• Life Insurance
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Actuarial science - Life insurance, pensions and healthcare
1
Actuarial science became a formal
mathematical discipline in the late
17th century with the increased
demand for long-term insurance
coverages such as Burial, Life
insurance, and Annuities
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Actuarial science - Life insurance, pensions and healthcare
In traditional life insurance, actuarial
science focuses on the analysis of
mortality, the production of life tables, and
the application of compound interest to
produce life insurance, annuities and
endowment policies. Contemporary life
insurance programs have been extended
to include credit and mortgage insurance,
key man insurance for small businesses,
long term care insurance and health
savings accounts (Hsiao 2001).
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Actuarial science - Life insurance, pensions and healthcare
1
In health insurance, including insurance
provided directly by employers, and social
insurance, actuarial science focuses on
the analysis of rates of disability, morbidity,
mortality, fertility and other contingencies
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Actuarial science - Life insurance, pensions and healthcare
1
In the pension industry, actuarial
methods are used to measure the
costs of alternative strategies with
regard to the design, funding,
accounting, administration, and
maintenance or redesign of pension
plans
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Actuarial science - Life insurance, pensions and healthcare
1
In social welfare programs, the Office
of the Chief Actuary (OCACT), Social
Security Administration plans and
directs a program of actuarial
estimates and analyses relating to
SSA-administered retirement,
survivors and disability insurance
programs and to proposed changes in
those programs
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Samsung - Samsung Life Insurance
1
It is the largest provider of life
insurance in South Korea.
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Samsung - Samsung Life Insurance
1
Samsung Life Insurance is listed on the Korea
Exchange stock-exchange (number 032830)
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Samsung - Samsung Air China Life Insurance
Samsung Air China Life Insurance
Co., Ltd. is a 50:50 joint venture
between Samsung Life Insurance and
China National Aviation Corporation.
It was established in Beijing in July
2005.
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Samsung - Siam Samsung Life Insurance
Samsung Life Insurance, holds a 37%
stake while Saha Group also has a 37.5%
stake in the joint venture, with the
remaining 25% owned by Thanachart
Bank.
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U.S. Representatives - Health and life insurance
1
Members of Congress are eligible to
participate in the Federal Employees
Health Benefits Program and the
Federal Employees Life Insurance
Program.
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Insurable interest - Life insurance
It may also mean the interest of a
beneficiary of a life insurance policy to
prove need for the proceeds, called the
insurable interest doctrine
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Insurable interest - Life insurance
1
Insurable interest is no longer strictly an
element of life insurance contracts under
modern law. Exceptions include
viatication agreements and Charity
(practice)|charitable donations.
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Insurable interest - Life insurance
has an insurable
interest in the life of
that second person.
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Insurable interest - Life insurance
Legal guidelines have been
established in many jurisdictions
which establish the kinds of family
relationships for which an insurable
interest exists
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Insurable interest - Life insurance
A person is presumed to have an
insurable interest in his or her own
life,Griffiths v. Fleming legal
citation|[1909] 1 KB 805; M'Farlane v.
Royal London Friendly Society legal
citation|(1886) 2 TLR 755 preferring to
be alive and in good health rather than
being sick, injured or dead.
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Insurable interest - Life insurance
1
The unlimited interest extends to the
life of spouses (and since 2004 civil
partners), even if there is no financial
dependency.Griffiths v. Fleming legal
citation|[1909] 1 KB 805; Married
Women's Property Act 1882, section
11.
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Insurable interest - Life insurance
1
UK law does not recognize other classes of socalled 'natural affection' however, thus:
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Insurable interest - Life insurance
1
*Children have no interest in the lives
of their parents (not in England / Wales
/ NI though Scottish law recognizes
this) Law Commission Insurance
Contract Law
[http://www.lawcom.gov.uk/docs/Insura
nce_Contract_Law_Issues_Paper_4.pdf
]
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Insurable interest - Life insurance
Nor is insurable interest recognized for
cohabitation|cohabiting couples. Although
many insurers will accept such policies, they
could potentially be invalidated because they
have not been tested in court. In recent
years, there have been moves to pass clear
statutory provisions in this regard, which have
not yet borne
fruit.[http://www.scottishexecutive.gov.uk/libra
ry2/doc11/rfl-12.asp Report on Family Law;
Cohabitation, s. XVI], Scottish Law
Commission.
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Insurable interest - Life insurance
1
In practice these problems are solved by
people assigning their policies or
placing them in trust with named
beneficiaries. If a person obtains an
insurance policy on their own life, it is
presumed that the person would only
name a beneficiary who wants the
insured to be alive and healthy. There is
no requirement that the beneficiary have
a proven insurable interest in the life of
the insured when the insured has
purchased the insurance.
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Insurable interest - Life insurance
In 2008, the English and Scottish Law
Commissions tentatively proposed some
reforms to the existing law, hoping to
clarify the complex rules. Their preliminary
recommendations included increasing the
category of ‘natural affection’ to include
dependent children and parents and also
cohabitees. Officially this is still under
review. HMRC
[http://www.hmrc.gov.uk/manuals/gimanual
/GIM1050.htm]
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Universal life insurance
'Universal life insurance' (often
shortened to 'UL') is a type of
permanent life insurance, primarily
in the United States of America
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Universal life insurance - Similar life insurance types
1
A similar type of policy that was developed
from universal life insurance is the variable
universal life insurance policy (VUL)
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Universal life insurance - Similar life insurance types
1
Universal life is similar in some ways to,
and was developed from, whole life
insurance, although the actual cost of
insurance inside the UL policy is based on
annually renewable term life insurance.
The advantage of the universal life policy
is its premium flexibility and adjustable
death benefits. The death benefit can be
increased (subject to insurability), or
decreased at the policy owner's request.
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Universal life insurance - Similar life insurance types
The premiums are flexible, from a
minimum amount specified in the policy, to
the maximum amount allowed by the
contract
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Universal life insurance - Similar life insurance types
1
To make UL policies more attractive, insurers
have added secondary guarantees, where if
certain minimum premium payments are
made for a given period, the policy will
remain in force for the guarantee period even
if the cash value drops to zero. These are
commonly called No Lapse Guarantee riders,
and the product is commonly called
guaranteed universal life (GUL, not to be
confused with group universal life insurance,
which is also typically shortened to GUL).
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Universal life insurance - Similar life insurance types
The trend up until 2007–2008 was to
reduce premiums on GUL to the point
where there was virtually no cash
surrender values at all, essentially
creating a level term policy that could
last to age 121
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Universal life insurance - Similar life insurance types
With the requirement for all new
policies to use the latest mortality
table (CSO 2001) beginning January 1,
2004, many GUL policies have been
repriced, and the general trend is
toward slight premium increases
compared to the policies from 2008.
1
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Universal life insurance - Similar life insurance types
Another major difference between
universal life and whole life insurances:
the administrative expenses and cost of
insurance within a universal life contract
are transparent to the policy owner,
whereas the assumptions the insurance
company uses to determine the premium
for a whole life insurance policy are not
transparent.
1
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Universal life insurance - Uses of universal life insurance
*'Income replacement', to provide for
surviving spouses and dependent children
1
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Universal life insurance - Uses of universal life insurance
1
*'Debt coverage', to pay off personal and
business debts, such as a home mortgage
or business operating loan
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Universal life insurance - Uses of universal life insurance
1
*'Estate liquidity', when an estate has
an immediate need for cash to settle
federal estate taxes, state inheritance
taxes, or unpaid income taxes on
income in respect of a decedent (IRD).
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Universal life insurance - Uses of universal life insurance
*'Estate replacement', when an
insured has donated assets to a
charity and wants to replace the value
with cash death benefits.
1
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Universal life insurance - Uses of universal life insurance
1
*'Business succession continuity', for
example to fund a cross-purchase or
stock redemption buy/sell agreement.
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Universal life insurance - Uses of universal life insurance
1
*'Key person insurance', to protect a
company from the economic loss
incurred when a key employee or
manager dies.
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Universal life insurance - Uses of universal life insurance
1
*'Executive bonus', under IRC Sec. 162,
where an employer pays the premium on a
life insurance policy owned by a key
person. The employer deducts the
premium as an ordinary business
expense, and the employee pays the
income tax on the premium.
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Universal life insurance - Uses of universal life insurance
*'Controlled executive bonus', just
like above, but with an additional
contract between an employee and
employer that effectively limits the
employees access to cash values for a
period of time (golden handcuffs).
1
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Universal life insurance - Uses of universal life insurance
1
*'Split dollar plans', where the death
benefits, cash surrender values, and
premium payments are split between
an employer and employee, or
between an individual and a nonnatural person (e.g. trust).
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Universal life insurance - Uses of universal life insurance
1
*'Non-qualified deferred compensation', as
an informal funding vehicle where a
corporation owns the policy, pays the
premiums, receives the benefits, and then
uses them to pay, in whole or in part, a
contractual promise to pay retirement
benefits to a key person, or survivor
benefits to the deceased key person's
beneficiaries.
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Universal life insurance - Uses of universal life insurance
1
*'An alternative to long-term care
insurance', where new policies have
accelerated benefits for Long Term
Care.
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Universal life insurance - Uses of universal life insurance
1
*'Mortgage acceleration', where an
over-funded UL policy is either
surrendered or borrowed against to
pay off a home mortgage.
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Universal life insurance - Uses of universal life insurance
*'Charitable gift', where a UL policy is
donated to a qualified charity, or the policy
owner names a charity as the beneficiary.
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Universal life insurance - Uses of universal life insurance
1
*'Charitable remainder trust replacement',
where a policy owner wants to replace
assets donated to a Charitable Remainder
Trust.
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Universal life insurance - Uses of universal life insurance
*'Estate equalization', where a
business owner has more than one
child, and at least one child wants to
run the business, and at least one
other wants cash.
1
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Universal life insurance - Uses of universal life insurance
1
*'Life insurance retirement plan, or Roth
IRA alternative'. High income earners who
want an additional tax shelter, with
potential creditor/predator protection, who
have maxed out their IRA, who are not
eligible for a Roth IRA, and who have
already maxed out their qualified plans.
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Universal life insurance - Uses of universal life insurance
1
*'Term life insurance alternative', for
example when a policy owner wants to
use interest income from a lump sum
of cash to pay a term life insurance
premium
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Universal life insurance - Uses of universal life insurance
1
*'Whole life insurance alternative', where
there is any need for permanent death
benefits, but little or no need for cash
surrender values, then a current
assumption UL or GUL may be an
appropriate alternative, with potentially
lower net premiums.
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Universal life insurance - Uses of universal life insurance
1
*'Annuity alternative', when a policy
owner has a lump sum of cash that
they intend to leave to the next
generation, a single premium UL
policy provides similar benefits
during life, but has a stepped up death
benefit that is income tax-free.
