Va-#V1try-`'wWilzi*g A I percent on its more down-to-earth rate tomorrow. If be shaken to the core. This kind of ma apt Wfit sal -lift. policy: Actually. the com• that happens, you may find your universal- ulation is going to wreak havoc,' • sayiE ",:�, �atras paying 10 percent at the time. 'ER life policy is not the outstanding invest- William Floyd, a vice president fork :-. •15ome. companies quote their rates as talent an agent said it would be. Huttoa Lift. =.► c interest: others quote a compound Some companits; complain that their An uascrupuzlous or incompetent agent �.ta >#h"irtalttlsed{ policies sound better. -- �+ -ear'+ CONSUMER 'A REPORT$;"AUOUST19t38 i,► ':•..• ::.a,'' "b •. h:N.�,..1 ��.: �.-'{�:.:. 3.. � ... i • ....'.Y ... . s .'"Me:'.Ioi�kiY..�.11.Y' :'944i.::f%1.iit,'�L:;r •i .. _ ..... . •r L , t , • 86-938 n '(7 Tw­W M­thlr, G—ler—P rrPT iorMi-se thi-,F Pc fir Pc Y-nTI, hrre to pl-y hirhpr rwrmirrmc ff p+f 010A, FW—A th pr -.Ihs ­VF Tcti minty te, sr�plr pr m, r""M--T,f p4trtb—i pnM;,frof rxio i _Amf"Y.,:X call of7br 10 for Con 17,71ir F"F"'rp"t Pr�,w wmM hXre mv, r;4 fcw TVW' ywiml, "The vvPT^,Fo Fry or,, (ham 5,,reft T-ho scorns thins r�m hrp"—r 9 pn rlmnt r"tMho!F withvit rpplt""v t1WVVW _wc"Ildr�•t I n -4," vrot it "v;tninhin-p p- im" tinivrr, tv"n n0" wrrr ktr4,lt & -7 ThF Philify of P rnm;V,,r.y Irl rpir. th'! Fn)-life P-)Ii-Y. If yn-Y PT)' A )TTgP Py"'Fh A vT'rr , r-,"Mry mn rV1._- (or ploriplity Ch, ;rive it ;1 diF­rh,Pr1tPFF of uni• pr(rn-itirm for, sry, five or co.v" y,!.*rt, the knT-r it i m rUU1, thzrg" 'Pnd ot" We very`) life. 11")t to fir it's P thrf,;t, not P FFrr?t mpy predict tb:ot VOIJIT Pc'vrr h2vit. ether FrpfrRsls In replitT. More of the cnrrp;lr;irr we lrvn�r-4 to spend ;znceher dirne on! the pnliri. chrev.t. Saxym T' )or at h,-ve rpj�l their mortality clipri7eF 110icve that promise m� ly if it's FJ_Atr,3 Fe 2ef up figs awl x company's, rrpona-es :Rind- theirni­rr-;%life ronli' ci-s were clEpTly in (he p1licy. Pre higher than rypectmi, Thr rornk--ry 7 brFt isoF4, The premiurm v;;ni!zh only it interest mild r"jp thrwe cfWiz.tw incre The p7rmcni fluihility of tanivrrsz.) life- rates sfFy high enough to rrnergte tArge -rK"1;oJ;ty rhx h.,5 a dark side,, ton. Flexibit pay mcnts C.Arb values th;:1 cover the cost of your The annual ttatemmt 0vt the cnip,pP0. can lull you into P false se-risc that you're insurance protection. If rates take a nose - sends toKhP poll ylrnlderw�JJd reveal of--.-trttinsz your life -insurance protection dive, the company vri)l come calling for cotirve, that the con4iani had without having to pay for it. r - T more money, 4 ft.'s, virtually impo*hle for c6nsu�mm-s, to ILRI- f e Mrl�i�lrrl '(Or all Un.JVCr policies, when you'll want to cash in the policy. The judge the cost -of competing unim-r.W-rife However, for 45-year old buyers purchss- cash value is the fund from which your policies. With term insurance and whole We. is ipg $100,000of coverage, weassumed an mortality charges and certain expense there a stdArd cost -comparison ennual premium of $1500, because some charges are paid. If you decide to cash in method (the inte-Test-adjusted net cost companies had minimum premiums your policy, the cash value —minus any index) that's accepted by Lbt industry and exceeding $1000. backload charges —becomes the surren- regulators. Witb tmivcrralJifc_thmrj,1)o A valor aim of our study was to find out der value. widely accqrted: yardstick. So ,we de -which policies had the lowest expense and We gave equal weight to the 5-year and signed our owrL In. doing so, we ark'm mortality charges, the ingredients of the 10-yeas values, less weight to the 20-year months talking with industry experts and.,,, pricing mix we consider least likely to values. We judge the 20-year figures to be our own consulting actuaries, rrfining Qur....- .,..change. To do that, we projected each pol- less. believable; we don't expect either the method so that it would , b , e - fair to compa. :!,­1cy`s cash. value and surrender value, companies' interest rates or their mortal - lots am uscfw to buyers,' We asked.72 compaies, ty the *"­mortahty using each company's own expense and factors, but 'ity charges to remain constant for such a genera a single interest long time. (The Ratings show only 20. largest seller's of universal life, to send rate for all-8 percent. The first group of.- year cash value; the 20-year surrender data for their policies. We chose the symbols in the Ratings tables shows which = value is virtually identical.) panies primarily on the basis of their t 7S,companie3 performed best by this mea- %, Once we had weighted all the totals at universal-Iffe.premiums" Elie ' amount- of. pure. The symbols range from 0 for Best eich interest rate, we averaged the two new uruversal-I&.: business, and; facq to'* for Worst. results to determine the final ranking. A amount of universal life policies in form:, To give you an idea of how much money company's 10-year cash value (accumu- Forty-om co'naps'nift resporlded.. that means, consider a 35-year-old man fated at 8 percent) broke any ties.Sixe many companies have morethki', -buying $100,000 of coverage. If he We.figured-the accumulated cash val- ' one universal -Ur, policy, we asked eacb i:•"boutht the top -ranked Woodmen of the ues tinder each policy's Option'A and company to send as the policy that repre-.. `-World - Policy, he'd accumulate some Option B and found virtually no change in sented the greatest percentage 01,' its',• 'sales, $12,625 in ten years. If he bought the bot- the Ratings order. (Aetna's Atcomfles (We also asked each'cafnpany's sea- :' tom -ranked Prudential policy, he'd accu-1, policy, however, ranks somewhat higher ior actuary to.attesuhat, the Ik ,emulate only $9556, . 0 under Option A than Option B.) Our gat - indeed met. thatme6fication.) ' To give companies credit for the rates ing4 show only Option A. We asked for the. interest 'rate each thiy were currently paying (a range from Please note this caveat: When we began cwnMY cridjted- to'k cash VaII&P its of - -.241/4 to 11 percent), e also projected �r ed the c our survey of universal -life policies a year March I.As weR as for its' mortality. and _.r-,:.cash value and surrender value for each '-a go, we found a market that was changing expense chargm (WC used nonsmoker company using its own interest rate as of fast. Many comparies, were revising the their mortality rates.) With those &ta._wq'br(j-"'% March 1, 1986, I -life univeria policies frequently, perhaps jetted the cash malue and surrender value ',.'.--We did those calculations for seven - ,every 9 to 14 months. Thus, we embarked for 25-, 35-,and 45-ye'a'r-oIdmen biiYin ptriods:'l, 2. 3, 4, 5. 10, and 20 -.'.on the project knowing full well that some $60.000 and $100 QOO of coverage. S'wi q years,ln the Ratings, the first five are of the policies we rated might oatbe avail - the: prenuarn for a - universallife, policyli -:,vombizied into a five-year average. able when our report was pubfidw(L We (within limits) up to *buyer*,. we based The, Ratings give equal weight to the 'judged that the benefits of our survey our accumulations on an annuii'prem cash value and the surrender value. Both 'aiyeraza would far outweigh the fact that some pol- of $1000. an amountdw to-th�= are important, since you never know ivies won't biaround for long. 518 .