A double-edged sword for life settlement players: rising COIs

Feb 24, 2016 | By Warren S. Hersch |
Cost of insurance charges for universal life policies are on the rise. That has big implications, not only for long-time UL policyholders, but also for life settlement companies and institutional investors that are looking to buy older UL contracts.

These were among the chief takeaways of an afternoon session of the 6th Annual Institutional Investor Life Settlement Conference, held at the Ritz-Carlton in New York City on Monday. Hosted by the Life Insurance Settlement Association (LISA), the session featured two life settlements experts: Michael Brohawn, managing director of ITM TwentyFirst; and Ann Marie Juliano, co-founder of Demeter Investments Ltd.
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Conseco Raising COI Charges on Some Universal Life Policies

Conseco Life Insurance Company has begun sending letters to policyholders announcing a cost increase on some Universal Life insurance policies.  The letters which, according to the carrier, started coming out earlier this month, reference the fact that any change in COI charges can be based on “our future expectations for such elements as investment earnings, mortality, persistency and expenses.”
The letter goes on to tell the policy owner that Conseco is “increasing the cost of insurance rates because the Company now expects higher rates and numbers of insured deaths than we had anticipated for policies such as yours.  We have been experiencing higher claims costs for these policies and expect this trend to continue in the future.”  The scheduled increase will begin next month.
At this time we are unaware of the percentage increase in cost and the number of policies affected, but we will be actively reviewing the situation and will report back as further information becomes available.

COI Update: AXA COI Increases Pushed Back Until March 8, 2016

COI Update 12/14/2015: Policy Owners Begin Receiving AXA Notification Letters For COI Cost Increase Deferral On Athena II Policies
As we reported last week, AXA has decided to postpone the increase in monthly COI charges on specific Athena II policies. Originally, the increase was set to begin January 1, 2016. AXA notified policy owners that they “decided to defer the effective date for this change to March 8, 2016.”

This deferral does not change the impact on the policies going forward, just postpones it. For a full analysis of the cost increase see our blog entry,Taking a Look Under the Hood of the AXA Athena II Universal Life Cost of Insurance Increase.


December 9, 2015

ITM TwentyFirst has been informed by AXA that the Athena II COI increases that were written about in our Blog dated November 16th that were originally scheduled for January 1, 2016 have now been pushed back until March 2016.

Frank Tomasello in our New York office spoke with representatives of the carrier who confirmed that the postponement of the increase will affect all of the policies originally set to increase.

ITM TwentyFirst is monitoring the situation and will provide updates as information is released.

Surprise: Your Life-Insurance Rates Are Going Up


Insurers are raising costs of ‘universal life’ coverage sold years ago, as they confront low interest rates


Major insurers are breaking a long-standing industry taboo of raising rates on lifeinsurance policies they sold to consumers years ago, in the latest fallout from a prolonged stretch of low interest rates.

In recent months, several insurers have notified tens of thousands of people who own a type of coverage known as “universal life” that they are exercising little-used contractual rights to raise costs.

Read Full Article Here: Surprise: Your Life Insurance Rates are Going Up

AXA Cost of Insurance (COI) Rates Increase

AXA will be raising the cost of insurance (COI) on a limited number of Athena Universal Life II policies, effective with the first monthly deduction that occurs on or after January 1st, 2016.  Like most other carriers raising costs, AXA is emphasizing the new rates will not exceed the guaranteed maximum COI rates as specified in the policy.
The Athena Universal Life II policy does contain a death benefit guarantee, the Lapse Protection Rider (LPR.)  The new COI rates will not increase the premium needed to keep the LPR in force, as long as no loans are taken on the policy and no changes are made to the policy.  Policies without the rider, will need additional premium to keep the policy from lapsing.
The increase is limited to policies originally issued to those over age 70 with face amounts of $1M or more. AXA is allowing those with face amounts above $1M to lower their death benefit below $1M so as to not be affected by the cost increase, though positive results should be reviewed because of banding and surrender charges.
AXA has already notified brokers, and letters to alert policyholders went out starting October 5th.  Illustrations with the new rates are available and AXA is waiving their illustration fee for the rest of the year for up to three policy inforce variations.
We will be reviewing the cost increase and will be publishing future Blogs with our results.  We have also scheduled a Webinar concerning the COI increases in general for later in October.  Visit our website at www.itm-twentyfirst.comfor more information.

Voya Financial Cost of Insurance (COI) Rates Increase

At ITM TwentyFirst, it is our goal to keep our clients informed of industry wide news that may affect how life insurance assets are managed now and in the future.