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Universal life insurance - Uses of universal life insurance
*'Annuity maximization', where a
large non-qualified annuity with a low
cost basis is no longer needed for
retirement and the policy owner wants
to maximize the value for the next
generation
1
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Universal life insurance - Uses of universal life insurance
1
*'RMD maximization', where an IRA owner
is facing required minimum distributions
(RMD), but has no need for current
income, and desires to leave the IRA for
heirs. The IRA is used to purchase a
qualified SPIA that maximizes the current
income from the IRA, and this income is
used to purchase a UL policy.
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Universal life insurance - Uses of universal life insurance
*'Creditor/predator protection'. A
person who earns a high income, or
who has a high net worth, and who
practices a profession that suffers a
high risk from predation by litigation,
may benefit from using UL as a
warehouse for cash, because in some
states the policies enjoy protection
from the claims of creditors, including
judgments from frivolous
1
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Universal life insurance - Uses of universal life insurance
*'Cryonics funding', where a life
insurance policy funds the costs
associated with cryonic suspension.
1
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Universal life insurance - Living benefits of life insurance
Many people use life insurance, and in
particular cash value life insurance, as a
source of benefits to the owner of the
policy (as opposed to the death benefit
which provides benefit to the beneficiary).
These benefits include loans, withdrawals,
collateral assignments, split dollar
agreements, pension funding, and tax
planning.
1
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Universal life insurance - Loans
1
Most universal life policies come with
an option to take a loan on certain
values associated with the policy.
These loans require interest payments
which are paid to the insurance
company. The insurer charges interest
on the loan because they are no longer
able to receive any investment benefit
from the money that has been loaned
to you.
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Universal life insurance - Loans
1
Repayment of the loan principal is not
required, but payment of the loan
interest is required. If the loan interest
is not paid, it will be deducted from
the cash value of the policy. If there is
not sufficient value in the policy to
cover interest, the policy will lapse.
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Universal life insurance - Loans
1
Loans are not reported to any credit
agency and payment or non-payment
against them will not affect the
policyholder's credit rating
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Universal life insurance - Loans
1
Outstanding loans will be deducted from the
death benefit at the death of the insured.
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Universal life insurance - Withdrawals
1
If done within IRS Regulations, an
Equity Indexed Universal Life policy
can provide income that is tax-free
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Universal life insurance - Withdrawals
1
Most universal life policies come with
an option to withdraw cash values
rather than take a loan. The
withdrawals are subject to contingent
deferred sales charges and may also
have additional fees defined by the
contract. Withdrawals will
permanently lower the death benefit
of the contract at the time of the
withdrawal.
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Universal life insurance - Withdrawals
1
Withdrawals are taken out premiums
first and then gains, so it is possible to
take a tax-free withdrawal from the
values of the policy (this assumes the
policy is not a MEC, i.e. modified
endowment contract). Withdrawals
are considered a material change and
cause the policy to be tested for MEC.
As a result of a withdrawal, the policy
may become a MEC and could lose its
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Universal life insurance - Withdrawals
Withdrawing values will affect the longterm viability of the plan. The cash values
removed by loan are no longer earning the
interest expected, so the cash values will
not grow as expected. To some extent this
issue is mitigated by the corresponding
lower death benefit.
1
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Universal life insurance - Collateral assignments
Collateral assignments will often be
placed on life insurance to guarantee
the loan upon the death of debtor. If a
collateral assignment is placed on life
insurance the assignee will receive any
amount due to them before the
beneficiary is paid. If there is more
than one assignee, the assignees are
paid based on date of the assignment,
i.e. the earlier assignment date gets
1
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Universal life insurance - Single premium
1
These policies were very popular prior to
1988, as life insurance is generally a tax
deferred plan, and so interest earned in
the policy was not taxable as long as it
remained in the policy
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Universal life insurance - Single premium
1
The IRS defines the method of testing whether a life
insurance policy is a MEC
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Universal life insurance - Single premium
1
In a MEC, the premiums and accumulation
will be taxed just like an annuity upon
withdrawing. The accumulations will grow
tax deferred and will still transfer tax free
to the beneficiary under Internal Revenue
Service Code 101a under certain
circumstances.
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Universal life insurance - Fixed premium
Fixed Premium UL is paid for by periodic
premium payments associated with a no
lapse guarantee in the policy. Sometimes the
guarantees are part of the base policy and
sometimes the guarantee is an additional
rider to the policy. Generally these payments
will be for a shorter period of time than the
policy is in force; for example payments may
be made for 10 years, with the intention that
thereafter the policy is paid-up. But it can
also be permanent fixed payment for the life
of policy.
1
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Universal life insurance - Fixed premium
Since the base policy is inherently
based on cash value, the fixed
premium policy only works if it is tied
to a guarantee
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Universal life insurance - Fixed premium
1
# Leave the policy alone, and let it
potentially expire early (if COI
charges deplete the account), or
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Universal life insurance - Fixed premium
# Make additional or higher premium
payments, to keep the death benefit level, or
1
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Universal life insurance - Fixed premium
1
Many universal life contracts taken out in
the high interest periods of the 1970s and
1980s faced this situation and lapsed
when the premiums paid were not enough
to cover the cost of insurance.
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Universal life insurance - Flexible premium
1
Flexible Premium UL allows the policyholder to vary
their premiums within certain limits
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Universal life insurance - Flexible premium
1
In addition, Flexible Premium UL may
offer a number of different death
benefit options, which typically
include at least the following:
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Universal life insurance - Flexible premium
* a level amount at risk (often called
Option B, etc.); this is also referred to as
an increasing death benefit.
1
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Universal life insurance - Flexible premium
1
Policyholders may also buy Flexible
Premium UL with a large initial
deposit, thereafter making payments
irregularly.
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Universal life insurance - Unlawfully sold to individuals as an investment
1
In the US it is illegal under the Investment
Advisers Act of 1940 to offer Universal Life
Insurance as an investment to individuals,
but it is frequently offered by agents as a
tax-advantaged financial vehicle from
which they can borrow as needed later
without tax penalties. This also makes it
an alternative for individuals who are not
able to contribute to a Roth IRA due to IRS
income restraints.
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Universal life insurance - Unlawfully sold to individuals as an investment
1
It is illegal to market Index Universal
Life (IUL) as an investment security,
as defined by the Securities Act of
1933 the Securities Act of 1934
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Universal life insurance - Unlawfully sold to individuals as an investment
1
Therefore, under the authority of the
SEC and FINRA, Index Universal Life
Insurance cannot be marketed or sold
as, a security, variable security,
variable investment or direct
investment in a security (or the stock
market), because it is not. However,
IUL can be marketed and sold as an
investment.
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Universal life insurance - Conflict of interest
Agents who sell Universal Life
Insurance often receive commissions
equal to the first year of target
premiums providing an incentive to
sell these policies over other less
expensive term life insurance
policies.
1
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Universal life insurance - Conflict of interest
1
Proponents respond that it would be
inaccurate to state that term insurance
is less expensive than universal life, or
for that matter, other forms of
permanent life insurance, without
qualifying the statement with the other
factor: Time, or length of coverage.
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Universal life insurance - Conflict of interest
While term life insurance is the least
expensive over a short period, say one to
twenty years, permanent life insurance is
generally the least expensive over a
longer period, or over one's entire lifetime.
This is mainly due to the high percentage
of the premiums paid out in commissions
during the first 10–12 years.
1
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Universal life insurance - Misunderstood risk to policyholders
1
'Interest rate risk:' UL is
a complex policy with
risk to the policyholder
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Universal life insurance - Misunderstood risk to policyholders
1
'No-lapse guarantees, or death benefit
guarantees:' A well informed
policyholder should understand that
the flexibility of the policy is tied
irrevocably to risk to the policyholder
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Universal life insurance - Miscellaneous
The single largest asset class of all but
one of the largest banks in the United
States is permanent cash value life
insurance, commonly referred to as BOLI,
or Bank Owned Life Insurance. During the
recent economic crisis, banks accelerated
their purchasing of BOLI as it was the
single most secure investment they could
make.
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Universal life insurance - Miscellaneous
One banker described BOLI as a
constantly resetting municipal bond
that I never have to mark to market.
1
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Universal life insurance - Miscellaneous
1
The majority of BOLI is current assumption
Universal Life, usually sold as a single
premium contract.
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Variable universal life insurance
1
This flexibility is in contrast to whole life
insurance that has fixed premium
payments that typically cannot be missed
without lapsing the policy (although one
may exercise an Automatic Premium Loan
feature, or surrender dividends to pay a
Whole Life premium).
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Variable universal life insurance
Variable universal life is a type of
permanent life insurance, because the
death benefit will be paid if the
insured dies any time as long as there
is sufficient cash value to pay the
costs of insurance in the policy
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Variable universal life insurance
1
If investments made in the separate
accounts out-perform the general
account of the insurance company, a
higher rate-of-return can occur than
the fixed rates-of-return typical for
whole life
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Variable universal life insurance - Regulation of VUL providers
Because the separate accounts are
securities, the representative providing a
VUL must be working in accordance with
the securities regulations of the country or
province in which he operates. And
because they are life insurance policies,
VULs may only be sold by representatives
who are properly licensed to sell life
insurance in the areas in which they
operate. The insurance company
1
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Variable universal life insurance - Regulation of VUL providers
This dual regulation helps protect
consumers, who can look up the track
record of offenses of any provider
listed by the regulating SRO (Self
Regulatory Organization) or Canadian
securities regulation|provincial
securities commission.
1
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Variable universal life insurance - Regulation of VUL providers
1
VULs may only be sold in the United
States by representatives who have a
producers life insurance license in the
state(s) in which he operates
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Variable universal life insurance - Regulation of VUL providers
In Canada, there is no real
differentiation between universal life
insurance|universal life and variable
universal life.mkj
1
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Variable universal life insurance - Uses
Variable universal life insurance
receives special tax advantages in the
United States Internal Revenue Code.
The cash value in life insurance is
able to earn investment returns
without incurring current income tax
as long as it meets the definition of
life insurance and the policy remains
in force. The tax free investment
returns could be considered to be
1
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Variable universal life insurance - Uses
1
In one form of variable universal life
insurance, the cost of insurance
purchased is based only on the
difference between the death benefit
and the cash value (defined as the net
amount at risk from the perspective of
the insurer)
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Variable universal life insurance - Uses
Often this is done within a VUL policy
because this allows a tax deferral (for
which no alternative would exist besides
tuition money saved in an educational IRA
or 529 plan), provides for permanent life
insurance, and can usually be accessed
tax-free by borrowing against the policy.
1
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Variable universal life insurance - Contract features
By allowing the contract owner to
choose the investments inside the
policy the insured takes on the
investment risk, and receives the
greater potential return of the
investments in return. If the
investment returns are very poor this
could lead to a policy lapsing (ceasing
to exist as a valid policy). To avoid
this, many insurers offer guaranteed
death benefits up to a certain age as
long as a given minimum premium is
1
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Variable universal life insurance - Premium flexibility
1
In order to curb this practice, but still
encourage life insurance purchase,
the IRS developed guidelines
regarding allowed premiums for a
given death benefit.