-a CONSUMER REPORTS AUGUST 19 M r-1: - r'u. W .0 86-,93fi i A 114 A Q, 5. Tue - 71* stprt of our sfllft pliry roonnnni-F pnP � thoTIF IFFwntc •r"'11A re"T r_WT"4-i' it - Put a Policy vifth polkip; poij by�, C-4-n- or,fr frw-111 htvp X pIrrpndoer For example, �Vnrompn of the World, A ppm- with F ins, inirrrO rate plsr) b;25 Inv raiue Clitpl to it; "th rpbi� Policies thPt firpternpil o-ppni7plinn, r-rils F pn!iry that frrr"r-nsr anti mortality cb.,rwrlt, making it ire b,od-mlewl thnvr ; lcvrr surrender rprike ri or near the top of F-rury Rrfini;F P brtirr pnliry than ono wb.q",, intr,.rfct vpdul in. the rprly year* Pivi m;,y tw 7wful table. (If you're not ;It pVCVAManj you c::-n rp!e it P prrctntpgr piitll or t-o fiirbCr,�, b11115 if you hart to cash tfwm in !vni after still buy The Policy. Write to 1700 Fsm:srr It's the mil of interest rr St., Omaha, Neb. 68,3 021 Crnti-PI Life of charges, and mnrlpliti . ch-rgr,-F that dfte.r- Take Vplirr Forgr,'q 5:'ri­,f llp-wbcy for D"_ Moines, Iowa, Alrr;lnl!'r Hamilton mines whether P policy is a goad buy. : P 35-yr;'r-0.1d man buying !llm,,000 of Life of Farmington Hills. Mich,, and Southwcrtri-n Liff's Visior Urifirl-stil c:f.nrr­aFF_ The policy ranks sirtr_--pth, Security -Connecticut of Avon, Conn., PIP-1 Li , f( policy for a25-yCPT-0!d manbuying with rraAaq:,b!y high accumulations for had outstanding policire, S60,0m, of coverage, is an example. The most -bf the tittle ,prtrvvJ5 v-e examined. USAA [ate, which markets directly to M, licy ranks eighth. yet its 9.50 percent HowFvcs,, if ths., jrlicy O'surren1cre'd in corisumers, b1p;5sing agents, has a. very interest rate is lower than the interest the first five yeaTik, it viJI he- a very poor good policy. By eliminating the costly rate for 23 companies that rank briow it. buy be-_7uAe cif its high surrender charges. agency Fjmtcm, the company can r,61 at On the other hand, New York Life's :Axv-min; the rwn Put in $1000 each lower cost. Although USA -A markets its Tergrf L(fr If offered a flashy 11 percent year, hin.surrendrT value after five years auto and homeowners policies only to pre- interest rate, but placed in the middle or would total only S3602 (asswmin; an 8 sent or formcr inflitiry officers and their near the bottom of the RatinFs for all ages prrc4nt interest we.). Someone suTTen- families, the company says it will sell its and face amounts. High expenses and dcring, after the second year would life -insurance policies to anyone. mortality charges offset its unusually high receive nothing, The charges, however, By contrast, the policies offered by Pru- interest rate. ­ Terminate at the end of the tenth year. dential, Metropolitan Life, New York Life, Some companies have better cash val- ' By contrast, the poricies of Kemper and and Equitable —the indusLry's big four ues than surrender values, and %ice versa. inter -State Assurance would be "me - companies —were mediocre at best. You can expect a front -loaded Policy to what better for those policyholders who The Ratings show that you can't judge a show a lower cash value in the early years----4kea to,4urnp their coverage by the end of policy only by its interest rate, even than a policy tfiat* recoups its expcnscs the fifth year. Both policies are front - loaded and have no surrender charges. A .35-year-old man surrendering the Kemper policy would receive $4236 at theend of the fifth year. He'd receive Variable universal life is the, newest protection and expense (ft& it $4602 from the Inter -State policy. UIUMEUTIAdy, that is just about the ,::.103pring of universal life. o cash values fail too tow; you may have only virtue of the Kemper policy. High Nariable universal behaves exactly .�_. I . to prut in more mone� to'kpep your frontloads and Sgh mortality charges Nfike its parent with one major excep- tion. If you buy a regular universal -If insurance in force. your cash values dip becatf�0 We in poor cash Valaes and make it a Efe'poficy,- the money in your cash-" ..."Value a nose dive, yo " " - stock market took U : pmr-buy overall. Inter-State's policy is : mewhat better. account efirns a stated rate of a] treatment: Either get no special r, ,so Some policies did better at certain ages interest that is determined by the pony up more money or risk. to�sing;',,V. I . : and amounts, pirhaps indicating the tar- ;0rnp" iy from time to time. you buy a variable -universal -universal p&- � 1 7:, your insurance protection. . . . v, � Several companies say they will of the companiesmarketing strate- ' -If icy, you choose your investment vehi� guarantee that your insurance will . gies. F6r example, Acacia Mutual's Flee I -r "ranks : ninth for year -olds buying A -:cles arid you money earns0hateier rate the underlying investments cam.'' stay in force for a specified period it you agree to paycertain prerruurn.W,:I; - 460.000 of coverage. For 45-year-olds. ",You can usually invest in stocks .a Q. first feiv years, Daring that .9 04 the policy ranks 27Lh.Qut.of 39 policies. The rates shown in the Ratings are for funds, or a:: they will guarantee to pay. the H.'bwAi, moneie-market, Oath :r,of the three. In other '•,";:'."Unefit even though your cash viilug!Q'� 'den., -.BmuieI.--we 4exe. breaking new 14.� 1 'words, you can pick the level of risk. words, , 6'. , - may be insufficle'nt, to pay the; t6st qUA-n,' 'insurarim....- ­44 , ,'groflnd in our study.- the actuarial work ­4m expensive. We had sufficient budget you want. If yott invest in mocks and the tiock ' ' ` * booming, the cash'. Even *withsu'c'h' si� . — . iH , , Jnarket_,is afeguards; 4Y J 4 prepaTe Ratings for -only one sex; since Alues in your p6licy-will rise. If the company is 'shifting a goodr*A of If'— 6inrently.. buy mare Life insurance - thai- vmmen we Seared the study to male: •., .-'itoik,miiket ciisheg your cash'val- to you wb6m you buy a A,!.-C.. .`.Ues will crash with ie- As with all investments, you bal- Versal policy. We think ih'e*'risk is toR".. 1` great for most people: and W of the �ompanies in our survey were afte the ritial re*zid against the. e potentc tial insurance pro� . best not to (angle your ins'. t irated. A +'- or A for financiAl stability by Ikst.'s Insurance Reports (or are subsi& ;&%k But with variable universal lice, section with n e,.. the mercurial behav10eqj':,, risk takes on an extra dim_ erasion. As the stock or bond muket.. iriisif parent companies that are). .,,we explain ou, page 515,'each month market may be a fine way to invest,'�,l "' i %AU of the rates were calculaited without '.. I al features purchased at any riders (option the insurance company.,,deducts frow._��f your cash value the cast of. insurance but not when insurance protection Ls., involved. h Coxtinsed on pve*s2q CONSUMER REMRTS:,; AtJdUSf 1985 r 86-936 H mylpf rd r-f-mll Ta2li, tkf, for 5, In, pn4 20 yrp-"' (" ittrr-r), rmj0-pd V-0-. in ARterick pre, wail -We to Cr, ho-4 a" (:**% vpi", prvj pinTp-7,4n r, ML PPI" 00rn F.rV' few MOO! tr73Trg P01i"," prrflprrei ricl-x " mfT, W. PnW rimp f # ppvhq l.rfppvTf rrf,* C*4 sw-TtRwrlr MOM@ cpwwrpw FW a 0 NOW ftwommew 1000 tsowwwow 0 Q 0 0 a 0 0 a 10-7s - Alm 0 mill M-P .06 Fly X 0 Ck a 0 a 0 0 0 0 -0 a 0 0 (n 1!1% 4) long m Ap-rvw 0 0 0 0 0 Ck 0 Q 0 0 10.4AD r4'---'110m t*Awp* LAI - 0 0 C 0 0 e In A 4111111 owt1w r-kr 1 0 0 0 (5 0 e (n 4 0 0 9 P2 0 0 0 0 1 rl m Amomida - 10.03 S*W ftow 171 - &75 CNOWY LHO 4*rw Lot 0 0 O (5 0 0 (n (!5 m25 A%PfhW ift 0A 111 q-0 0 1015 w L& 100 0 1p 0 9.50 AM As m, - Adin for Lmtbwxw Rmtwn '-Q 0 0 0 10.50 how,uph Al, I, IN Im I I &Xft #--qrKw PkAl 0 0 0 a0 0 0 10.50 r 40xft It~ A4 L* 0 -0 0,'-' 0 Q Lbwtr LOO AwwAftv'... 