Top trends 2002
After the entry of WTO, more and more foreign insurer will enter China via mergers, acquisitions and alliances, which will make the competence fiercer.
Growing consolidation within a maturing industry will encourage focus on cost control and new services and products to gain profit.
Some Chinese insurance companies are considering becoming financial services firms because financial services firms are better suited to offer insurance products with a savings component such as a variable life insurance policy.
The Stewardship Life Income is a reversionary annuity - a unique new life insurance product. Reversionary Annuity... “[A] life insurance policy conditioned on the survival of the beneficiary beyond the life of the insured and payable to the beneficiary at a stated amount per month or year so long as the beneficiary lives and commencing with the death of the insured.”
The mission of the financial services industry is to develop, market and administer products and services that, when properly utilized, enable the public to provide themselves with financial security. Few would argue that, for most people, the key element of financial security is income. The existence of an adequate and reliable income creates a sense of safety and comfort. The absence of such an income creates a sense of vulnerability and fear. Even our Social Security and Welfare programs are designed to provide a minimal financial safety net of income. In recent years, many life insurance companies have emphasized face amount over income in both product design and marketing. This has subsequently resulted in most death claims being settled with lump-sum payments.
Unfortunately, studies show that such payment has often led to dissipation of proceeds, leaving beneficiaries with serious financial problems within a year or two following the death of a loved one. There are, of course, many needs for lump-sum settlements of life insurance death proceeds. However, there are also many, perhaps even more, needs for the financial security that can only be provided by a guaranteed lifetime income.
It is also unfortunate that many people, even those with considerable financial sophistication, often fail to understand the financial mechanics of providing guaranteed income. They overestimate the income that will be provided by their existing life insurance funds and underinsure themselves, leaving their beneficiaries with burdensome financial problems.
The Stewardship Life Income is an extraordinarily cost-efficient provider of guaranteed life income to a designated beneficiary. It should be your product of choice wherever and whenever your client has a beneficiary with a need for lifetime income. Several unique features of the product enable it to be very affordably priced. The Stewardship Life Income does only one thing. It provides a primary benefit to a primary beneficiary. Costly secondary and contingent benefits have been eliminated. The Stewardship Life Income provides a guaranteed lifetime income to a designated beneficiary on the death of the insured. No extraneous benefits have been built into this product. As a result of this simplified and efficient design, the Stewardship Life Income delivers it’s primary benefit for a premium that is significantly lower than the premium for a traditional product providing the same benefit.
Both the insured and the beneficiary apply for, and are underwritten for, the policy. The premium is determined by the relative age and health status of both the insured and the beneficiary. The older and more medically impaired the insured, the higher the premium. The older and more medically impaired the beneficiary, the lower the premium.
Once the policy is in force, the lifetime income benefit is guaranteed and cannot be changed. The premium is indeterminate. After the first policy year, the premium can be increased or decreased depending on experience on the total block of business. Refer to question 3 on page 11 of this brochure for detailed information about the limitations and conditions under which Baltimore Life could change the premium. Baltimore Life’s decision to utilize this indeterminate premium structure reduces policy reserve requirements and enables lower premiums. It is important that the prospective purchaser of a Stewardship Life Income understand this aspect of the product. Advance premium deposits are accepted by Baltimore Life at a 4½% discount rate.
The beneficiary is irrevocable and must outlive the insured in order for the lifetime income benefit to be paid. Should the beneficiary predecease the insured, the policy will terminate without value unless the Return of Premium Rider is a part of the policy. The Stewardship Life Income has no cash value or other non-forfeiture values. It does not have a face amount and the lifetime income benefit cannot be commuted.
A Return of Premium Rider is available for policies with beneficiaries who are aged 80 or younger and who are issued standard through Table 12. This rider provides that should the beneficiary predecease the insured, all premiums paid into the policy will be returned to the insured over a comparable time period, frequency and amount as the premiums were paid to Baltimore Life. (e.g. A Stewardship Life Income containing a Return of Premium Rider had 34 monthly premiums of $125 each paid prior to the beneficiary’s death. The premiums would be returned to the insured in 34 monthly payments of $125 each.) If the insured dies before all premium payments have been returned, rider benefits cease.