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Variable universal life insurance - Maximum premiums
1
If the cash value in a contract exceeds the
specified percentage of death benefit, the
policy no longer qualifies as life insurance
at all and all investment earnings become
immediately taxable in the year the
specified percentage is exceeded
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Variable universal life insurance - Maximum premiums
1
The maximum premiums are set by
the IRS guidelines such that the
premiums paid within a seven-year
period after a qualifying event (such
as purchase or death benefit
increase), grown at a 6% rate, and
using the maximum guaranteed costs
of insurance in the policy contract,
would endow the policy at age 100 (i.e
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Variable universal life insurance - Maximum premiums
To add more confusion the seven-year
MEC premium level cannot be paid in a
VUL every year for 7 years, and still avoid
MEC status
1
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Variable universal life insurance - Investment choices
The number and type of choices
available varies from company to
company, and from policy to policy.
The current generation of VUL policies
have a wide variety of sub-accounts
for the policy owner to allocate their
cash surrender values into. These
newer policies often offer 50 or more
separate accounts covering the entire
spectrum of asset classes and
1
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Variable universal life insurance - Investment choices
1
Separate accounts are organized as
trusts to be managed for the benefit of
the insureds, and are so named
because they are kept 'separate' from
the 'general account' of the life
insurance company. They are similar
to mutual funds, but have different
regulatory requirements.
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Variable universal life insurance - Tax advantages
*Tax deferred growth of
cash surrender values while
a policy is in force
1
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Variable universal life insurance - Tax advantages
*FIFO withdrawal
status on premiums
paid into the contract
1
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Variable universal life insurance - Tax advantages
1
*Income tax free death benefits (may be subject to
estate tax if policy is owned by the insured)
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Variable universal life insurance - Tax advantages
1
Taxes are the main reason those in
higher tax brackets (25%+) would
desire to use a VUL over any other
accumulation strategy
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Variable universal life insurance - Tax advantages
1
Other alternatives for those in the 34% tax
bracket that own their own companies
would be to consider SEP IRA's, company
401k's or retirement arrangements from a
company perspective, or to incorporate
and consult a tax specialist.
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Variable universal life insurance - Tax advantages
These numbers assume expenses that
may vary from company to company, and
it is assumed that the VUL is funded with a
minimum face value for the level of
premium. The cash values would also be
available to fund lifestyle or personally
managed investments on a tax free basis
in the form of refunds of premiums paid in
and policy loans (which would be paid off
on death by the death benefit.)
1
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Variable universal life insurance - Risks of variable universal life
*Cost of insurance - the cost of
insurance for VULs is generally based
on term rates and as the insured ages,
the risk of mortality increases,
increasing the cost of insurance
1
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Variable universal life insurance - Risks of variable universal life
*Cash outlay - the cash needed to
effectively use a VUL is generally
much higher than other types of
insurance policies. If a policy does not
have the right amount of funding, it
may lapse.
1
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Variable universal life insurance - Risks of variable universal life
*Investment risk - because the sub
accounts in the VUL may be invested in
stocks and bonds, the insured now takes
on the investment risk rather than the
insurance company.
1
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Variable universal life insurance - Risks of variable universal life
*Complexity - the VUL is a complex
product, and can easily be used (or sold)
inappropriately because of this. Proper
funding, investing, and planning are
usually required in order for the VUL to
work as expected.
1
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Variable universal life insurance - General uses of variable universal life
These are the features typically
marketed by insurance companies,
however the VUL in most cases will
limit the insured to being able to take
advantage of only one of these
features listed. Each of these features
can be achieved through other means.
1
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Variable universal life insurance - General uses of variable universal life
1
*Financial protection - as with all life
insurance programs, VULs can be
used to protect a family in the case of
a premature death.
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Variable universal life insurance - General uses of variable universal life
*Tax advantages - because of its taxdeferred feature, the VUL may offer an
attractive tax advantage, especially to
those in higher tax brackets. To attain
them, the policy must be highly funded
(though still non-MEC), for the tax
advantages to offset the cost of insurance.
These tax advantages can be used for
either...
1
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Variable universal life insurance - General uses of variable universal life
1
**Education planning - the cash value of a
VUL can be used to help fund children's
education, as long as the policy is started
very early. Also, putting money into a VUL
can be used to help children qualify for
federal financial aid, since the federal
government does not consider the cash
value when calculating EFC (Expected
Family Contribution).
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Variable universal life insurance - General uses of variable universal life
1
**Retirement planning - because of its taxfree policy loan feature, the VUL can also
be used as tax-advantaged income source
in retirement, assuming retirement is not in
the near future and the policy is not a
modified endowment contract. Again, the
policy must be properly funded for this
strategy to work.
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Variable universal life insurance - General uses of variable universal life
*Estate planning - those with a large
estate (A filing is required for estates with
combined gross assets and prior taxable
gifts exceeding $3,500,000 effective for
decedents dying on or after January 1,
2009http://www.irs.gov/businesses/small/a
rticle/0,,id=164871,00.html) can
sometimes use a VUL as part of their
estate planning strategy to reduce or avoid
estate taxes by setting up a life insurance
1
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Variable universal life insurance - Criticisms of variable universal life
*Potentially higher costs - VUL
policies may be more expensive than
other types of permanent insurance,
such as Whole Life and traditional
Universal Life. Volatility of cash
surrender values, especially at late
duration, can cause a reverse dollar
cost averaging effect that results in
higher costs of insurance charges.
Proper funding of a contract may
1
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Variable universal life insurance - Criticisms of variable universal life
*Some older VUL policies have limited
sub-account choices. This issue has been
greatly corrected with the current
generation of policies having 50 or more
sub-accounts that cover all the major
asset classes, with more than one subaccount manager.
1
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Variable universal life insurance - Criticisms of variable universal life
1
*Policy administrative expenses and costs
of insurance may increase at the
company's whim, subject to a contractual
maximum.
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Variable universal life insurance - Criticisms of variable universal life
1
*VUL is relatively complex
compared to traditional
Whole Life or Term Life.
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Variable universal life insurance - Criticisms of variable universal life
Some criticism is not about the
product, but rather the sales tactics
used by some insurance agents.
1
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Variable universal life insurance - Criticisms of variable universal life
1
*Projecting the maximum illustrated
assumed interest rates (generally,
12%), using current (or assumed)
administrative expenses and current
costs of insurance, without showing
the prospective client several other
assumed rates of return, creating a
Blue Sky problem.
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Variable universal life insurance - Criticisms of variable universal life
1
Some regulators are
criticized, as well.
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Variable universal life insurance - Criticisms of variable universal life
* The Financial Industry Regulatory
Authority (FINRA) does not allow
insurance companies to illustrate VUL
policies using a stochastic projection
(commonly called a 'Monte Carlo
Simulation'), limiting agents to use
'straight line', constant interest
assumptions.
1
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Servicemembers' Group Life Insurance
'Servicemembers' Group Life Insurance'
('SGLI') is a life insurance available to all
active duty and Military reserve force|reserve
members of the uniformed services of the
United States. Supervised by the United
States Department of Veterans Affairs, the
program is administered by the Prudential
Financial|Prudential Insurance Company of
America.[http://www.insurance.va.gov/sgliSite
/miscellaneous/SGLI-Ann-Report-2009 SGLI
2009 Annual Report]/pdf
1
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Servicemembers' Group Life Insurance
1
It is available to active duty members of
the United States Army|Army, United
States Navy|Navy, United States Marine
Corps|Marine Corps, United States Air
Force|Air Force, United States Coast
Guard|Coast Guard, National Oceanic and
Atmospheric Administration
Commissioned Corps, and United States
Public Health Service Commissioned
Corps
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Servicemembers' Group Life Insurance
1
Insurance is available in increments
of $50,000, up to a maximum of
$400,000. As of July 1, 2008, SGLI
premiums are $0.065 per month per
$1,000 of insurance, regardless of the
member's age. An additional $1 per
month is charged for traumatic injury
protection. Accordingly, a $400,000
policy costs $27 per
month.http://www.dfas.mil/milhttps://store.theartofservice.com/the-life-insurance-toolkit.html
Servicemembers' Group Life Insurance
1
'Veterans' Group Life Insurance' ('VGLI') is
a similar product available to veterans.
SGLI policyholders may convert their
policy to VGLI upon Military
discharge|discharge unless an exception
for Total permanent disability
insurance|total disability applies.
Premiums for VGLI are higher and are
based on the age of the insured.
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Servicemembers' Group Life Insurance - US military life insurance lawsuit
1
The company provided life insurance to people in
the armed forces under a government contract
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Servicemembers' Group Life Insurance - US military life insurance lawsuit
It is not clear if the
practice was in violation
of law or the contract
1
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Servicemembers' Group Life Insurance - Alternatives
1
Insurance coverage similar to SGLI is replicated by
a few other private organizations
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Permanent life insurance
'Permanent life insurance' is a term
sometimes used for life insurance, such as
whole life or Endowment
policy|endowment, where the sum assured
is due to be paid out at the end of the
policy (assuming the policy is kept current)
and the policy accrues a cash value.
1
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Permanent life insurance
1
This is contrasted with Term life insurance
where insurance is purchased for a
specified period (such as 5, 10, or 20
years) and a benefit is only paid out if the
insured dies during this period.
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Permanent life insurance
Variable life insurance or linked life
assurance is similar, but the benefits
are more directly linked to investment
performance, thus shifting some risk to
the policyholder.
1
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Permanent life insurance - Higher premiums
As permanent life insurance program is
designed to pay out a benefit in all cases,
the premiums are much higher than for
term assurance, which can be regarded as
pure death benefit with no investment
element. Thus many people select term
insurance for its low cost, and they may
invest the difference in separate
investments.
1
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Permanent life insurance - Higher premiums
1
Another commonly used tactic is to utilize
the slow, steady, growth within the cash
value of permanent life insurance as a
conservative savings strategy to hedge
against the risk of the market.
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Medical Underwriting - Life insurance underwriting
A distinction between underwriting of
individually purchased life insurance and
the underwriting of health insurance is
generally recognized in US state-specific
regulation of insurance. The general legal
posture is for states to view life insurance
as less of a necessity than health
coverage.
1
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Term life insurance
1
'Term life insurance' or 'term assurance' is
life insurance which provides coverage at
a fixed rate of payments for a limited
period of time, the relevant term
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Term life insurance
1
Term life insurance is the original form
of life insurance and can be contrasted
to permanent life insurance such as
whole life insurance|whole life,
Universal life insurance|universal life,
and variable universal life
insurance|variable universal life, which
guarantee coverage at fixed premiums
for the lifetime of the covered individual
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Term life insurance
Term insurance functions in a manner
similar to most other types of insurance in
that it satisfies claims against what is
insured if the premiums are up to date and
the contract has not expired, and does not
provide for a return of premium dollars if
no claims are filed
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Term life insurance - Usage
Term life insurance is generally
chosen in favor of permanent life
insurance because term insurance is
usually much less expensive
(depending on the length of the term)
1
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Term life insurance - Annual renewable term
1
The simplest form of term life insurance is
for a term of one year. The death benefit
would be paid by the insurance company if
the insured died during the one year term,
while no benefit is paid if the insured dies
one day after the last day of the one year
term. The premium paid is then based on
the expected probability of the insured
dying in that one year.