0 0 0 0 0 0 0 0• 10-00 ow rot urs r. T&VKL* if Q •0 00 samemm ram I RavW Aw*m UAr 0 0 Q 0 0 0 Q 0 0 0' 10-00 Lik4in7bb - Cbrdw%WF%s sy. Q Q. 0 f O. 1020 rw cilim Q Q 0 9.75 Q 0 0 0-10 0 Q Q 0 0 Clot". .77,- .0 0 Q 0 Q 0 0 0 0 0 1025 Q, 0 0 .Q 10-50 Sww N Lft%waW Lb Q Q 0 Q 0 Q 0 0 0 10.25 Q Ql' 0 • 'Q 0 Q.. 0,- 10.00 0 0 Q 0 0 0 Q 0 0 Q 9.50 Q -'Q . Q - Q ";Q ... - .9 0 Q Q Q 9.75 9 0 0 .0 Q Q 0 Q 10.00 0 Q - O-Q 0 Q 0 Q 9.7t Q * 0 Q 0 Q - Q 0 - Q Q 10.50 Q 0 Q 10.05 -Q 0 Mw Cm&d 9 0 10-00 0 0 .9-006 adr"maw 9.25 520 -4 CONSUMER REPORTS AUGUST 1986 SG-936 • `' ►:y •4• ,. � -•>' -� � �}¢ ^�y � � - }i �f.�Y - �'�r,` �• �," •ter •' ,.:' of ' • - .: � .; - -��� • ' w ..• - '.r r..- • _ ` : �"� ; _.' ��_ `fit ` t' RM � f 1 JfKJ 1p lw- CQ 0 fc 40 � Lift �3 t'3 C C) ` 8 f3 . C4 G • f0 qua- . ;r' t^9.t t C3 •; t�='C3 a :C9 Q.; t Lot s Ant"a"f 0 0 �! rleft ow xetupw-r. K b31E+�-Le*R#LAf - h e' .�• •. �.fT49 J?�.•�'��- Awe� ate► r Q 0 a 5 Q Q 0® C) as2 e C*Pb R tlty Q Q. e1 An Q. _ C) C) , • ., ►ei 11L fM d 0 ® Q 0 C) 4 50 rrrw,ftrfi Awwn@0 t ry"marl dives Q O ' O .e ..10 .. ; 0 , . 0" Cr - e - ®' tG S�J Md Ar NON Uer ►w LYNoru" ►+ fib O 0 C) .1 k� ® 8 -0 0 t as0 Nit 1h4e Qrf! r A C3 Q Q- - Q-...:�. Cerreellarf rNIf�+M L1M A. 0 O • Q Q : r � (� - • ' A mound c aar+ver a. r.. Q (� • .,(� -.0 .: 10.50 11.00 - �' ti.0 -@ O ..• . C)L«<M� u cr O- •'. f) icy n nwn D•ao,.wY�"� L Lea � .0 e ® • O . : ,: , Q� 'O el . , a Q .. fo.vo .. � � : ,�, wrr- w++•.•+•+`� `'J' • .•i i :: b • ®• 0 •'O • 1 .Q.:'.:��a�l/,t :'®'•yi F5 79,..•'�./._ _i02S '� son" Fir Am A4 Wk* Of i? O O O d' �`': Q : .4i Q C) O 950 =} ttis�r ri►r.'-,; `. .- swta a LA�frrrwr Lr • r, ` = 0 Q Q • ; OE ~', O A, a O - 0; • :�0..IL. ao.zs . oral sera m We" UlAvrsd un Q O Q . • @ Q Q O • C) woo Liierl�rw wr ./_ Aawc�ra• ,. :O lobo . ! s. ua of cawds Sun Lwetftetrs► R O Q Q O Q . O Q Q O Q 2.73 -.:...; a•..`. O Q ! • .Q `.�..{7>.. ®�® 0 11.00 saft" rwo Berra. Raw Plrrfto OF • O Q Q O Q ' r +U Q Q � (? ' Q 10.00 L� h..Mrlr S�A�lrBiidlt►a �`-`Q d', Q, - Q . C) Nap, firrrDlr Avmtnr Lila O Q -Q Q Q ' Q ® O, ' Q ` Q 10.50 /�Rw1rrr LrwaHn ir• • . 1020_ofAoe •QQQ ' to.00 ` �Uie rrrwaoee i Aerefb ' T �' 9uA lr►a' : _� Q ' C) ` rear ru, lbap+ a LM > O Q Q , • Q. ;. ~ o • • • • s ''; `�r.e..err__ ";...; :;�-„"Ag�ra�,LMv.-:- ��-•• ;t•.e 'Q a:Q._�Gia_s.;�•�•"��1-V�•G:.•�f. .,G00 ,. +,"1 ,.: .AruOYAwruntJh • . • a Q :.sue• K••/ ` �► `• 925 ,. Mr�Eli eflb.lYri k r.?.w�w�drrr•;w '''• �• ;• . ,rt•.•t Nrs�►y =t. • - o.� r.' � /�NMLtI AApraYtlfr LaII • • •_ � • • = � •``�,; r N � • • ~ • 9.00 . ram.' .:�, ��'A �•,f •:� -Ji-. �..� -e•4- '' ` ••� ;�-•' � •'•, i{,�1�•. ... �. rye '.•v, .• .CONWMEAAEPORTS, }AUMST99802, iF 1;:� ' •• 't :� i`•... '.� .... «a/:+,. .. .'�' k diG iit'.:IA...a yS.4trA i�if• '.i�irL�'wa �'�iT.• ~.}.�`'. ��. ...�'.•t1,� , I Ao # /srwlo""r of ors / _ A �+a7+ts R (y . - - � t0 tR pimw FfvmiAm~ tlim ,�, M srrr� �9►' 0 . 0 Vim' • ? 0 Q 1tt A0 POW 0 d C9 C3 r#r tcrcr, r Q Ar • O 0 O•• O 0 1o.o0 Sam& on .F 0 Q (n 0 to.00 L1�.►... , ° � _-_-� tom} ��'�-� �._I�r,..� _ 0 0 O 0 O' a Cd - . g.s� �;. Q O• 0 O O O• 0 O@ 0 O Q Q Q a O O 0 00 0 10.50 AL -0 O 0 O O Q Q' O 102s • O O (n O Q 0®® 0 10.50 0 O '• O 0 0 O• O to.00 f a :. -MA4 UM O O Q• Q O 0• 0 n 11.00 " 4 Ia • tVh* Uh -_, : ' 0 0 O t5 Q.)O @ O O 9.60 L a ..•, A O O@ O O O O O O O 10' • O Q 0 Q 0 O '1025 ter et - - = Q>re4r /anus • • @ O 0 O • @ O 0 O 10.20 ,:,• -, r, .��4' :F.�. O Q @ V @ @ O O O Q O 10-25 �. s Oesue .. __. c;+ • O O@ Q Q O O@ Q@ 10.00 Liieoroetl�s': C 0 O O • • (5 ® @ • • 9.75 i etldr� a L ►a. - r . O @ @ GQ Q O @ @ O @ 9.75ran saftd. — fte NotkW O O @ Q O O @ • • @ 9.50 • L#t�f!eFttAhr " '�s_�:•.�; -a . $fJYL+: •� fit"' ^ @ a ! • • O O d @ 0- 11.00 r r" sirihne - ' : - uwmowsrsafufe @ O @ • O @ ® @ • ® 10.00 <...-O O 0":, G @ @ ! • O_ ' • 0.00 " 7 r rN.W �t�aotlrR:reao�tLm - @ • • • • @ @ O @ @ 10.50 a @ •. @ • , 0 -O -,:: 0 • . • Q • e.25 j 4MiW CM6's! . _ � •. _ : - t 0.00 I%XWm LHD N Nw ftk @ O @ • • ! @ • 9.71 bv4"mim CAP ►,tort » — - APPV62W LAIR ' . • • • • • • • • • • 9.00 - :.'":. 522 CONSUMER REPORTS AUGUST./988 '#':r, :e�f,yt. f� t ,r+'`c �yt,1 .. Y..• •j.. • ti!� _ .. 5.;'1C•�CiiebP:''.1/�..JSl��1�1:id�Y�$? ir'tii *:.: �`.�f_wsaP.� ►�;��i+:i�ai '!�'L•h�:*'i.'.• a 0-i FAIN - _hj;Rj" I i ilk rVA.- pwdxw of or vow 0 a 00 , -04 -, 40 10M rAMj7W IV cy. 07-0 a pip" I. P WIN 01 0 E Gg0 C) 715 LLB Life. wk�r Im"'W LOP o 0-0 -'70 com"Kifro owmar A*MW* Uff @ 0 0 0 0 0 0,0'. 0 10.00 )oft _ PON xpr*ow bw4uft Q 0 Q a 0 ..'.0­010 0 o Low (n-' 0 0 Woo ftk NO*W ft,* P 0 0 0 -0 0 ' plaft C) o .5 o c iO.25 COAPT Los Lkoywrm Lot o Q Q .0- 1025 rowtm* r*wft rmm *4. mom LF4 Nwffw4 Lof s &Ty Satter 0 0 0 0 0 'a 0 0 0 1025 LkS* 0'% 0 0,; 0 _0 0 0 0 e 0-,-' Q 010.25 ofift Www li" - o e, d o AM AmodsUm lhw Laftma Haram 0 w e f (5 0-. 1050 &,stow - i n*xA* Fftw*n A4 uts 10 0. 9 Sw Loo of colou Sun LAWWsw 0 0 0 Q 0 0 0'•90 Q, 0 Q - .. 10: Q'Woo o o �Q :' 'r 'Q'�AD _'' Aemb Nabd rkirl 0. 0 0 0 0 'Q w Q 0 -0- .9.92 O• Q Q 0 Fkd cairn Of On# PLC, e e 0 0 0 9.75 lom now Soo* r*-Q -+Qy 0 A5-,10.00 abim cdwd A*aw* Life Q 0 0 .0 • • V 0 Q. 10.00 ona6m mood or.-O.,2 solvam ram noxat Pmnmor Los ­o Q 0 Q10.00 im of "f*b 57,a -�Q 10.20 fto W &A� A',dwwd*"&mdw9 Q Q Q 0 'o 825 NOW IW* Luo xaww mm*m TW ftb4da" qvin R#xb*4%1*muft N 925 of gow lfw* 0 a .9.71 04 AAA L* •9.00 CONSUMER REPORTS: AUGUST 1986 5k� -V f % • :, �, �,� �-: :• cr .., ; ►=� ' � � tt ®• Q • � ��* C3_ �. _ �► tots - ..... coo 041 Q Q 0 76 - •r i ...,; -� .:" rT - of -_ •� - pow rpr no 4pbolm, i t :. - 1 lilts' ' ::F'�_..n... Q 9 Q Q 0' 0 Q Q 10 25 ;,.�, .•t� r., .� s •,., s.f.. 0- 9 Q 10.00 N •,. ' �i �� ' . ' t .• 1 «� 9 CQ 0 - O C7 : } C? Q Q -.0, _1450 1 t xhillbol.y ter- .`T:' _ 9.0 Y0�al i1.V ' - ��T�.�':, jam:''' .1/i�,�4a: •+'T�4�.i,.L I�+:*. ��yn:.•� •j.'{ � _ > ��• � v9` � - AI .. V ® � � � derF" Ad W?oV Lrf . 9 O O o Q ® O 9.50 9ll(lttr An Ill �,•; E�SxiAF9•-EPr'� p'r = i.. Q ` Q O 10.50 tie' 5,0 0 ! ! Q F: 0 0 ! 10.00 =.. . Q O ! C9 O O 10.50 9.50 r•,. :� tR W Q ! Q O O lie? • O `i?i 9.50 Milt •�'_Q ,,.p Q `! l (� -0-- Q 10.00 :_ fiexl '�• . m i ! Q ® Q Q ! ® Q 9.92 ' •' p�tgM�: ` '::'�:'+'t3,e`LlkQhuPI�P> as" 'i' \ �.'• '�6;�; ®'!.! • Q t�ii ! "9•73 ter-- _ • ;f . / blp A7rn Ac; ift a • ! Q ! ® O ! Q 11.00 • ft of snrtLtleraarr+ O Q Q•• O G G G• 9.7a a. t �,:..p Q • • • O Q G. O G 10.00 �r.r+�. �_l;«: .,, rPt�+�e►L�r-S . ;:1 •,'' ' �c: • Q t7� ' TO 41 - ! . Q • .,:0:. O XdIW„w . �mrrur ' a • • • • G G G G Q 10.50 KatNrlraulist::=.;.<•_.:,; n+r►,.n.►.M:, c ...� .� ® ' O O •.. O tom'- • •• 1it�blMrdllwlfarf� '' ' Cpn01t>�lrp• � �- , • • Q 0 Q •• ! • � Q •' 9.7'1 . QLo"Uv% %dL*,.: w... •,,,.. p . p : 0� ,.