Voya Financial, in letters to clients that began about a month ago, announced cost increases in some of its Universal Life (UL) policies.  According to information from the carrier, the increases were in three areas:  Monthly Cost of Insurance, Percent of Premium Expense Charge – the “charge assessed as a percentage of each premium paid” and Monthly Expense Factor – a charge “based on the Accumulation Value of your policy”.
Voya, which rebranded from ING US in April of 2013, noted in an FAQ to clients that they “periodically review costs associated with their policies” and that the increases were “being made in response to an increase in the anticipated costs of providing future coverage”.  They noted that the increase will take effect on the “first Monthly Policy Date on or after October 1, 2015” and, like other carriers who have raised costs, provided options for the policyholders that include:  taking no action, paying a higher premium, reducing the death benefit or surrendering the policy.
In conversations with representatives from the carrier we have been told that the policies affected were “all Universal Life policies issued before 2009”.  We were also given the following list of policies affected by one or more of these increases:

  • Security Design I & III
  • Estate Design (RL) and NY
  • Life Design GUL
  • Premier Design
  • Strategic Accumulator UL
  • Select Design
  • GPUL (version 1, 2, and 3)

In reviewing the client letters that we have received so far the highest increase in monthly Cost of Insurance we have seen is 42.3%, but we are still analyzing the policies we manage to determine actual increases.  This is another notice from a major carrier of a cost increase and we will be monitoring the situation as we move forward.
ITM TwentyFirst is a leading provider of ILIT administrative services, life settlement portfolio services and medical underwriting. We are monitoring the impact of these changes for all ITM TwentyFirst clients.
If you would like more information please contact:

Managing Director
ITM TwentyFirst
TOLI Solutions

Banner and William Penn COI Increase for Select Universal Life Plans

Banner and William Penn announced they will implement a cost of insurance (COI) increase for select universal life plans effective August 1, 2015. For any plan affected, the increased cost of insurance will be reflected in the first monthly deduction following the effective date of the increase. The table below lists the plans for each company, the policy form numbers, the dates the policies were available for sale, and the effective date of the COI change. It also identifies the plans which included no-lapse guarantees.

Download PDF – Banner and William Penn COI Increase August 2015

USFL Nova & SuperNova UL Products: Increase in Cost of Insurance (COI) Rates

Effective on the first policy anniversary following August 31, 2015, the clients with Nova & SuperNova UL policies will see an increase in their schedule of cost of insurance (COI) rates. AXA is making this change because they are expecting future mortality experience to be less favorable than was anticipated when the current schedule of COI rates was established. However, rates will never be above the guaranteed maximum rates as specified in the policy.
AXA will be sending a letter to your clients, notifying them of the change in rates. They will copy the servicing agent on the client letters as well.

  •  Clients with policies that have September to December anniversaries will receive the letter in June 2015.
  • Clients with policies that have January to August anniversaries will receive the letter in August 2015.
  • AXA will also include a notice of the change in the policy’s annual statement from September 2015 through August 2016.

ITM TwentyFirst is a leading provider of ILIT administrative services, life settlement portfolio services and medical underwriting. We are monitoring the impact of these changes for all ITM TwentyFirst clients.

Download PDF – USFL UL Products Increase COI Aug 2015

TransAmerica COI Changes

Transamerica Life Insurance Company recently notified producers of upcoming cost of insurance rate increases on certain policies. The increases are limited to certain UL based products that were issued between 1987 and 1998. The particular products include:

Download PDF – TransAmerica COI Changes Aug 2015

ITM TwentyFirst Releases Updated Senior Mortality Data Set

Minneapolis, MN August 28, 2015: Today, ITM TwentyFirst – a leader in longevity data, analytics and life insurance services – released the June 30, 2015 update to its senior mortality database. The comprehensive data set includes information on nearly 85,000 insured seniors, with over 210,000 underwritings and allows insurers, researchers and life settlement investors to analyze the impact of various impairments, family history and lifestyle factors on senior longevity.

The data now includes approximately 18,500 observed mortalities. With the data, subscribers can more accurately identify trends in mortality rates for the senior population. ITM TwentyFirst updates its data set bi-annually.

TwentyFirst Receives Clean SOC 2 Examination Report

Minneapolis, MN June 30, 2015: Today, ITM TwentyFirst – a leading provider of insurance portfolio management, policy analytics, medical underwriting and related life insurance services – announced its successful completion of a SSAE 16 Service Organization Control (SOC) Type II audit. The audit was completed by the Minneapolis-based accounting firm Lurie Besikof Lapidus & Company, LLP and focused on TwentyFirst’s security and availability procedures for the previous year (June 1, 2014 through May 31, 2015). The SOC 2 is a recognized third-party assurance audit for service providers.
Following the examination, TwentyFirst received a service auditors’ report with a clean opinion, and no exceptions were noted during testing, demonstrating that TwentyFirst’s policies, procedures, and operations met or exceeded the stringent SOC 2 criteria.

Merger of Leading Life Insurance Service Firms

Minneapolis, MN, June 1, 2015: InsuranceIQ (IIQ) and Insurance Trust Monitor (ITM), both located in Cedar Falls, Iowa today announced that they are merging with TwentyFirst.

The needs of corporate and professional life insurance trustees have increased significantly in recent years, and will continue to do so. There is a heightened focus on the regulatory and legal risks associated with overseeing life insurance trusts. To better serve this new environment, combining the resources of the three enterprises allows ITM|TwentyFirst to more efficiently and effectively provide the services required to meet the needs of policy owners and their fiduciaries.

Read Full Press Release

TwentyFirst Releases Updated Senior Mortality Data Set

Minneapolis, MN March 19, 2015: Today, TwentyFirst – a leader in longevity data, analytics and life insurance services – released the December 31, 2014 update to its senior mortality database. The comprehensive data set includes information on nearly 90,000 insured seniors, and allows insurers, researchers and life settlement investors to analyze the impact of various impairments, family history and lifestyle factors on senior longevity.

Read Full Press Release