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Term life insurance - Annual renewable term
1
Because the likelihood of dying in the next
year is low for anyone that the insurer
would accept for the coverage, purchase
of only one year of coverage is rare.
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Term life insurance - Annual renewable term
1
One of the main challenges to renewal
experienced with some of these
policies is requiring proof of
insurability. For instance the insured
could acquire a terminal illness
within the term, but not actually die
until after the term expires. Because
of the terminal illness, the purchaser
would likely be uninsurable after the
expiration of the initial term, and
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Term life insurance - Annual renewable term
1
Some policies offer a feature called
guaranteed reinsurability that allows
the insured to renew without proof of
insurability.
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Term life insurance - Annual renewable term
1
A version of term insurance which is commonly
purchased is annual renewable term (ART)
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Term life insurance - Level term life insurance
Much more common than annual
renewable term insurance is guaranteed
level premium term life insurance, where
the premium is guaranteed to be the same
for a given period of years. The most
common terms are 10, 15, 20, and 30
years.
1
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Term life insurance - Level term life insurance
1
In this form, the premium paid each
year remains the same for the
duration of the contract. This cost is
based on the summed cost of each
year's annual renewable term rates,
with a time value of money
adjustment made by the insurer. Thus,
the longer the term the premium is
level for, the higher the premium,
because the older, more expensive to
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Term life insurance - Level term life insurance
Most level term programs include a
renewal option and allow the insured to
renew for a maximum guaranteed rate if
the insured period needs to be extended
1
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Term life insurance - Level term life insurance
Most term life policies include an
option to convert the term life policy
to a Universal Life or Whole Life policy
1
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Term life insurance - Return Premium Term life insurance
A form of term life insurance
coverage that provides a return of
some of the premiums paid during the
policy term if the insured person
outlives the duration of the term life
insurance policy.
1
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Term life insurance - Return Premium Term life insurance
For example, if you own a 10 year
return of premium term life insurance
plan and the 10 year term has expired,
the premiums paid by the owner of the
life insurance policy will be returned
less any fees and expenses which the
life insurance company retains. Usually,
a return premium policy returns a
majority of the paid premiums if the
insured person outlives the policy term.
1
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Term life insurance - Return Premium Term life insurance
1
The premiums for a return premium term
life plan are usually much higher than for a
regular level term life insurance policy.
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Term life insurance - Payout likelihood and cost difference
1
Both term insurance and permanent
insurance use the same mortality
tables for calculating the cost of
insurance. A death benefit which is
income tax free. However, the
premium costs for term insurance are
substantially lower than those for
permanent insurance.
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Term life insurance - Payout likelihood and cost difference
The reason the costs are substantially
lower is that term programs may expire
without paying out, while permanent
programs must always pay out eventually.
To address this, some permanent
programs have built in cash accumulation
vehicles to force the insured to self-insure,
making the programs many times more
expensive.
1
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Term life insurance - Payout likelihood and cost difference
1
Other permanent life insurance policies do
not have built in cash values. The policy
owner may have the option of paying
additional premium in the early years of
the policy to create a tax deferred cash
value. If the insured dies and the policy
has a cash value, the cash value is often
paid out tax free in addition to the policy
face amount.
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Term life insurance - Payout likelihood and cost difference
1
Insurance industry studies indicate that the
probability of filing a death benefit claim
under a term insurance policy is low. One
study placed the percentage as low as 1% of
policies paying a benefit. The low payout
likelihood allows term insurance to be
relatively inexpensive. Because of the low
likelihood of an insurer having to pay a death
benefit, term insurance may offer more
coverage per premium dollar - by a factor of
up to 10.
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Whole life insurance
1
'Whole life insurance', or 'whole of life
assurance' (in the Commonwealth of
Nations), is a life insurance policy that
remains in force for the insured's whole
life and requires (in most cases)
premiums to be paid every year into the
policy.
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Whole life insurance - Non-participating
All values related to the policy (death
benefits, cash surrender values,
premiums) are usually determined at
policy issue, for the life of the contract, and
usually cannot be altered after issue.
1
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Whole life insurance - Non-participating
This means that the insurance
company assumes all risk of future
performance versus the actuaries'
estimates. If future claims are
underestimated, the insurance
company makes up the difference. On
the other hand, if the actuaries'
estimates on future death claims are
high, the insurance company will
retain the difference.
1
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Whole life insurance - Participating
1
For a mutual insurance|mutual life
insurance company, participation also
implies a degree of ownership of the
mutuality.
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Whole life insurance - Indeterminate premium
1
Similar to non-participating, except that the
premium may vary year to year. However,
the premium will never exceed the
maximum premium guaranteed in the
policy.
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Whole life insurance - Economic
A blending of participating and term life
insurance, wherein a part of the dividends
is used to purchase additional term
insurance. This can generally yield a
higher death benefit, at a cost to long term
cash value. In some policy years the
dividends may be below projections,
causing the death benefit in those years to
decrease.
1
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Whole life insurance - Limited pay
Similar to a participating policy, but
instead of paying annual premiums for
life, they are only due for a certain
number of years, such as 20
1
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Whole life insurance - Single premium
1
A form of limited pay, where the pay
period is a single large payment up
front. These policies typically have
fees during early policy years should
the policyholder cash it in.
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Whole life insurance - Interest sensitive
1
The policies are a mixture of traditional whole
life and Universal life insurance|universal life
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Whole life insurance - Requirements
1
In contrast, universal life insurance generally
allows more flexibility in premium payment.
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Whole life insurance - Guarantees
1
Thus, many are using whole life insurance
policies as a retirement funding vehicle
rather than for risk management.
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Whole life insurance - Liquidity
1
Cash values are considered liquid enough
to be used for investment capital, but only
if the owner is financially healthy enough
to continue making premium payments
(Single premium whole life policies avoid
the risk of the insured failing to make
premium payments and are liquid enough
to be used as collateral
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Whole life insurance - Liquidity
1
Variable universal life insurance may
outperform whole life because the
owner can direct investments in subaccounts that may do better
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Whole life insurance - Liquidity
1
Cash values associated with these policies
carry provisions alongside their benefits
that may not be beneficial for policy
owners and insured individuals. Typically,
when death benefit is paid out, policy cash
values revert to the issuing company; they
are therefore lost. The reason for this is
that all policy cash values become owned
by the issuing company (a fact that can be
verified in the policy contract), they
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Corporate-owned life insurance
'Corporate-owned life insurance'
('COLI'), is life insurance on employees'
lives that is owned by the employer, with
benefits payable either to the employer
or directly to the employee's families.
Pejorative names for the practice
include 'janitor's insurance' and 'dead
peasants insurance', the latter of which
refers to the plot of Nikolai Gogol's novel
Dead Souls. When the employer is a
bank, the insurance is known as a 'bank
owned life insurance (BOLI)'.
1
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Corporate-owned life insurance
1
COLI was originally purchased on the
lives of key employees and executives
by a company to Hedge
(finance)|hedge against the financial
cost of losing key employees to
unexpected death, the risk of
recruiting and training replacements
of necessary or highly trained
personnel, or to fund corporate
obligations to redeem stock upon the
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Corporate-owned life insurance
Additionally, up until 1984, certain
premiums for life insurance were Leverage
(finance)|leveraged and deducted, in
essence creating a transaction with
highest possible tax benefits
1
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Corporate-owned life insurance
Today, COLI is most common for
senior executives of a firm, but its use
for general employees is still
sometimes practiced, primarily as a
real economic transaction for
Voluntary Employee Benefit
Associations (VEBAs).
1
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Corporate-owned life insurance - Tax law history
Under the Internal Revenue Code
(IRC) dealing with life insurance
benefits paid due to the death of the
insured, the benefits are usually
excluded from the taxable income of
the beneficiary.
1
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Corporate-owned life insurance - Tax law history
Because of the tax-free nature of death
benefits, the IRC prohibits the deduction of
the premiums paid for life insurance when
the premium payor is also the beneficiary
of the death benefit rather than the
individual employee and their family
1
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Corporate-owned life insurance - 1950s: Leveraged insurance
1
Interest incurred on indebtedness has historically been
deductible, (although the deduction of personal
interest was largely eliminated in 1986), and in the
1950s a type of Leverage (finance)|leveraged
insurance transaction began being marketed that
permitted an insurance owner to in effect deduct the
cost of paying for insurance by (1) paying large
premiums to create cash values, (2) borrowing against
the cash value to in effect strip out the large
premiums, and (3) paying deductible interest back to
the insurer, which was in turn credited to the policy's
cash value as tax-deferred earnings on the policy that
could fund the insurer's legitimate charges against
policy value for cost of insurance, etc.
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Corporate-owned life insurance - 1950s: Leveraged insurance
1
The advantage of being able to deduct
interest, on the one hand, and yet not
include in income the interest credited to
the policy's cash value is a form of tax
arbitrage.
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Corporate-owned life insurance - 1950s: Leveraged insurance
1
The Internal Revenue
Service (IRS), via the
Supreme Court case
Knetsch v
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Corporate-owned life insurance - 1980s: Tax shelters
1
Although the 4 out of 7 test was exploited
in the 1980s by businesses seeking to in
effect pay for insurance on
employees/shareholders, e.g., on a
deductible basis, the introduction of the
US$50,000 cap/insured in 1986 in turn led
to the creation of broad-based leveraged
COLI transactions, i.e., those in which the
employer would purchase life insurance on
hundreds or thousands of (usually lowhttps://store.theartofservice.com/the-life-insurance-toolkit.html
Corporate-owned life insurance - 1980s: Tax shelters
1
In a typical broad-based leveraged COLI
transaction, a corporate employer would
purchase policies on masses of lowerlevel employees, sometimes without the
employees' knowledge or consent. When
an insured employee died, the company
received the death benefits, and the
employee's family typically received either
a small portion of the proceeds or nothing.
These policies could remain in place even
https://store.theartofservice.com/the-life-insurance-toolkit.html
Corporate-owned life insurance - 1990s to present: Limited reform
Ultimately, the IRS won court cases
against several leveraged COLI investors,
including Camelot Music, Winn-Dixie
(supermarket)|Winn-Dixie, American
Electric Power, and Dow Chemical
1
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Corporate-owned life insurance - 1990s to present: Limited reform
1
So long as the employer complies with the
new rules (adopted in 2006 and
characterized as the COLI Best Practices
Act), however, the tax-free nature of the
death benefits and the tax deferral on
earnings credited to policy value remain.
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Corporate-owned life insurance - 1990s to present: Limited reform
1
The Act amends Section 101 of the
Internal Revenue Code by adding
subsection (j), “treatment of Certain
Employer-Owned Life insurance
Contracts,” and adds Section 60391,
“Returns and Records with respect to
Employer-Owned Life Insurance
Contracts.”