• .c ' - p ' v • . e o _ taoa .�:: �.:.j�.-:.-..:.F:,; :;�:.,.i.ty'ti,'' ter'-' .- _ :.. _ -• - - - -i '� .: ._^ c . PI �'':`' L^. H`?' `. •,• r *' `.;. ~ CONSUMER REPORTS AUGUST 1986 524 �'+��y1�yt ,;..r+ -M:' �}J0. � • � � • ''LRr _ ` `/^:� •Y.�f1�.1�-.: � i .�' 1�.3' f1''4. .. t .. _ •r C�ryrr•.�t f(.t r� �! `r , y, �' Y"�Lb�;�,��, c.af !";, .� �r`�.f � � ,. f .� f ',�i w+T-b � �, � - .:T• ' .: ..' ,� .•id"F•�1f ar i'i.E tdC�Y����[•tl`7�'Ar4/o" �•.l"�,�j�.• .�... .l.'d4 l �'a:,, ��'4i ,. :G�4iS�.Il '�lr-. �r:r�'.+. :.r. ... a �. n i i . I :, , le+ v T1 rrrN JO An— @.(W POW 1 E. C3 ' ► t� �► ► -:.' e:_ 0° f9-::cr -co , pass ` e �► a �►► O 4::'�"► Im grompy F F LhWI)w Lefd 0 • • e 0 0 Q 0 �►004maffftf OWWk.• rtt .• z•g,. ,.t9 `® a "E3= :�'•t"y _''C3 :E3 P, ,.-p ta.m _ � LOW��► ® e d p • f .. 4 e . Q . �oa3 _ u�► v, a �m e�0 9 0. 'r.,e Me � ,� C9 I -SO rrnnrur.s E, s -0-0@ Q© Q® e .0 ® ,aas LAWKYun `LVft ® 0- 0 • 0. o'- c4dwy uff u m O Q 0 e U .O 0 e e U �K O C3 Q -"Q. Q ® 10.50 — _ uwmb o. O. O Q .:--,= .:- .- a 077 4.. _ lo-so _ dun 0 0 0 Q O ® O• `? .oa _ ► . ,. ; n �-sx�o�ne 6� ' p � �d •!�o Q',>,�'� G� .: O - O-� Q� Ca',�0.30 f ire Q ® 0 e -e, ..�.. (� .e d' taoo r une rff;wuna Q Q Q. Q -,1 { -', O:. Q p 11.00 Faxk* Pr~ of o o Q Q• Q 0 o O Q o to.sa _ uu� o� 'o O: 6e0ac t • _ rw� cam► p p -0 • • ® . O O O , • Oloz _ SMWeorc+.a: src n.N!'- „0' 'O O Q� Gi,:��a�Q:"�O ,Q 4®. ®. -&Ts _ Los .rO*k ca .fPkt,• • Q o o O ,,:• Q O e O 10.20 iAawnowd ,i ,N Q .Q Q e:.0 Y • Q'. to utroo - O Q• Q O ''..O Q o. O Q sm _ Ovirsrrhn i .R rrw uae • "y am _ the cohm uM ane f 0 O9.75 • • ! ��... : _ AilArs0aiN0wlbrlrWrar hbrfran • • Q Q Q "} 0 .°.Q O'' Q .0 10.50 pmki Mwrree • l F4 AoNio Ihdd p• • � � .-�< , AIr � 3 •: r• r• : e •: -• `; � tee,` _,wi.,: �� . _ _ s w«■ Fww #was R.ioa A~ un. • O @ • • • ,F ,':, O . • Gi ! ' • - •' 10.00 n» .: y�. • , ! , • ®, - O� , ' 'w a':�•• ' ! �� �9 • tom , t+FrewN. rdt w< : c.aMer. �; ..�::,.;`. ,���, • !'.. p,= Gi :• i�,�;;r• •�a,.• ='gyp .• • '. ; �e♦Ty ; • •' � • ,: '• ,`. ,i':=.;4': fat ��_. •.A-•���=`. L •d': CONSUMER REPORTS AUGUST 1988�ri ;r 525, . .}....- .. _:.•• .. .. .. ..:. ' •..?��►i::,•..:..a71i�rr...�:.,:�►�1:✓�fL`n`"X,'C�'.a:i�X•yi,`:�V1;::4:'.�-w, :�. 0 tl n A h*4 prrmillm r-,-c rr-rr�,k-4. Thitt's like a bank -nmh --I inn, of the P-th-1. l"wrt PrpitAm-li+Ws YWX WAIT, f110 Fq-7VM-.'1 Th4 in he)H)iqF yrrtr pTyrnl! chock PrVd not cred- r (:ps� prin' the r-,fr�5 rrerlitf-,i to those ""r - iting it to 1-mir Pccount for h-vv f:r1,qrPb it. the lnsrt q-rvcrAl dr;4_� jyJAdr,, many Co-rranjlpenalise you if you str- 9"r, OKI Npti� %Vt Qf!if-'T!dir -P:Pr1in11::r1y favorable jop.n prmiqinn. The rrndcr P pnAicj eAdy in itst life, some add rpk policy Inn rate is only 6 P-rce.rt, corn- insult to irriur - In, depriving you of some of rah- m"'Virnilm if a pewliq"ldr- r'it crash pared with F p-rcent for most rompfti- the interest credited 0 your c�-sll Value in "ihe''prc0out; . - .7�' to e rplit- erupt lr+rw Pi crrl;tin lr� -I,,. - rs.' AnI ib company credits the same 12 mnnth.,�. Cornp;lnir-s C-20 Olb-r cp"-2f frptlre�_c are f(rind jiT pri `Interest r-ete to the loaned Pc to the ­jhpt an cycr",-interest penalty. 11cre's rash value."w it works:' y ',Often the TFIS paid on the loaned cash The "cyccss interest" ig the interest IhF jj<-.w!r romp vijth rii2r;knfef.-t cif 4 or,. loe is the minimum guaranteed rate -1hal is credited beyond the guaranteed 4 1/y The VAIIFY Forga Sonirr FtFtrd in the po!iry. But company prp.c- rate, Spy for example, your universal -life I'! policy hss a 6 prrr--nl The 'tic%cs Vary. Siate Mutual; for -example, - policy h;Rs, cash y v -c,; -Ouie of $50,000, which ,%i" that its ruri7rrt! -rrdirs the loaned cash value with 6 per- has b^cn earning 8 percent. Your annual rite will rW-VfT1V. 14!4-qq th;'" th4, 62-wk—_k_ --frnt.-whfle Wcsfrrrn-.Southcrn credits earnings would total $4000, disregarding 7, . only 4 pr-rernt, itsguaranteed rate. (A compounding. But the company's guam- -crimpany's- current rites , of course, are Swch guaraniaren't "'ry im, s teed rate is only 4 percent, which would When inter--t rate* are high, -ft­crrditcd to the unlo4med cash value.) 'provide $2000 worth of interest. If a com- ccrild becor" vf'ry jmr_wWot if i6irrest',_1 'Guxronte-pip iga.;nitt ploj)cy lapse. pany applied the excess interest penalty, rates plunge. -if rate so low that com- •:.As we've cautioned, if you overuse the gxrl - their Inism-ril"flexibility a universal -life policy gives you you'd in effect be docked $2000. Century Life, Connecticut Mutual, panif -s piyiTig- rates, then a ;Y)li(-y with a lijocr Vuar;rl- to set your own premium, your policy First Colony, The Hartford, Life of Vir tef would have an rdize- could run out of money to cover the cost ginia, Metropolitan, Southwestern Life, roticy loan pro.,risiolm, you am bor- of your insurance protection, and your and The Travelers all may impose an row against the cash rahn in yourr uruvcr- coverage could lapse. Some companies excess -interest penalty in some cases. sal-bfepoky, ;tsnintm�T.irate set inthe -.gu7rpnt cc they will not lapse your cover- daring the first few years* of the Limits on partial withdrawals. Some companies are fussier about partial policy. Three commoon an 8 percent fixed rate- a vaiiable rm as long as you've paid a minimum withdrawals than others. Connecticut ._'.policy, that can go no higher than 8 percent, or A""' premium. Most of those guarantees are Mutual, for example, allows no partial variable rate tied to Mordy's long-tem. for two or three years, but First Colony withdrawals in the first five years. When it bond index- cxtcnds its guarantee for five years. does permit them, you can't withdraw If you borrow, pianio may credit",,: . Timing of interest, credits. Most more than 20 percent of your surrender the cash value you have 06t bmqwrd companies credit interest on the by they . value, and then only once a year. Further - against with a higher' rate than the cash receive yotir premium. But'. about one- -'more. the minimum amount withdrawn :Must be at least $500. Sun Live has some value you have- borrowed' at. 1g., thirq of the'companies we studied wait bisurance jargon,.daw twoarnmritS w-c until.the end of the month in which the of the same restrictions. mawm=MP, M, For most buyers; we rom*y. How good is that investment? Linton yields at the end of five years for term insiarawe as.* ainnilp--economical :,:r.'