TITLE

Deciphering Cash Value Life Insurance Illustrations

AUTHOR(S)
Katt, Peter
PUB. DATE
October 1997
SOURCE
Journal of Financial Planning;Oct97, Vol. 10 Issue 5, p32
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The article focuses on the cash value life insurance illustration abuse and the attempts being made by the National Association of Insurance Commissioners (NAIC) to curb the problem through the implementation of regulations. Cash value life insurance Illustrations are critical to the life insurance planning process because they serve as roadmaps for consumers considering the purchase of life insurance. However, life insurance policy pricing is inherently complicated, making it easy for life insurance companies to manipulate illustrations in ways that give them an apparent advantage over other companies, yet leave policy buyers vulnerable to exaggerated claims that may not materialize. The author's tentative conclusion is that the NAIC's attempt to eliminate illustration abuses is producing under whelming results. First, the regulations appear to be inadequate for protecting unsuspecting consumers from the potential losses they may incur with lapse-supported pricing. Second, the regulations apparently can be interpreted to allow companies to continue the game of illustration liar's poker by making unsupported exaggerated policy values promises.
ACCESSION #
9712013890

 

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