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Corporate-owned life insurance - 1990s to present: Limited reform
Under Section 101(j), the employerowned death benefit proceeds will be
considered eligible for exclusion from
the employer's income provided all the
following Notice and Consent
Requirements and one of the Specified
Exceptions are met.
1
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Corporate-owned life insurance - 1990s to present: Limited reform
1
: The Employee must, prior to the
issuance of the insurance contract:
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Corporate-owned life insurance - 1990s to present: Limited reform
# Be notified in writing that the
employer intends to insure the
employee’s life and the maximum
face amount for which the employee
could be insured at the time the
contract is issued.
1
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Corporate-owned life insurance - 1990s to present: Limited reform
1
# Provide written consent to be insured under the
contract during and after active employment.
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Corporate-owned life insurance - 1990s to present: Limited reform
: The insured was an employee at any time
during the 12-month period before the insured’s
death.
1
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Corporate-owned life insurance - 1990s to present: Limited reform
: Directors and Highly Compensated
Employees: At time of contract issue, the
insured employee was a director, or a 5%
or greater owner of the business at any
time during the preceding year, or received
compensation in excess of $95,000,
adjusted for future inflation, in the
preceding year, or was one of the five
highest-paid officers, or was among the
highest-paid 35% of all employees.
1
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Corporate-owned life insurance - 1990s to present: Limited reform
According to one source, Hartford Life
Insurance estimated that one-quarter of all
Fortune 500 companies have COLI
policies, which cover the lives of about 5
million employees.
1
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Mortgage life insurance
'Mortgage Life Insurance' is a form of
insurance specifically designed to protect
a repayment mortgage. If the
wiktionary:policyholder|policyholder were
to die while the mortgage life insurance
was in force, the wiktionary:insurance
policy|policy would pay out a capital sum
that will be just sufficient to repay the
outstanding Mortgage loan|mortgage.
1
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Mortgage life insurance
Mortgage life insurance is supposed to
protect the wiktionary:borrower|borrower's
ability to repay the mortgage for the
lifetime of the mortgage. This is in contrast
to 'Lenders mortgage insurance|Private
mortgage insurance', which is meant to
protect the wiktionary:lender|lender
against the risk of Default (finance)|default
on the part of the borrower.
1
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Mortgage life insurance - The Mechanics
When the insurance commences, the
value of the insurance coverage must
equal the capital outstanding on the
repayment mortgage and the policy’s
termination date must be the same as the
date scheduled for the final payment on
the repayment mortgage
1
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Mortgage life insurance - The Mechanics
1
Some mortgage life insurance policies will
also pay out if the policyholder is
diagnosed with a terminal illness from
which the policyholder is expected to die
within 12 months of diagnosis. Insurance
companies sometimes add other features
into their mortgage life insurance policies
to reflect conditions in their country’s
domestic insurance market and their
domestic tax regulations.
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Mortgage life insurance - The Controversy
1
In many cases, traditional life insurance
(whether Term life insurance|term or
Permanent life insurance|permanent) can
offer a better level of protection for
considerably smaller premiums.
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Mortgage life insurance - The Controversy
1
The biggest advantage of traditional life
insurance over mortgage life insurance is
that the former maintains its Par
value|face value throughout the lifetime of
the policy, whereas the latter promises to
pay out an amount equal to the client's
outstanding mortgage debt at any point in
time, which is inherently a decreasing
sum. Hence, mortgage life insurance is
extremely profitable for lenders and/or
https://store.theartofservice.com/the-life-insurance-toolkit.html
Mortgage life insurance - The Controversy
In addition, lending banks often
incentivise borrowers to purchase
mortgage life insurance in addition to
their new mortgage by means that are
on the verge of Tied selling|tied selling
practices
1
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Mortgage life insurance - The Controversy
Finally, mortgage life insurance is not
required by law. It is up to the clientborrower whether he or she will opt to
protect his or her property investment by
an insurance product or not. Similarly, the
choice of insurer is completely
unrestrained as well.
1
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Mortgage life insurance - The Controversy
As such, mortgage life insurance can
cover the biggest expense left by a
deceased breadwinner - ie housing costs
1
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Mortgage life insurance - Private Mortgage Insurance
1
The term Mortgage insurance may in
some contexts refer to 'Private
mortgage insurance' (PMI), also
known as 'Lenders mortgage
insurance'. Private mortgage
insurance protects the lender instead
of the borrower, although its
premiums are payable by the
borrower. This type of insurance is
compulsory in certain jurisdictions
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Mortgage life insurance - Private Mortgage Insurance
In the United States, subject to
Homeowners Protection Act of
1998,[http://www.frbsf.org/publications/con
sumer/pmi.html Private Mortgage
Insurance] from Federal Reserve Bank of
San Francisco, retrieved on June 10,
2011. a borrower who provides less than
20% down payment up front may be
required to pay for private mortgage
insurance until the outstanding mortgage
is less than 80% of the value of the
property.
1
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False insurance claims - Life insurance
Life insurance fraud may involve faked
death|faking death to claim life insurance.
Fraudsters may sometimes turn up a few
years after disappearing, claiming a loss of
memory.
1
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False insurance claims - Life insurance
1
An example of life insurance fraud is the
John Darwin disappearance case, which
was an investigation into the act of
pseudocide committed by the British
former teacher and prison officer John
Darwin, who turned up alive in December
2007, five years after he was thought to
have died in a canoeing accident. Darwin
was reported as missing after failing to
report to work following a canoeing trip on
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False insurance claims - Life insurance
Another example is former British
Government minister John
Stonehouse#Faking his own death|John
Stonehouse who went missing in 1974
from a beach in Miami. He was discovered
living under an assumed name in
Australia, extradited to Britain and jailed
for seven years for fraud, theft and forgery.
1
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History of insurance - Life insurance
1
4 The first plan of life insurance was that
each member paid a fixed annual payment
per share on from one to three shares with
consideration to age of the members being
twelve to fifty-five
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History of insurance - Life insurance
1
The first life table was written by Edmund
Halley in 1693, but it was only in the 1750s
that the necessary mathematical and
statistical tools were in place for the
development of modern life insurance
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History of insurance - Life insurance
1
His disciple, Edward Rowe Mores was
finally able to establish the The
Equitable Life Assurance
Society|Society for Equitable
Assurances on Lives and Survivorship
in 1762. It was the world's first mutual
insurer and it pioneered age based
premiums based on mortality rate
laying “the framework for scientific
insurance practice and development”
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History of insurance - Life insurance
1
Mores also specified that the chief
official should be called an actuary the earliest known reference to the
position as a business concern
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History of insurance - Life insurance
The sale of life insurance in the U.S.
began in the late 1760s. The Presbyterian
Synods in Philadelphia and New York
founded the Corporation for Relief of
Poor and Distressed Widows and
Children of Presbyterian Ministers in
1759; Episcopal Church in the United
States of America|Episcopalian priests
created a comparable relief fund in 1769.
Between 1787 and 1837 more than two
dozen life insurance companies were
started, but fewer than half a dozen
survived.
1
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Louis Brandeis - Developing new life insurance system
1
By 1906 he concluded that life insurance
was simply a bad bargain for the vast
majority of policyholders due mostly to the
inefficiency of the industry
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Louis Brandeis - Developing new life insurance system
He succeeded in creating a
groundswell in Massachusetts with his
personal campaign of educating the
public, and created a new savings bank
life insurance system with the help of
progressive businessmen, social
reformers, and trade unionists
1
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Life Insurance Corporation of India
1
'Life Insurance Corporation of India' ('LIC')
() is an Indian State owned|state-owned
insurance group and investment company
headquartered in Mumbai. It is the largest
insurance company in India with an
estimated asset value of . As of 2013 it
had total life fund of Rs.1433103.14 crore
with total value of policies sold of 367.82
lakh that year.
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Life Insurance Corporation of India
The company was founded in 1956
when the Parliament of India passed
the Life Insurance of India Act that
nationalised the private insurance
industry in India. Over 245 insurance
companies and provident societies
were merged to create the state owned
Life Insurance Corporation.
1
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Life Insurance Corporation of India - History
1
The Oriental Life Insurance Company, the
first company in India offering life
insurance coverage, was established in
Calcutta in 1818 by Bipin Behari Dasgupta
and others. Its primary target market was
the Europeans based in India, and it
charged Indians heftier premiums. The
Bombay Mutual Life Assurance Society,
formed in 1870, was the first native
insurance provider. Other insurance
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Life Insurance Corporation of India - History
1
*Postal Life Insurance (PLI)
was introduced on 1
February 1884
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Life Insurance Corporation of India - History
1
*Bharat Insurance
Company (1896)
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Life Insurance Corporation of India - History
1
*National Insurance (1906)
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Life Insurance Corporation of India - History
1
*Co-operative Assurance
(1906)
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Life Insurance Corporation of India - History
1
*Hindustan Co-operatives
(1907)
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Life Insurance Corporation of India - History
1
*Sahyadri Insurance
(Merged into LIC,
1986)
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Life Insurance Corporation of India - History
1
The aggregate effect of these events
led to a high rate of and liquidation of
life insurance companies in India
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Life Insurance Corporation of India - History
1
In 1955, parliamentarian Amol Barate
raised the matter of insurance fraud
by owners of private insurance
agencies. In the ensuing
investigations, one of India's
wealthiest businessmen, Sachin
Devkekar, owner of the Times of India
newspaper, was sent to prison for two
years.
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Life Insurance Corporation of India - History
1
The nationalisation of the life insurance
business in India was a result of the
Industrial Policy Resolution of 1956, which
had created a policy framework for
extending state control over at least
seventeen sectors of the economy,
including the life insurance.
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Life Insurance Corporation of India - History
1
From its creation, the Life Insurance
Corporation of India, which
commanded a monopoly of soliciting
and selling life insurance in India,
created huge surpluses, and by 2006
was contributing around 7% of India's
Gross Domestic Product|GDP.
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Life Insurance Corporation of India - History
The Corporation, which started its
business with around 300 offices, 5.7
million policies and a Capital
(economics)|corpus of INR 45.9
crores (US$ 92 million as per the 1959
exchange rate of roughly 5 for US$1),
had grown to 25,000 servicing around
350 million policies and a Capital
(economics)|corpus of over by the
end of the 20th century.
1
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Life Insurance Corporation of India - History
In August 2000, the Indian Government
embarked on a program to liberalise the
Insurance Sector and opened it up for the
private sector. Ironically, LIC emerged as
a beneficiary from this process with robust
performance, albeit on a base
substantially higher than the private sector.
1
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Life Insurance Corporation of India - History
1
In 2013 the First Year Premium compound
annual growth rate (CAGR) was 24.53%
while Total Life Premium CAGR was
19.28% matching the growth of the life
insurance industry and also outperforming
general economic growth.
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Life Insurance Corporation of India - Products and services
LIC offers a variety of insurance
products to its customers such as
insurance plans, pension plans, unitlinked plans, special plans and group
schemes.