-t We calculated Linton yields (estimated most of the .whole -life policies we rated ' way to meet life -insurance needs.Univer- rates bf return) using each company's own "were negative. -For each of the top five sal life' has remedied several' --of- the, ''interest rate and also using art 8 percent universal -life policies, the Linton yields drawbacks of the traditioaa1 'wtiole4je-,, ' —'rate for the top five policies and the bot- - :were positive, indicating that expenses ,,-ak policy. But even though theamount:YcAf:! "`IOM -live pblicies fisted in every Ratings don't Consume as much of the premium as pay for univei%W Ide is Ifts thail for,w hole tible. For a 35-year-old man buying they. do with -whole life. Keep in mind. life, it will umu*M " be ore thiii. what- $100,000 of coverage, the Linton yields "Ahough, that the cash -value buildup in a you'd pay for IL comparable ampad ot-:at the end of five years ranged from minus whole -life policy is essentially guaranteed. term insurance.. Despite universal Ijfe'j.',' -10. IS percent to 10.79 percent. At the With a universal -fife policy, the company premium flem'bdity; many families wff; ­ Z'dnd of 20 years, the yields ranged from 'reserves the right to change the interest have trouble squeennz apercent to 11.13 percent. rate —and hence the pace of the cash - premium into the budget*_ if &ley bury.. As an investment, then, the universal- value buildup —dramatically. enough insurance to javvWean'ade' via `rife ii6licies• appear on the whole to be as Also keep in mind that the appeal ofuni- death Woefit. _71 good as or better than the whole -fife poh- vernal life as a tax -deferred investment Buying universal. life is like Wyihj term 'ties we rated last month. And the better ` vehicle will diminish if everyone's tax insurance and iAv6ting the 'rest of.yoqr. universal -life policies were not bad invest- Ptes are lowered as a result of the tax premium nioncy.-with the 1ife-insurance.- fflents even if held for only a few years. reform bills now in Congress. 526 -'CONSUMER REPORTS AUGUST1986 .86-936 n 'car ed eN ; ve ds es as id, ny !st .h- ni- !nt ax ax 86 For trrrer•Y w•hn o'a+rt tM+r P-VMi lifs;, hart €rf ps e•x�+ yl to nts Er rrrr�:+?� 0A 38 0 AWOM12,11 ,' I�� t fN'ttt a: elr-4: Cl" t t6a�� jrtFrf•¢t r h't•- rat. , n r hs A (! ! ( f•rrc !room to res,^►.pr t rr jrtn ! rElt p,r- 10 ch jdE• Th• frer;hsr (rtt in urnft a rn-nr,arF•' pro-, lv vmvr cAQlf aC'cyf+++nt?t}!)S9e• the if,st _ f-ITI-Able pr'r the r"_ ja+rtin?ye. iin*f'f cmi"t m� becoming a millinnrirt from :': rro_ ycnr'v€ Mteghl pn in4nr- 'i-brAw iw.ilstarf hits Pre useful to rosette ymr urii,trs-l-lif€ thtir� , '''''' gnre p�lrrv, chi;rld t'oir CRC . itrfFrt. trPt don't WT m icyt0der•s enough 17 Fe -Wing mit a Vye tm4,Frr_-I+fr gid-r it an 11rhrP'nl shlE pact = .' ,7a'` I)t 00 cm. mf tinning ccof x policy. p-alrrp rr,1t0re-s work., l:e�islly if v`NJ r€ in Ratings• brtw"tl yms pni the ir51r' ' . r,>r.'-h,�. -r" F a» C�rttppnv% Unfortunately, the pnsv er f t 11 cnnQiaeting a Iurlrcy trot otrr .? .:., ;fence theme's tm slpndprd r(w1-comp rr• On't eat. Replacsmt`nl is a subjr-m nc- nd€ ht,venly has TIP* fiat to Oak is the son mFaeure' trT rasing a pr-t- r-611r€ Simi- ong on thin of the gptrs qua�41on Whether 1?r to the one we vsr•e, thF pm•u•Fra to," "vs Thnrnas Eason, se»- ,' Msa policy me?sstE your instrt'x.nre needs, It PkV an interest rat€ you think is rra- for Vice president of Union Central Lift- = ; arr pprnt vPntg eta x"trh 1-M from 11 eam snnakle in todpy's climate of falling inter-_ Yeplaeement it a titkli4h jc re- in the policy to a v�nit life ire a univrTMI-life Pit rxtE s— 7 or 8 percent, for example, insurance industry, since compan)r!Z dort't '•, . P-AkT , t:irnply u"_ it, huilds a •cash Ask several agents to sh-W you cash- and wart to Irne rnging policies. and agents satur. makr. ¢u v the new policy prm^ides surrender -value srcumulationp with a don't want to losj rcnewpl commissions, . ,. the "_me amcr*tnt of cncv_,rage at i price . premium you seler' for each year up to And thf re:'s a fine line betvren replacing Tba on xflord. Th€t is tmlikety to be the ray, 15 years. Ily asking each company a policy and "twisting" ---inducing a prr- . . case for most familiews. The cash values for a projrc.tion using the same interest son to switch policies using false or won't WJp your family, touch if you die rate and the wane premium, you can learn misleading 'data. Twisting is against the suddenly and are severely underinsttred. which policies have the lowest cxpe'nse law. Replacement isn't. - • ' ' - Another consid "tics is your insurabd- and mortality charges. (There's nothing For many years, conventional wisdom ..1� fry. It you've cxaratra..cted a serious illness, to prevent a company, from raising its in the insurance industry held that 8 new insurance company might reject mortality charges later on, but you can't replacement was bad for policyholders. ' 'ya=J oi'ci;arge you much higher rates. predict such changes in advance) After all. they had to pay new loads,"ter Ji Svti a itcb, the suicide and contesti- Once you determine Which politics expenses, including an agent's cornmis- ppsiods will have to run again. The have the lowest charges and expenses, lion, each time they bought a new policy. .;.;Znnade clause found in most policies consider the interest rate. if 'two compa- That conventional wisdom has; over the states that d Company won't pay a claim if nies have similar expenses and charges years, been embodied in law. From time ', ; ,• w comnnt suicide within two years of and one pays a much higher rate --say to time, the National Association of Insur- • • -_taking out the policy, During, the contesti- 1 t/t to 2 percentage points more —then ance Commissioners (NAIL) issues model • . bility years as a rule, the buy the policy with the higher rate. If regulations intended to serve as standards • `.``hiuranoe company cars refuse to pay a interest rates are similar, then other fea- for regulators in each state.. The first-,`claiin if ym've withheld material facts on tomes such as policy -loan provisions or model regulation on replacement, issued ; your insurance application, excess -interest penalties might tip the in 1969, required agents seeking to make . •'- ,, Companies , in general view replace - balance in favor of one policy or the a replacement to provide lengthy, detailed trient with some distaste- A few compa- other. • I forms and to give the policyholder a noticef' nibs Are even starting to turn down the . Look for a policy that has both a good warning that replacements were gener, ' business of polkyholdem who hop fre- cash-value and a good surrender value ally a bad idea. In 1979 the NAIL issued a,° gi ently from one company to another --a since you don't know for sure when you'll second regulation that also tended to dis-, r,, hot uncommon behavior during the recent want to cash in the policy. • ' courage replacement., = ` ' ` '' v� term -insurance price wars- Some people :ate B Don't put too much weight on the In 1984 the NAIC issued a third regula- bought a new tertn policy every year. "If special features agents like to tout~ A tion, so far adopted by some.2d states."t we see someone who leas rolled term from higher -titan -usual guaranteed rate, for The new regulation discourages ;One company, tr to another, he may be a risk eurnple, is nice, but it's not much help if ,replacer.• menu less than the two previous versions ''. W.don't want to ar,cept." says Gregg the policy is otherwise a poor one. did. Unfortunately, though, it does; not' q_.Saafer, a vice president at Business Mena 2 A universal -life policy can't be left require that companies give consumers all jAssuraata Ca to gather dust in a drawer. The flexibility ' the information they need. to make •a ?J 1-*1- - r.ir:�i, ;- .' « , -- _ • s of its elements requires -that you pay rational decision about switching. In par- jl+t ninXAO&l 11It ! apples,' attention to all notices and statements ocular, it does not require the agent to-� °: Mr +�.� y♦, w.. ' from the insurance companq'so you'll give the consumer an updited intereat,'�A'I !i you have a high-aw policy, you may -- know if the policy is in danger of lapsing. adjusted net cost index on the old police'' ' ., swell to replace it• To make a cast corn- A Consider agents' service. It may be recalculated using the present as a start- F ;:; panion between. the ilew policy aced the more important with universal life than ing point. Without such an index, the ..r - .,ski one, ask the new agent for the inter - with other types of policies. A good agent consumer is hard put to compare an exist- •�oV,,'st-adiusied net cost index on the policy won't just sell a universal -life contract ing policy with a proposed new one, � he br. she is pang. Try to obtain a and forget about you. He or she will con- Instead, the regulation requires the Id ..,similar, •updated Index on. your present tact you periodically to see whether the agent and his or her company to sins p6iicy from yowl carmt insurance com- polity still meets your needs turd whether the policyholder with bits and pieces `off ; 'lSariy: As always: the polity smith the lower you should consider any adjustments in information —tor example, dividends, pre.;c •; ` index will be the better deal. Remember, premiums or in amount of coverage. • :rniums, caih values, and death beadt.%; utgh., that the i miei`an be used to con . CONSUMER REPORTS �U6USTISM Af _ , " ` � ' c, f,:* r Kr� •� - ,�.=+ � :'r' , , . 527kl , •'. .♦ • • . l : -.• , �'r -j• . �+ . - 4.{'' . • .. .f• riiT 1a . ��✓r 4 iS. !Y i1. 86-93t� • t . a f FM'P Mr Piff"IW TF r-"'f t". M-i,,4 C^sh rpl',ts to •opp-n-16, IF rnlf'rr rfr"T"r74 to CWW,Vf mr F for" Wo r M47 olhf?r, n- A If 1"Tf- t 4 A tr—,. P-J#--T th"t, F I ---1+fP T lath VfVnt-4ifit ra;-Tr Pak 'irFrrlFl0r9t _enn't trrT thvn the erw rn!f pgr-nj to p-ni-I q-1-wa racks !•Aloe fn: pirp T" flha- th* r"Wi 10- AS MIT-1-or fv­vvi. not P,r rrmii in rmrp"ng PM CM V-hA-4ifL* i"�- rM*O JWrP to *7itF 1;; th1w jTQ1 thd in-iti:4 p I , f 0-Twe"T P"VWX V*4 ;Pqlr fnr K-TTnf*l t1vPnF'j6"m1:40r littla- re_min pnj to !r pili.-T with q un;rrr1.t4,;ffv TrilirT, Ask the As 9--p "H in Duna, tPrm jrv.!yr;mnrs, j` tegpnt "llinl; thi! jinij,p -Flire •prPrWo proir-tion of vom rrprmfi r-urrendIPT P if OWT. PM CM wWrlt 0 X t t j"S. value for -4 time P--ry_As----.Wy .5, PT" .,T -.1 1 (1, and 2.0 YQ ff OWR P*01V fife IfPvO the ppent vee the. "me premium a 11 the W cmrny rrfuie!, to otupTOy the bpre A P-MP. rtirl you're pminj; for tha wh-Jr-life roo!irT, the "Pote-4 irom tb M_T's 00 effio-Mt. "y to life policy that wad if'rued before 1978 or same f;.C,?, P.Mnurt, PH the crempiry's cur- --awnmre Ow orwv 0( ove'u" dies" pq, Y-,M prohO)ly have a fairly high -cost rent interest nptF, V*M TM_ wpm to 00 thmo the math to policy ;,.reJ could ge .t a letter rate, of return Rave the pt?rrl vrhn ftoll you the whole- ca-3c"Ute the jxk �__ y�e (Ipstnic- either from a nrr whole -life policy or a life- policy tell you v7bAt your cAqh surren- tjow for Ming to are fMMd in our t** universal -life policy prik-ed und-r more derw0ues will he Ft the "me pnintc in oil* CIS Union IR'MI'Di we Current intert-t-rpte assumptions. (Tbf! timf, and vrh;rt dhi&,n-.ls ym;%Tc likely to -old rvmp.:;r prJjcies were priced vrbrn receive.. Whirbever policy provid" 'the Wben you mpt*m a caa)t-v;phje policyA intrx"t rates were much lower than they most cash if you surrender is probably the you receive vrb*tcm cash n1we has xcxw are tcpd;y.) utter deal, mulcted to date- That money :if ym r .,- If you ovim a participating whole -life But keep in mind that premiums and don't spend it on w,=etbimg trark4toiy Re. policy, the decision to replace may depend cash value's for a v.rhole-life policy are 0 V*Ca600--beCMM available to FdVr Oft VhM_hCr that company has paid genes- guaranteed (only the dividends are not). beinL, and may reduce the amount of new ous dividends over the ycarp. 11 you have a With a universal -life policy, virtually all kwaaam you need, Q*.. a poni.cipaLing policy that hat paid only the the elements can change over time. To t*e that fad into accoutnt, Harold dividends illustrated when you bought the You can do a similar comparison if you Skipper, profemm of inm=ce at Georgia policy (or slightly more), the policy is already have a universal -life policy and a State University ,"and to expert on-., Rely to be high in cost, and you may want new agent tries to perr.uade you that his replacement, recommend& making a to junk it. But the actual decision should or her policy is better. Ask the agent to mathematkal adjustment to thi interest.- hinMop a comparison of cost indexes. show you surrender values for the new adjusted cost its for the ;W Rctlicp.In - Asa gencral nk, it's unwise to replace w&erzal-life policy using the same pre - ...calculating the Mu per $ 1000 aE cover- crib -value policies frequently. As shown miwn and the same face amount as for the aM divide the intava-adjusted cost not b last month's report, the Linton yield old policy. If the new policy generates a simply by the, face amount but rather lly' rate of investment return) for signikintly higher cash value, then a the face amount minus the cash value. most of the whole -life policies was nega- switch may be appropriate. But if the dif- to general; if the difference. bdween' - Live in the first five years. A person ferences are small, keep the old one. two policies is anialL it's probably best to surrendering in, the early years would Comparisons of a universal -life policy stick with vrhaymahvady have-- receive little or nothing back. with a whole -fife policy are rough approxi- mations at best. You don't know what the :tat bout univenal life? universal -fife company will actually credit nza A- A` �a_ 1C.N.11.4 W to the cash value over byre, and you don't A dedsm about wbetber to a When universal life is involved, the 1 know what interest rates the whole -fife tam policy is relative easy.'Thari's no-,, replacement decision requires a different company will use to calculate future divi- dends. Under the circumstarwq. any comparison is an estimate verging on a* guess. One at the idvisft' Professor Skip if A final WOM vrialler. 'the updated index for the old $50,000 situations nvo replacinga &)argei one. at if Sometimes an agent may try to per. PAicy With W1 you is better than the index for the -Irp, �' �suade you to switch policies because of jbi4 say-, $100.000 4.covmge.,iDd p M100.000 Policy (or about the sane); some special feature such as a cost-of-liv- ym currently own a policy for-,.