1
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Life Insurance Corporation of India - Operations
1
Today,the LIC had 8 zonal offices, around
109 divisional offices, 2,048 branches and
992 satellite offices and corporate offices;
it also has 54 customer zones and 25
metro-area service hubs located in
different cities and towns of India. It also
has a network of 1,337,064 individual
agents, 242 Corporate Agents, 79 Referral
Agents, 98 Brokers and 42 Banks for
soliciting life insurance business from the
public.
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Life Insurance Corporation of India - Slogan
LIC's slogan yogakshemam
vahamyaha is in Sanskrit language
which translates in English as Your
welfare is our responsibility. This is
derived from ancient Hindu text, the
Bhagavad Gita's 9th chapter, 22nd
verse. The slogan can be seen in the
logo, written in Devanagari script.
1
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Life Insurance Corporation of India - Awards and recognitions
1
* The Economic Times Brand Equity
Survey 2012 rated LIC as the No. 6
Most Trusted Service Brand of India.
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Life Insurance Corporation of India - Awards and recognitions
1
* From the year 2006, LIC has been continuously
winning the Readers' Digest Trusted brand
award.
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Life Insurance Corporation of India - Employees and Agents
As on 31 March 2012, LIC had 119,767
employees, out of which 24,295 were women
(20%).
1
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Life Insurance Corporation of India - Employees and Agents
1
LIC had 12,78,234 agents as on 31 March
2012, out of which the number of active
agents was 12,14,111 (95%).
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Life Insurance Corporation of India - Initiatives
1
'Golden Jubilee Foundation'
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Life Insurance Corporation of India - Initiatives
1
LIC Golden Jubilee Foundation was established in
2006 as a charity organization
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Life Insurance Corporation of India - In News : About holdings in various
companies
1
LIC holds shares worth about Rs 2.33
lakh crore in all the Nifty companies put
together, but it lowered its holding in a
total of 27 Nifty companies during the
quarter.
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Life Insurance Corporation of India - In News : About holdings in various
companies
1
The cumulative value of LIC holding
in these 27 companies fell by little
over Rs 8,000 crore during the quarter
shows the analysis of changes in their
shareholding patterns.
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Life Insurance Corporation of India - In News : About holdings in various
companies
1
Individually, LIC is estimated to have sold
shares worth Rs 500-1,000 crore in each
of Mahindra Mahindra, HDFC Bank, ICICI
Bank, Tata Motors, LT, HDFC, Wipro, SBI,
Maruti Suzuki, Dr Reddys and Bajaj Auto.
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Life Insurance Corporation of India - In News : About holdings in various
companies
The insurance behemoth also
trimmed holdings in Ambuja
Cements, Cipla, TCS, Lupin and Asian
Paints. A marginal decline was also
witnessed in its stakes in companies
such as IDFC, Hindustan Unilever,
Grasim, ACC, BPCL, Bank of Baroda,
Punjab National Bank, Sun Pharma
and Tata Power.
1
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Life Insurance Corporation of India - In News : About holdings in various
companies
1
On the other hand, LIC further ramped up
its stake in a total of 14 Nifty constituents
with purchase of shares worth an
estimated Rs 4,000 crore.
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Life Insurance Corporation of India - In News : About holdings in various
companies
1
The major companies where LIC has
raised its stake include Infosys, RIL and
Cairn India. Other such companies are
ITC, Power Grid Corp, NTPC, Siemens,
Bharti Airtel and Hero MotoCorp.
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Life Insurance Corporation of India - In News : About holdings in various
companies
1
The state-run insurer also marginally
hiked its exposure in Ultratech, Gail
India, Ranbaxy, Kotak Mahindra Bank
and HCL Technologies, while its
shareholding remained almost
unchanged in companies like ONGC,
Tata Steel, BHEL and Reliance Infra.
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Life Insurance Corporation of India - In News : About holdings in various companies
Among the Nifty companies, LIC’s
holding in terms of value is estimated
to be highest in ITC (Rs 27,326 crore),
followed by RIL (Rs 21,659 crore),
ONGC (Rs 17,764 crore), SBI (Rs
17,058 crore), LT (Rs 16,800 crore),
and ICICI Bank (Rs 10,006 crore).
http://www.thehindubusinessline.co
m/markets/stock-markets/lic-cutsstake-in-27-nifty-firms-sells-sharesworth-rs-8000crore/article4375025.ece
1
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MetLife - Life insurance
1
MetLife’s individual life insurance products
and services comprise term life insurance
and several types of permanent life
insurance, including whole life, universal
life and variable universal life. The
company also offers group life insurance,
provided through employers, which
consists of term life, group variable
universal life and group universal life.
MetLife is the largest life insurer in the
United States, based on life insurance inforce.
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Bharti Enterprises - Bharti AXA General Insurance and Life Insurance
1
Bharti AXA is a joint venture between
Bharti Enterprises and AXA, world
leader in financial protection and
wealth management. They offer a range
of life insurance and wealth
management products.
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Housing Development Finance Corporation - Life Insurance
The company has been providing life
insurance since the year 2000, through
its subsidiary HDFC Standard Life
Insurance company Limited. It offers 33
individual products and 8 group
products. It uses HDFC group network to
cross sell by offering customised
products. It operates out of 451 offices
across India serving over 965 locations.
It had a market share of 4.6% of life
insurance business in India as on 30
September 2013. HDFC Life has over
1
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Bank of Montreal - Purchase of AIG Life Insurance Company of Canada (2009)
1
In 2009, BMO purchased AIG's Canadian
life insurance business, AIG Life Insurance
Company of Canada, for approximately
$330 million CAD. The transaction,
including 400,000 customers and 300
employees, made BMO the secondbiggest life insurer among Canadian
banks. The new component was renamed
BMO Life Assurance Company.
https://store.theartofservice.com/the-life-insurance-toolkit.html
Real estate economics - Life insurance companies
1
Life insurance companies are another
source of financial assistance. These
companies lend on real estate as one
form of investment and adjust their
portfolios from time to time to reflect
changing economic conditions.
Individuals seeking a loan from an
insurance company can deal directly
with a local branch office or with a
local real estate broker who acts as
loan correspondent for one or more
insurance companies.
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Actuarial - Life insurance, pensions and healthcare
Actuarial science became a formal
mathematical discipline in the late 17th
century with the increased demand for
long-term insurance coverage such as
Burial, Life insurance, and Annuities
1
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Actuarial - Life insurance, pensions and healthcare
* In traditional life insurance, actuarial
science focuses on the analysis of
mortality rate|mortality, the production of
life tables, and the application of
interest|compound interest to produce life
insurance, annuities and endowment
policies. Contemporary life insurance
programs have been extended to include
credit and mortgage insurance, key man
insurance for small businesses, long term
1
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Actuarial - Life insurance, pensions and healthcare
1
* In health insurance, including
insurance provided directly by
employers, and social insurance,
actuarial science focuses on the
analysis of rates of disability,
morbidity, mortality, fertility and
other contingencies
https://store.theartofservice.com/the-life-insurance-toolkit.html
Actuarial - Life insurance, pensions and healthcare
1
* In the pension industry, actuarial
methods are used to measure the
costs of alternative strategies with
regard to the design, funding,
accounting, administration, and
maintenance or redesign of pension
plans
https://store.theartofservice.com/the-life-insurance-toolkit.html
Actuarial - Life insurance, pensions and healthcare
1
* In social welfare programs, the Office of
the Chief Actuary (OCACT), Social
Security Administration plans and directs a
program of actuarial estimates and
analyses relating to SSA-administered
retirement, survivors and disability
insurance programs and to proposed
changes in those programs
https://store.theartofservice.com/the-life-insurance-toolkit.html
Executive pay in the United States - Life insurance funding
The practice, sometimes called
janitor's insurance, involve a bank or
corporation insuring large numbers of
its employees under the life insurance
policy and naming itself as the
beneficiary of the policy, not the
dependents of the people insured
1
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National Life Insurance Company
'National Life
Insurance Company'
is a U.S. mutual life
insurance company.
1
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National Life Insurance Company
1
It was chartered on November 13, 1848
“upon the principle of mutual participation
in the funds or profits” of the company. As
such, the National Life of Vermont was a
Mutual insurance|mutual company even
though that fact was not apparent from its
name. The company officially issued its
first policy and began business on
February 1, 1850.
https://store.theartofservice.com/the-life-insurance-toolkit.html
National Life Insurance Company
Its name bespoke the fact that its
organizers were from many different
states and believed company life
insurance policies would be sold
throughout the nation.
1
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National Life Insurance Company
Julius Yemans Dewey, medical doctor of
Montpelier, Vermont, was among the
company's founders. He would later serve as
general agent and then president of the
company and delivered the remittance of the
company's very first claim on July 26, 1850.
(Archived by the Internet Archive
[http://web.archive.org/web/20061114145621/
http://www.nationallife.com/public/histarchive/
our_history/pages/first_claims_1.asp here])
1
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Equitable Life Insurance Company
'AXA Equitable Life Insurance
Company', formerly 'The Equitable
Life Assurance Society of the United
States', also known as 'The Equitable',
was founded by Henry Baldwin Hyde
in 1859. In 1991, AXA, a French
insurance company, acquired
majority control of The Equitable. In
2004, it officially changed its name to
AXA Equitable Life Insurance
1
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Equitable Life Insurance Company - History
Equitable Life Insurance opened its
headquarters at the Equitable Life
Building (New York City)|Equitable Life
Building in 1875 near Wall Street
(Manhattan)|Wall Street
1
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Equitable Life Insurance Company - History
James Waddell Alexander, the son of
James Waddel Alexander, was the
company president at the time of the
James Hazen Hyde|Hyde costume ball
scandal in 1905, in which James Hazen
Hyde, the son of the founder and a vice
president of the company, was falsely
accused through a media smear campaign
initiated by Alexander and board directors
E
1
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Equitable Life Insurance Company - History
1
After the company's headquarters
building burned down in 1912,
Equitable moved to the Equitable
Building (Manhattan)|Equitable
Building at 120 Broadway in
Manhattan.
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Equitable Life Insurance Company - History
In 1985, the Equitable Life Assurance
Society of the United States, then the
U.S.'s third largest life insurance company,
formed Equitable Real Estate Investment
Management, a subsidiary used by
Equitable Life to develop and finance new
real estate projects and manage the
US$20 billion worth of real estate under
Equitable's control.
1
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Samsung Group - Samsung Air China Life Insurance
1
Samsung Air China Life Insurance is a
50:50 joint venture between Samsung
Life Insurance and China National
Aviation Corporation. It was
established in Beijing in July 2005.
https://store.theartofservice.com/the-life-insurance-toolkit.html
Samsung Group - Siam Samsung Life Insurance
Samsung Life Insurance holds a 37%
stake while the Saha Group also has a
37.5% stake in the joint venture, with the
remaining 25% owned by Thanachart
Bank.