� thea.keep the $50.000 policy and buy le �* -r-�4nother $50,00A oolicy- But if the mg rider or an interest -rate guarantee. $50,000?.Sbould you j=k tl . ! buy.. Bells and whistles may be nice, but they S50.000 policy jots ithre3dj own for the old policy is worse. buy a mvpolicr for $100,0001 Or: the $100.000 policy and drop tho old' hardly make a caw for switching policies. A -'-should 1W keep the policy sod sim�"��­,�'$50,000 policy. les easier t6 keep final and very important considera- Id* if and p the Skipper. ,e h x b buy e buy f 0 e old 0 keep Iffly aWther pDlicft $$0.00 stack ofoneVolicy than two. -And: tion if you do switch policies is to keep p your family protected during the tran- .""One way Ciplookat the give you a price n ore t tion period. Don't drop your old policy adjusted costindez.fdr dw $100,Q00V4, i "break when you're buying more than h cc 'S until the new one is approved and deliv- 6ertain un and compare it.witir am a am t of insuranmi sucli as ered. In light of the importance of life d9dated oQwiaa for tjte $5 $100,000 or $250,000 at a crack. insurance, you viatfldn't want to be with- out coverage, even for a short time. 0 528 ;CONSUMER REPORTS AUGUST 1986 F P .--b I 4 4 EXHIBIT B Great West Life Illustrations MAT-MMT LIFE ASSUPANCE DWANY FACT2 -- UNIVERSAL LIFE MMIO A. Kemy Fep-E. ASc d 1 NON-S4MR CLASS 125M INITIAL DEATH MUTT WYSk PREMIU11MFE LEMER PAGE AM "ED VALUES ( 3, 5?%) EMD OF POLICY PRE11I114 POLICY St!RRENDER VORANCE CEATH YEAR AGE DEPOSIT VALUE CA.H VPLt'= MWT 9EPJEFIT LRIARMWEED VXMS (4%) POLICY CEATIH VALLE P1 UIT 1 42 1623,72 02 0 2487?7 25mle 7S" ascm 2 43 1E.?3, 72 2491 41 2475r, 25u:0 1615 25CO20 3 44 1623.72 38/1 1e11 2461�-, 25M? 248e 25M.- 4 45 1623.72 53S4 LA464E 2531av0 3174 215" 5 46 1623.72 6 0 545a ;;zc=c zIS? 0m 3913 E53004 6 47 16c3,'2 ES70 74:-D 241330 25Mz 4624 c`.8t09 � 7 46 1623.72 lE?526 9`:2 23?474 E!v- , 5306 8 49 1623,1-2 12532 11722 G374Ec 2502"a. 5:56 ,:52?'.0 9 50 1623.72 14793 142C3 235G:7 c5"iO3 KE0 25CtE�d 10 51 1623,72 1T?SS iEE6 23_ci4 _SC:3j 71 '? 25:�`a 11 52 1623.72 1?61@ 1351C 1 25eC'21 7635 -:!c 0 12 53 1623.72 :2s'9s ? "s83 L27017 254tz-111 8M4 1E23.72 25Z?? .2535? EZ4s_f 1 251`:C0 6393 `«C. 14 35 0.23 27054 27�!5b c 0 12 '.17a cS;:t?" !3 `6 0.00 268Q c?E4c 221IS, E c5CfL'0 =E27 z!00 , 16 57 0.ea 227,1 Z27J: =i,_4: c5a2V S:'65 6`:M0 17 56 9.00 22792 227?-- 21.72D- 2sm 2103 Ese-M :9 59 0.00 24981 34521 2151119 25M0 60 25em 19 60 0.00 37332 37332 21cEE8 25@J`�T�J 0 e c0 E1 0.0J 35863 39e63 2:C,137 25NOZ 0 a THIS IS AN ILLUSTMICV AND NOT A CONTRACT. IT SV-U H 4elIt,10 WITH T)E PERSNALIZED 5f.1'0WY PAGE ACCOMPANYING 7NIS LEDSER. OVER THE YEARS. -HE CASH kq-L'E PAY VARY Z•EPE.NDING ON ACTUAL EXPERIENCE. THIS ILLUSTRATION ASSU"ES PECMMED PREMIUM DEPOSITS A4E P-WAYS MICE. ASSIKES POLlCYO!MR LETS PAID -UP DEATH ESDUIT SkOFIN AT AGE ?a: EURR-MER CASH VALUE SON IS REFL!IDED TO THE POLICYO'11ER. PRE£ENTED BY: JC%G4 d H!C�iNS ME 1 S?P 4 VERSION 4.5 / 3 -- 09-¢5-1955 rl 0 /" N SFEAT-HEST UFE A5FJRMU CC".W FACT2 — UNTY€R541, LIFE UMIO A. KENIIEDY FE0113LE, ASE 41 NLN-MI ER CLASS $ 25M INITIAL HEATH PWIT AWJk PREMIIL14 MOM LEDSER PAGE ASS1. v t'A1AS t 9. °dM 1 sm.w aw '.'T> w l4%1 80 OF POLICY PREMIUM POLICY SURRENDER INl.�JM—I"r DEATH POLICY D:ATH YEAR AGE DETT'IT VALUE CASH V1y LG A"MM7 FENEFIT VALUE QEIIEFIT 21 62 0.02 4226 2P7434 2b 0 0 22 63 0." 45461 45461 20453: ?5A04+0 a a 23 64 0.00 4M4s` 4E'.43 201457 25" 0 0 24 65 a," 518'38 SIBlip 198192 c5ml@g 1 0 25 66 0.6id 5SM S'910 1949N 2:0m 0 26 67 0. 09 58542 SKK 191458 25f m 0 27 68 0.0 621?4 62194 1678M 2Som 0 28 69 0. tit 66063 66M 163937 25m8 8 29 70 Me 1017E 7P178 17982 2sm" 4 :0 71 3.k0 745a? 7a5�? 17E4:1 c`'a 0 t 1 31 72 0.00 79103 191e3 170637 25M 0 0 32 'r3 8.60 63939 :s20G 165191 2g2'0Q'8 0 A 33 74 0.E0 EE703 E6703 161237 MN 0 34 75 -a.iQ 93744 ?374 1562r°5 250000 a 9 35 76 0.20 98935 ?8?s;; 151065 2SN"ll 0 E 35 77 0. @0 1f 4245 104245 145M 25M 0 J 37 78 0.00 1@9651 109E51 IW349 25NN 0 0 38 79 0.00 115133 115133 134857 25000a 0 a 39 80 0.00 120663 0663 129337 2S0®0a 0 0 40 81 0.20 126221 12E221 123779 2" 0 8 THIS IS AN ILLL'STRATIM AND 10T A CONTRPCT. IT SHGi!_D EE PEIJIEFIED :TITH THE PERMP-IZED SUMMARY POE AMOMIPNYING T141S LEDGER. MR THE YEARS. THE CASH VX'jE YAY VARY DEPENDING ON A;TUAL EXPERIENCE. THIS ILLUSTRATION ASSILKS RECOME11DED PREMIUM DEPOSITS ARE PLWAYS "ASS. ASSUMES POLICYMP, ELECTS PAID -LP DEATH BENEFIT 5''•F.VN AT 'r'S_E ?A: E'JRPr?W CASH VALUE SW I5 REFLN ED TO TW POLICYNKR. PRESFIM BY: JOMON t MIS_INS PAGE ? Cf 4 VERSION 4.5 ! 3 -- e9.05-!s!s GREAT -NEST LIFE ASSURNX C�.IMNNY FACT2 -- UNiVEREOL LIFE RVAID A. KErNEDY FEMALE. AGS 41 NG1a-SMNR CL= S ZSlW INITIX DEATH PREFIT RM4x PREMIUR ME LEDGER PAGE ASSUMED VALUES ( 3, 5c%) & ARFMIiEED !'ALLwES 41) 80 OF -- POLICY PREMIUM POLICY 611pR24PER INSUMCE DEATH POLICY DEATH YEAR AM DE WIT VA1.lIE CAS' V.N-UE A""XNT, EEN-91T VALID PeUIT 41 82 0.0E 131 P,F,7 121667 118113 2`00,00 0 0 42 83 0.08 137597 1375=a 112410 250aa0 0 a 43 84 0. N 143367 143Z67 1 KIAKl 25l'r8N 0 0 44 85 0.08 149165 1k9165 12PF835 c ellv0 0 0 45 86 0. N 1,55K9 155?59 94S41 25t ffl0 0 a 46 87 0.00 161132 161132 88868 250000 0 0 47 88 0. co 16752E 16752E 82474 25t3". e 0 48 89 0.00 174333 174333 75667 250N3 8 0 49 so 0.Q0 P a 0 250-0p2 0 3 24 65 0. C11 51608 51828 198192 251,Nn 0 29 73 0.00 70178 70178 179822 2:3200 0 0 49 =4 0. 25e282 V a THIS 13 Q4 ILLUSTRATION AND NOT A CCNTRACT. IT SN+MU BE FEVIEIED WITH If E FEPS04 LIZED ELM PY PA<-E A=.'lP%''fN6 THIS LEDGER. OVER ;f YEAFS. THE CASH VALUE Ki VARY DEPENN G aN ACTUAL. E ;ERIENCE. THIS ILLL'3TPATIGN ftS rmc-S RECCNDelDED PP01UM DEPOSITS ARE ALLAYS MAK. ASSNS MLICYOFt R ELECTS PAID -UP DEATH MUIT SHIN AT AGE 38: SURRENDER CASH VC'wJE SHNN IS FEFINDED TO THE POLiCYONNER. PRESENTED BY: JOff1SON & HIE6INS PAGE 3 OF 4 VERSION 4.5 / 3 -- 09-r,-199S 9 11 0 6RE4T-44EST LIFE ASSUPANE COMW FXTP -- u"' KERSAL LIFE MID A, Ve!4EDY FF!A` E, Ar-E 41 N04-SwxER'mm5 S 25M INITIk DEATH PEW-rIT ANN4ik PREl9IL#4 SLl'+�}ARY PAGE Ol RATION OF POLICY: POLICY mATIIRES C"! 44 ASSMED INTEREST PASIS 40 INSURED IS IN AT WHICM ME A DEATH PcMrIT OF 4 250,,P;2 IS PAID UP FOR LIFE. INITIAL BASIC DEATH EENTFIT; 15 IXVET.', "UIS AS5101 T"S THAT THE O�MER HA& AVVISED GREAT -;TEST LIFE TO MCREIIEE T? F hKOV"fT OF Jam. URAM F ERN! 1'EPP P5 T;4E RXICY ACCOUNT INCR.EAEES. INTEREST RATES CRE017T. TO RMACY AF( ,NTS: 03G94NTEED RP'TE I5 4% FOR ALL YEARS. AMU11'D RgTE I6 Mit FOR 4S YEAR(E) PF0IVlS: INITIP' OPE;IU'". IS 411611_3.7G SEE LEeAR PACbiS; FOR f"LFLL SJ'ED.N.E Or PREM "S FEE SCHEDLR.E: EXPF,-SE CHARGE o PERCENT OP ALL PRDJU!"S REC:I'JED j SERVICE CHARGE $4,00 EACH MONTH TO AE gti SURREIDER CHARGE FIRST YEAR - 10 DOLLARS PER I DOLLARS OF FACE AMO(W SECOND YEAR - 3 PER It►f'2 FIFTH YEAR - 6 PER 1@@P! EIGHTH vE'AR - 3 PER IN? ;HIED YEAR - 8 FER 1PC8 SIXTH YEAR - 5 PER 1000 NINTH YEAR - E PER iL.1 FOURTH YEAR - 7 Pi:R I M. SEVENTH VEPR- 4 PER !Fffl TENTH YEAR, - i PER 100 TFEEFE IS NO SURRENNXF CPT,.; E I'! TPE ELEt'ENTTH AND S:,'PSECMIT YE K. i= - RECCv,*--4 D PREMILMS APE (AID ACC_Q.DI115 TO SCHELULE, THEY WILL YIELD T},E EENEFITS II.LL'ST?41E.?, ',RO'.'IiED THE ASSXD I!1TE7.EST RATES AND "'WILY COST CF INSURANCE ACULLY OCCUR. C-L'A'!: ;TEED EECME r.41AREES AND THE MAXIMUA M0;14THLY COST +:F INSLRNa RATES WILL EE SNCIwN IN YC:.'F PRESE"l"ED BY: ' tiMSGt; I HIG5I?S P46E 4 OF 4 `ERSION 4.5 / 3 %"L e e P 11 u""RcfiT-WF—FT LIFE PSRMP4CF C•31W FACTS -- WTVER9k LIFE JOSEPH J. PLUMMIER M- ul A'* 69 N'34-540VIER CLASS 1 2 INITIAL DFPTN FRUTT gWok PR9+'IU0q MODE PRDJECM STAMMRD PDEMS CG`+R7-W=0TJCr' IININ6 CMIM ISSIOwe# Ciil"ISSIGN SERVICE FEES OF UP TO MAY I tU ARAM NAY MIM PERCENT 7 POLICY APaP11IAI.IZED; AIMIXT OF# PRRIU" PREMIUM INSURMCE L14. RGES TOTAL YEAR AGE PREMIUM INSIIRAWE (CPASE/FACTOPI) (C?GUR/FACTCR3) (CSERF/FP DRID) CC`IPENSATION 1 49 3424.11 25NN 1027 0 690 1717 2 50 3424,I1 247401 171 0 74 243 3 51 3424.11 244610 171 0 79 250 4 52 3424.11 241607 171 0 87 29 5 53 3424,1! M199 171 0 92 263 6 54 2424.11 234935 171- 8 99 270 7 55 3424.11 231217 171 0 105 E77 8 56 3424.11 227216 171 0 115 29 9 57 3424.11 222931 171 0 123 894 10 58 3424.11 218328 171 0 129 300 11 59 Z4c4.11 213344 1i1 2 :39 11; 09 10 `st`�fG 5a 61 3424.It 5424.11 007991 171 9 c32197 !45 316 171 0 M 0 :y 62 0." 195963 d 0 !:8 188 1S 63 0.00 I°2657 0 0 .:;a4 :+74 16 64 0.00 18%19 8 0 221 221 17 SS IL a0 18M 0 0 239 239 18 66 0.00 182739 0 0 239 259 19 67 0.00 179141 0 0 277 277 20 68 0.00 175374 0 0 297 297 * ASSIMES INTEEEST RATE OF S.5% FOR 41 YEAR(S) CBA5E: THIS E11TRY ON THE COINISSION STATEMENT APPEARS IN TWO PARTS. sty CSERF: SERVICE FEES ARE COMMISSIONED MONTHLY AS MORTALITY EXPE'dSE3 f.?E C41RGED, REGARDLESS OF THE PREMIUM FP.EOUMCY. ABOVE CO.MPENSf+TION DOES NOT I'tCLUDE PROCUCTIGN KNUS OR EKPE"!SE ALLCW4!ICE IF. APPLICABLE. THIS ILLUSTRATION ASSI.!MES FECOXeIDED PPEPIIUM DEPOSITS ARE ALWAYS ME. THIS IS FN ILLUSTRATION AND NOT A CONTRACT. ORSSOM BY: JOH11 N a HIGGINS PAGE 1 OF 1 VERSION 4.5 / 3 — 0"5-1586 ri WEI w 8 6REPT-WFT LlrE ASSU?0CF COMPgNT FACT2 — L+klfVER=At LIFE JOSEPH J. PLUM}EP MA#-E. *lF br- Np.-Swp. CLASS 21M INITIAL PEATH PPFrT T AMm m1UN MODE LEVER PAGE pSStm klkuEE i 9.541%i GU4P.ARM VALUES 14%'• 00 POLICY PREMIUM POLICY SU°RPCF-F IN51IRM DEATH POLICY DEATH YEAR � IEPOSIT VALUE CASH VA',_UE Aar a£►lEFIT VALLK 9DUJT 21 70 01" 62630 62630 167:77P 25P2P$ 0 0 22 71 0.m 8062 8666E 1631-TE 2`"00 0 3 23 72 0. tv 91197 911 ?7 15cE'.A3 254"a00 0 0 24 73 0.00 95685 .56E5 154015 "sent 0 Q 23 7t 0. G0 I Wes I N298 1497; 2 250000 $ $ 26 75 0.08 104983 104?89 14y011 c 2200 0 27 76 0.09 109830 1V.6.0 14P17? 2°000© 8 ;� 28 77 0.08 114752 1147" 135G48 252'0P0 Q Q 2S 78 0.00 119719 11971? 12L81 2°ffl00 g a 22 79 0.0 124734 1247?.4 12`�6E .520^0 0 j 31 e0 P.tQ 12?8?5 12?@C5 1,,,'1-5 C!?elo 8 22 a,1 '. N 434841 13u841 1:515? E50uo 0 23 82 T.:? 139?49 139?49 11CK1 2`f+3►10 Q 34 83 0.C9 145117 145117 10488E 2°::SOP $ 0. f0 150336 151 336 .?EE4 c5.E20 $ 1 25 85 0.1.18 1=57 1SSW 94443 E`C^Q0 8 37 86 C.CO 160865 160865 89125 25eml @ 44 38 67 0. N 166387 166387 E3613 25M S D 39 88 0.00 172296 1W.6 77704 258000 0 0 48 89 a.01 176698 178698 71322 250 m ! 3 THIS IS AN ILLlJlSTR4T1N AND NOT A CONTRACT. IT STr101A.D LE REVIEWED WITH THE PERc-MA1.IZn Sl.XMRRY PAM ACCOM4PANYI'1G TH13 I EDGER. OVER TYE YEARS, Tlf- CASH VALUE MAY VARY DEPRIDING ;1N AMPL EXPERIENCE. THIS ILLL'STPATIC.4 RSSMS RECCY,1 .10 PRE I.L.4 CEPOSITS ARE PGAYS !BADE. ASSUMES PL'I.ICYO'XR ELECTS PAID -UP XATH EDIEFIT S401*1 AT PSE 90; SU.RP,QIDER CASH VALUE SKWN IS REFC M M THE POLICY&ER. PRES94M BY:.; 4SON 141SGINS WE 2 0 4 VERSION 4.5 / 3 -- t'9-45-1'sc5 0 S;EAT-'WEST LIFE P i:Rg4CE M''Wy FAC"T2 -- iONIVEVSk 0rE MFEPM J. PLUW. -R Itul Arm 4? 404-SP!O!KER CLASS S 250Q`01 INITIAL DEATH PENEFIT P" AI. PRRIUN MADE LEMER PW ASSLI"£D t1kt.'E5 I S. %%) GUARANTEED VALUES (4x) 00 OF PoLICY PREMI A POLICY SURPME? JHSU04VCE DEATH POLICY DEATH YEAR AGE XPOSIT VALUE CAS4 VALUE A► M ?EM'f IT VALUE °mI- 41 90 0. 04 @ P 0 2`MM 0 16 65 0.00 63748 63749 186252 2°; re 0• 21 la 0." R630 @2630 16/37: 25"C1110 0 0 41 °2 0. of 0 ? ' 25vM 0 0 THIS IS AN ILLU57FATJD4 PlD NOT A CGNTRA T. IT S4,71D PE PEVIENED WITH THE cEP!-K r `IZED SUMMARY PPrr ACCMP.WYING ':!S LEDGER. O,'ER "HE YEARS, THE"' DISH VALUE !"AY VARY ON EYPrERIEKE. THIS ILLUSTRATION ASSIXES R[�CTTEITfl) PRE]"iUM DEPOSITS ARE A! 1,AYS ,.•� i+$S -11:S rDLIC`.'."t 4 ELECTS PATD-,_= 'E�TH 5F.!•IEFIT - C',,•N AT 03C W, CASu I -,LL'E = riM IS ?E=L'-XD TO rhE P` L I'" ; CA'NE R. oFE:EYTE.^,.Y: 'Cr'.: it G -I'ssiI!►S PA;E 3 OF 4•�.�- n 86--936 F 3 GREAT-:im—T LIFE AS31-111M C,7.0*1Y FACT _ --- UNIVF SAL. LIFE j JOSEPH J. PLUMIER 4kE, A'., 6C'. M f '�`c!"t iKITIAL CEATH PENFIT ANM PREMIU1M NODE . 5�RY Fih?E — DURATION OF POLICY: POLICY MATURES ON PN ASSMED INTEFE57 PASTS or-N INtkiRED IS 9W 4T WHICH TIME A DEATH PEW -FIT Or . 25f, M I5 KID UP FOR LIFE. INITIAL OASIC CEATH ?E''IG'F:'T: ; ".M'. THIS P3RJ F THAT 7K w�JF HAS AlDVISED GREAT-1SST LIFE TO DECREME TPE 0-r JN-;!FW- Ef)CU YESn PS THE, Pa.ICY ACCOM I"'CF.EASES. I?;'EREST RPTES CREDITED TO P`",_ICY Af ZJNTS: G.R44t'TIw'Qi F.uTE IS 4 FUR ALL YEARS, AfiSli1ED RATE IS 9,5+ FOR 41 YEAR(S) P"- IUKS: INITIAL PREMIUM IS $-) 9E: IEDER PAtS} FOR FULL SYHEi) Or PRE`?t1"S PEE SC+;F.CULE: EXPENSE C.4ARGE I?,% PERCSTIT OF R-L PRMU"S RECEIVED SERVICE CHARGE $4.0 Ekil ONTH TO AGE 90 SURRENDER CH.riRnE FIRST YEAR - 10 DOLLARS PER IOTA DOLLARS OF FACE f,I'!OUNT SECOND YEr4R - 9 PER 1Q+:~0 FIFTH Y-EfR - 6 PER K-• t EI?,T8 YEAR - 3 PER IM THIRD YEAR - 8 PER leM SIXTH %,EH� - 5 PER 1:M0 KINTH YEAR - 2 PER !M FOURTH YE4R - 7 PER 1ON 6„ENTH /EAR- 4 PER IM TENTH YEAR - 1 PER I-M THCPE IE "0 EJF,RENDER, C-4RGE IN THE ;: E':'ENTH AND SuESECUc)IT I= T•?E RECS,� .1E?'tED AREMILN5 ARE K*-D 1CCORI I'19 TO SCF'EDJLE, THEY WILL YIE:.n THE c-E-;EFi".. ILL.UrT..ATED, — P^JJViDU TH-E IWTc::EET PATES PND `,;tITHLY COST OF INSL'RP!la HMI' Li CCCUR, N:::ANTEEL EYPEME C:4?REES AND THE rAXI'!Uti :IONTHLY CAST OF INSURANCE RATES WILL BE ;'r,: iN tl YOUR POLICY. MSErITED BY:."'MRU1 d HIGGI'IS PAID 4 OF 4 "'NSiOrr 4.5 / 3 -- 0-05-19% ■t r"y le� "; 1. L I fy I I�° O Nf CDISABI f INCOME FROTECTION Based on A 10-6sy FS.imi.nation Period •�" SUARE2. �! CAFOLLO . '• DAWKINS .6 1 KENNEDY- 111 PLII� MMEI� ,;— Monthly Benefit $2,670* $4,420 $2,470 $1,870 $3,820 Basic Premium 1,392.72 1,774.16 3,169.19 1,166.92 3,544.68 Cost of Living Adjustment 411.18 574.60 227.24 347.82 798.38 Social Security Supplement ($800) 264.80 228.80 459.20 293.60 372.80 Partial Disability (255.03) (432.00) (209.63) (427.84) Hospital Confinement 143,74 206.71 237.07 186.37 249.48 l ` Residual 65 200.25 260.78 348.27 168.30 454.58 TOTAL $2,414.69 $3,045.05 $4,440.97 $2,163.01 $5,419.92 $15.00 policy fee has been added to the basic premium amounts. *Mayor Suarez is presently covered by a $3,000/month policy. Partial Disability has been excluded from the total amounts. Prepared: April 21, 1986 9 } DISABILITY INCOME PROTECTION Suarez Carolla Dawkins Kennedy Plummer Monthly Benefit $2,670.00 $4,420.00 $2,470.00 $1,870.00 $3,820.00 Basic Premium 1,334.82 1,769.17 2,362.57 836.63 365.49 Plus Residual COLA-6% 643.75 351.66, No option 200.37 379.90 TOTAL $1,578.67 $2,120.83 $2,362.57 $1.037.00 $3,445.39 Union Mutual: 1) Does not offer Hospital Confinement 2) Will offer only 60 day elimination period to Dawkins and Kenneday because of range of salary. 3) Will not offer COLA option to Dawkins. These rates reflect a 15% discount if paid annually. Monthly Benefit Basic Premium COLA-6% Residual Social Security DISABILITY INCOME PROTECTION PROVIDENT LIFE S ACCIDENT Suarez Carolla Dawkins Kennedy Plummer $28670.00 $4,420.00 $2,470.00 $1,870.00 $3,820.00 18038.28 1,429.63 1,973.53 838.93 2,341.53 1,437.57 $1,899.25 *No options $1,181.38 $3,225.81 TOTAL $2,475.85 $3,328.88 $1,973.53 $2.020.31 $5,567.34 ° $20.00 policy fee has been added to the basic plan. ° Provident does not offer Hospital Confinement. ° These rates reflect a 15% discount if paid annually. N ;r' * Will not offer options because of age