1
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Manhattan Life Insurance Building
The 'Manhattan Life Insurance Building'
was a tower at 64-66 Broadway in New
York City completed in 1894 to the designs
of the architects of Kimball Thompson and
slightly extended north in 1904 making its
new address 64-70 Broadway. It was the
first skyscraper to pass in Manhattan.
1
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Manhattan Life Insurance Building
In 1926, the building was sold by
Manhattan Life Insurance Company to
Frederick Brown, who then re-sold it
to the Manufacturer's Trust Company
a few weeks later
1
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Manhattan Life Insurance Building
1
The building was demolished to make way for
an Annex to the Irving Trust Company
Building, now One Wall Street, completed in
1965. Sources vary about whether the year
of demolition was 1963 or 1964. In 1936, the
Manhattan Life Insurance Company relocated
its offices to One-Hundred-Twenty West 57th
Street in midtown Manhattan. Then,
catastrophe arrived when the building was
only 69 years old; in a 1963 act of utter
desecration, the Manhattan Life Insurance
Building was demolished.
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Metropolitan Life Insurance Company Tower
1
The 'Metropolitan Life Insurance Company
Tower', also known as the 'Metropolitan
Life Tower' or 'Met Life Tower', and
currently being converted into the 'New
York Edition Hotel', is a landmark
skyscraper located on Madison Avenue
near the intersection with East 23rd Street
(Manhattan)|23rd Street, across from
Madison Square Park in Manhattan, New
York City
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Metropolitan Life Insurance Company Tower
1
The building was added to the List of
Registered Historic Places in New York
County, New York|National Register of
Historic Places in 1972, designated a
National Historic Landmark in 1978,
and and a List of New York City
Landmarks|New York City landmark in
1989., p.79
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Metropolitan Life Insurance Company Tower - Architecture
The tower was a later addition to the
original 11-story, full-block Metropolitan
Life Home Office building (the East Wing),
which was completed in 1893 and was
also designed by Napoleon LeBrun Sons.
Plans for the tower were first announced in
1905. In 1953-57, the original Home Office
building was replaced with the current
building, designed by D. Everett Waid.
Then, between 1960 and 1964, the Tower
1
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Metropolitan Life Insurance Company Tower - Architecture
1
There are four clock faces, one on each side of
the tower, located from the 25th to 27th floors
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Metropolitan Life Insurance Company Tower - Restoration
1
The building figured prominently in the
Metropolitan Life Insurance Company's
advertising for many years, illustrated
with a light beaming from the top of its
spire and the slogan, The Light That
Never Fails.
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Metropolitan Life Insurance Company Tower - Current status
1
In March 2005, SL Green
Realty Corp
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Metropolitan Life Insurance Company Tower - Current status
1
The three Edition hotels, in London, Miami
and New York, were sold by Marriott in
January 2013 for $815 Million to the Abu
Dhabi Investment
Authority.http://www.hotelnewsresource.co
m/article75700.html The New York
property will be conveyed to its new owner
on its completion in 2015. Marriott will
continue to manage the hotels under longterm contract.
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Metropolitan Life Insurance Company Tower - Metropolitan Life North Building
1
By the late 1920s, the 1909 Met Life Tower
and the 1919 North Annex were becoming
too small to house the continuously
growing activities of the Metropolitan Life
Insurance Company. Looking to expand,
the company considered building on a full
block site between East 24th and East
25th Streets.
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Metropolitan Life Insurance Company Tower - Metropolitan Life North Building
Ecole des Beaux Arts-educated
architect Harvey Wiley Corbett left his
position on the Rockefeller Center
design team in order to take up this
project in 1928
1
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Metropolitan Life Insurance Company Tower - Metropolitan Life North Building
1
The primary tenant of the Metropolitan Life
North Building today is the investment
banking arm of Credit Suisse. Credit
Suisse refers to the building as Eleven
Madison Avenue, or EMA.
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Metropolitan Life Insurance Company Tower - Metropolitan Life North Building
1
The 'Metropolitan Life Home Office Complex'
was added to the National Register on January
19, 1996.
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Metropolitan Life Insurance Company Tower - In popular culture
*The clock tower is mentioned in the
opening of Murray Leinster's 1919 story
The Runaway Skyscraper, the clock
running backwards indicating that the
skyscraper was traveling in time.
1
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Metropolitan Life Insurance Company Tower - In popular culture
1
*In the animated TV series Futurama, the
tower is seen in the future as wider and its
face replaced with a digital clock.
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Mutual of Omaha - United of Omaha Life Insurance Company
1
Founded in 1926, this company provides
life insurance, pension and annuity
products for groups and
individuals.[http://www.mutualofomaha.co
m/about/organization/affiliates/index.html
Affiliate Companies - Mutual of Omaha]
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Mutual of Omaha - United World Life Insurance Company
Through direct marketing and
independent agent networks, this
company has offered health and
accident coverage and specialty life
plans since 1983.
1
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Life Insurance Securitization
'Securitization' is the financial
practice of pooling various types of
contractual debt such as residential
mortgages, commercial mortgages,
auto loans or credit card debt
obligations and selling said
consolidated debt as bond
(finance)|bonds, pass-through
securities, or collateralized mortgage
obligation (CMOs), to various
1
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Life Insurance Securitization
Critics have suggested that the
complexity inherent in securitization
can limit investors' ability to monitor
risk, and that competitive
securitization markets with multiple
securitizers may be particularly prone
to sharp declines in underwriting
standards
1
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Life Insurance Securitization
1
In addition, off-balance sheet treatment for
securitizations coupled with guarantees
from the issuer can hide the extent of
leverage of the securitizing firm, thereby
facilitating risky capital structures and
leading to an under-pricing of credit risk
https://store.theartofservice.com/the-life-insurance-toolkit.html
Life Insurance Securitization
1
The granularity of pools of securitized
assets is a mitigant to the credit risk
of individual borrowers
https://store.theartofservice.com/the-life-insurance-toolkit.html
Life Insurance Securitization
Securitization has evolved from its
beginnings in the late eighteenth
century to an estimated outstanding of
$10.24 trillion in the United States and
$2.25 trillion in Europe as of the 2nd
quarter of 2008
1
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Life Insurance Securitization - Servicing
A 'servicer' collects payments and
monitors the assets that are the crux
of the structured financial deal. The
servicer can often be the originator,
because the servicer needs very
similar expertise to the originator and
would want to ensure that loan
repayments are paid to the Special
Purpose Vehicle.
1
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Life Insurance Securitization - Servicing
1
The servicer can significantly affect
the cash flows to the investors because
it controls the collection policy, which
influences the proceeds collected, the
charge-offs and the recoveries on the
loans
https://store.theartofservice.com/the-life-insurance-toolkit.html
Life Insurance Securitization - Servicing
1
When the issuer is structured as a trust,
the 'trustee' is a vital part of the deal as the
gate-keeper of the assets that are being
held in the issuer. Even though the trustee
is part of the SPV, which is typically wholly
owned by the Originator, the trustee has a
fiduciary duty to protect the assets and
those who own the assets, typically the
investors.
https://store.theartofservice.com/the-life-insurance-toolkit.html
Life Insurance Securitization - Issuance trust
In 2000, Citibank introduced a new
structure for credit card-backed securities,
called an issuance trust, which does not
have limitations, that master trusts
sometimes do, that requires each issued
series of securities to have both a senior
and subordinate tranche
1
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Dai-Ichi Mutual Life Insurance Company
, or 'Dai-ichi Life' for short, is the third
largest life insurer in Japan measured by
revenue, only behind Japan Post
Insurance and Nippon Life Insurance
Company|Nippon Life Insurance.
1
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Dai-Ichi Mutual Life Insurance Company
1
Founded on September 15, 1902, Dai-Ichi
was the oldest mutual insurance
company in Japan until a motion to
demutualise was passed in 2009 and, on
April 1, 2010, it listed on the Tokyo Stock
Exchange, raising 1.01 trillion yen. As of
March 2013, it had the most assets of any
listed company in Japan with a total of 33
trillion yen on its stand-alone balance
sheet, more than twice the total assets of
#2-ranked Tokyo Electric Power
Company.http://info.finance.yahoo.co.jp
/ranking/?kd=51mk=1tm=dvl=a
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Dai-Ichi Mutual Life Insurance Company - Key facts
1
* Total assets - $276,552 million
USD
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Dai-Ichi Mutual Life Insurance Company - History
1
* 1938 - head office is
moved to its current
Tokyo location.
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Dai-Ichi Mutual Life Insurance Company - History
1
* 1982 - first European
representative office is
established in London.
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Dai-Ichi Mutual Life Insurance Company - History
1
* 1990 - investment in Lincoln National
Corporation|Lincoln National Life
Insurance Company marked the first time
a Japanese company participated in
capitalizing a leading U.S. insurer.
https://store.theartofservice.com/the-life-insurance-toolkit.html
Dai-Ichi Mutual Life Insurance Company - History
1
* 1993 - completion of the DN
Tower 21, a new head office
building.
https://store.theartofservice.com/the-life-insurance-toolkit.html
Dai-Ichi Mutual Life Insurance Company - History
1
* 1995 - Great Hanshin earthquake: simplification
of claims settlement procedures.
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Dai-Ichi Mutual Life Insurance Company - History
1
* 1996 - establishment of the Dai-ichi Property
and Casualty Insurance Co., Ltd.
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Dai-Ichi Mutual Life Insurance Company - History
1
* 1997 - establishment of Dai-ichi
Life Research Institute Inc.
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Dai-Ichi Mutual Life Insurance Company - History
1
* 1999 - agreement on total business
cooperation with the Industrial Bank
of Japan (now Mizuho Financial
Group.)
https://store.theartofservice.com/the-life-insurance-toolkit.html
Dai-Ichi Mutual Life Insurance Company - History
1
* 2000 - agreement to form a comprehensive
business alliance with Sompo Japan Insurance
and Aflac.
https://store.theartofservice.com/the-life-insurance-toolkit.html
Dai-Ichi Mutual Life Insurance Company - History
* 2010 Demutualization and
stock listing on the
Tokyo Stock Exchange
1
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Dai-Ichi Mutual Life Insurance Company - History
1
* 2011 - completes take over of ASX listed
Tower Australia life insurance company,
the wholly owned subsidiary is then
renamed TAL
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China Life Insurance
The 'China Life Insurance Company
Limited' (short 'China Life', ) is a Beijingbased China-incorporated company that
provides life insurance and Annuity
(financial contracts)|annuity products.
1
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China Life Insurance - History
1919: American Asiatic
Underwriters (later AIG) is
founded in Shanghai.
1
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China Life Insurance - History
1
1929: Tai Ping Insurance
Company is founded in
Shanghai.
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China Life Insurance - History
1
1931: China Insurance
Company is founded in
Shanghai.
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China Life Insurance - History
1
1949: The Chinese government takes over
all insurance operations on the mainland,
establishing People's Insurance Company
of China (PICC).
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - History
1
1959: Insurance operations are abolished,
except for foreign (marine and aviation)
insurance needs, and PICC becomes a
department of the central bank.
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - History
1
1979: Following the launch of economic reforms,
PICC begins issuing non-life insurance policies.
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - History
1
1980: A joint venture is formed
with AIG.
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China Life Insurance - History
1
1982: PICC begins offering life
insurance policies.
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - History
1
1988: The Chinese government licenses the first
competing insurance companies.
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China Life Insurance - History
1
1996: PICC is restructured as PICC
Group, as a holding company for its
life, reinsurance, and property
operations.
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - History
1999: PICC Group is dissolved and
replaced by four state-owned companies,
including China Life Insurance.
1
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China Life Insurance - History
2003: China Life goes public on the
Hong Kong Stock Exchange and the
New York Stock Exchange in the
world's largest public offering that year.
1
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China Life Insurance - History
1
2004: China Life announces its intention to
diversify into asset management,
brokerage services, and banking services
in the near future.
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - History
Formed from the breakup of former
government-owned monopoly
People's Insurance Company of
China, China Life is the only life
insurance company in China with a
national operating license, which has
permitted it to develop a network of
more than 8,000 field offices, 4,800
branch offices, 3,000 customer service
offices, and 87,000 sales outlets in
1
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China Life Insurance - History
1
'Inheriting China's Pre-Revolution
Insurance Industry'
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China Life Insurance - History
1
The opening of China to the West in the
early years of the 20th century led to a
variety of new business opportunities
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China Life Insurance - History
1
Starr set up a new company, Asia Life
Insurance Company, which became the
first to market life insurance products
to the Chinese
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - History
1
In the meantime, Asia Life's success
inspired a raft of competitors. Most of
these were local representatives of
large foreign companies. A number of
local groups appeared, however, and
played an important role in
developing the life insurance market
among the indigenous population.
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - History
1
The following year, Tai Ping added a life insurance
component, Tai Ping Life Insurance Company
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - History
1
By the mid-1930s, Tai Ping had grown
sufficiently large to become a
member of the Shanghai Insurance
Association, the only Chinese-owned
company to be included in what had
previously been an exclusive club for
foreign insurers. Tai Ping's fortunes
began to dwindle after the start of the
Sino-Japanese War in 1937, and
especially with the Mao-led
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - History
1
Tai Ping in the meantime had been joined
by a growing number of other Chineseowned insurance companies. Among
these were China Insurance Company,
founded in 1931 in Shanghai, which
opened a life insurance subsidiary, China
Life Insurance Company in 1933. Later
insurance market entries included Ming An
Insurance Company, established in Hong
Kong in 1949. By then, China boasted
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China Life Insurance - History
Following the revolution, the Mao
government set up the People's Insurance
Company of China (PICC), which took
over all insurance interests on the
mainland
1
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China Life Insurance - History
1
At first the PICC monopoly continued
to operate its various insurance
services, integrating the assets of the
former independent insurance sector
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China Life Insurance - History
Economic reforms launched under
Deng Xiaoping in 1978 paved the way
to a rebirth in China's insurance sector
1
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China Life Insurance - History
PICC began offering life insurance
policies again in 1982, targeting the
small but growing numbers of middleclass and wealthy Chinese, as well as
government officials. Nonetheless, the
Chinese life insurance market
remained tiny—as late as 2004, per
capita spending on life insurance
amounted to the equivalent of just $28,
compared with average per capita
1
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China Life Insurance - History
1
PICC officially retained its monopoly on the Chinese
insurance market into the late 1980s
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China Life Insurance - History
1
'Public Company for
the New Century'
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China Life Insurance - History
1
The Chinese government began a wider
opening of the country's insurance market
in the early 1990s. By the end of the
decade, the government had granted
licenses to a total of 16 companies—
including such returning groups as Tai
Ping Insurance Company and China
Insurance Company.
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - History
1
The increasingly competitive environment
led to a need to change PICC's structure.
In 1996, the company reorganized as a
holding company, called PICC Group. Its
operations were then broken up into three
subsidiaries, PICC Life, PICC Property,
and PICC Reinsurance. PICC Group
initially operated under the control of the
People's Bank of China.
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - History
Despite the restructuring, PICC
Group was somewhat hampered in
its growth
1
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China Life Insurance - History
Under new rules, insurance
companies were prohibited from
operating in both the non-life and life
insurance markets
1
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - History
1
Yet the former members of PICC Group
began moving toward an opening of its
share capital at the beginning of the 2000s
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - History
China Life then began petitioning the
CIRC for authorization to go public, which
was granted in June 2003. As part of the
run up to the company's IPO, China Life
restructured its operations, splitting into
three entities: China Life Insurance
Company and China Life Asset
Management Company, both of which
were placed under a new holding
company, China Life Insurance
1
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - History
In order to make its IPO more
attractive, the parent holding
transferred only long- and mediumterm policies issued on or after June
10, 1999, to China Life. This move was
made in order to avoid launching
China Life with the burden of a large
number of loss-making policies
issued at return rates as high as 6.5
percent. The June 10, 1999 date
1
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China Life Insurance - History
1
To attract as wide a pool of investors as
possible, China Life launched its IPO on
both the Hong Kong Stock Exchange and
the New York Stock Exchange in
December 2003. The IPO was a huge
success, raising $3.5 billion and becoming
the world's largest for that year. The retail
offer had been oversubscribed by 172
times, and the total order had reached $80
billion.
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - History
In the meantime, China Life had
emerged as the dominant player in
what many expected to become the
world's fastest-growing and largest life
insurance market.
1
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China Life Insurance - History
Principal Competitors: Ping An
Insurance Company Ltd.; China
Pacific Insurance Company Ltd.; AIG;
AIU Insurance Co.; Allianz Dazhong
Life Insurance Company Ltd.; Chubb
Group of Insurance Cos.; Cigna
Corporation; Manulife-Sinochem Life
Insurance Company
Ltd.http://www.fundinguniverse.com
/company-histories/China-Life1
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - History
1
It became a Public company|publiclisted company on December 18, 2003,
with a market capitalization of
US$5,756 million as of August 31, 2005
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - History
There is no business relationship
between China Life Insurance Company
in Mainland China and Taiwan.
1
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China Life Insurance - 3.02 billion yuan in illegal activities
1
and China Life Insurance Co.,
during an audit of their 2009
books
https://store.theartofservice.com/the-life-insurance-toolkit.html
China Life Insurance - 3.02 billion yuan in illegal activities
These violations have raised concern
amongst some Chinese citizens over the
authenticity and legality of the policies they
currently hold. They are worried about
where their money is going and what it is
being used for. Without transparency, trust
is quickly evaporating from businesses
that are found to be conducting shady
business.http://topics.scmp.com/news/chin
a-business-watch/article/PICC-China-Lifeembezzlement-charges-shake-industry
1
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China Life Insurance - Board Members
1
Mingsheng Yang, Feng Wan, Yingqi
Liu, Dairen Lin, Bruce Moore,
Changji Sun, Anthony Neoh SC,
Jianbang Tang, Jianmin Miao,
Xiangxian Zhang and Sidong Wang.
https://store.theartofservice.com/the-life-insurance-toolkit.html
Cheil Worldwide - Samsung Life Insurance (Bridge of Life)
1
In an attempt to prevent such events,
Seoul has teamed up with Samsung
Life Insurance and its advertising
agency Cheil Worldwide to re-position
Mapo Bridge as a healing place using
technology and a total of 2,200 lightemitting diode (LED) lights
https://store.theartofservice.com/the-life-insurance-toolkit.html
Nippon Life Insurance Company
1
, also known as or is the second largest
Japanese life insurance company behind
Japan Post Insurance|Japan Post
Insurance Co., Ltd. The company was
founded in 1889 as the Nippon Life
Assurance Co., Inc. In structure it is a
mutual organization|mutual company. It
first paid policyholder dividends in 1898.
https://store.theartofservice.com/the-life-insurance-toolkit.html
Nippon Life Insurance Company - Sponsorship
*A-nation, annual
music event organized
by Avex Group
1
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Nippon Life Insurance Company - Headquarters
1
*5-12 Imabashi Sanchōme,
Chūō-ku, Osaka|Chūō-ku,
Osaka, Japan
https://store.theartofservice.com/the-life-insurance-toolkit.html
USAA - Property, casualty, and life insurance
1
USAA's life insurance policies, while not
completely unique in the industry, are
different from most offerings since they do
not include a war-exclusion
clause[http://www.answers.com/topic/warexclusion-clause?cat=biz-fin
Answers.com] (also known as a War risk
insurance|war clause).
https://store.theartofservice.com/the-life-insurance-toolkit.html
Samsung Life Insurance
1
'Samsung Life Insurance' (Korean
language|Korean: 삼성생명, ) is a
South Korean Multinational
corporation|multinational insurance
company headquartered in Seoul,
South Korea, and a subsidiary of the
Samsung Group. It is the largest
insurance company in South Korea
and a Fortune Global 500 company.
https://store.theartofservice.com/the-life-insurance-toolkit.html
Samsung Life Insurance
1
Samsung Life's principal products include life
insurance|life and health insurance and
Annuity (finance theory)|annuities. Samsung
Life was a private company from its
foundation in 1957 until it went public in May
2010. The IPO was the largest in South
Korean history and made Samsung Life one
of the country's most valuable companies
measured by market capitalization. Its
headquarters are situated across from
Namdaemun, a historic gate located in the
heart of Seoul.
https://store.theartofservice.com/the-life-insurance-toolkit.html
Samsung Life Insurance - History
1
Founded in 1957, the company quickly
grew and attained a market leading
position after just 18 months of
operations. Since then, Samsung Life
Insurance has maintained its market
leadership in the industry through
product innovation, marketing, and
distribution. In particular, the growth
was accelerated after the company
was incorporated under Samsung
https://store.theartofservice.com/the-life-insurance-toolkit.html
Samsung Life Insurance - History
In 1986, the company opened
representative offices in New York and
Tokyo. It has also expanded in overseas
operation through a joint venture in
Thailand in 1997 and China in 2005. The
company was the first life insurance
company in Korea to achieve KRW 100
Trillion Won in assets in 2006. On May
12, 2010, Samsung Life Insurance went
public and the shares went for 110,000
won, or $96/share in one of the largest
initial offerings and a record for the
country, raising $4.4 billion.
1
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Gerber Life Insurance Company
1
The 'Gerber Life Insurance Company'
was formed in 1967 as a subsidiary of
the Gerber Products Company, which
itself is a subsidiary of Nestlé, in
Fremont, Michigan.
https://store.theartofservice.com/the-life-insurance-toolkit.html
Gerber Life Insurance Company - About
1
It is headquartered in White Plains, New
York.http://www.gerberlife.com/gl/view/inde
x.jsp#product1 It is one of the top directresponse marketing insurance companies
and a leading provider of juvenile life
insurance. Gerber Life Insurance
Company has more than $33 billion of life
insurance in force with over 2.9 million
policies throughout the United States,
Puerto Rico, and Canada.
https://store.theartofservice.com/the-life-insurance-toolkit.html
Minsheng Life Insurance
1
'Minsheng Life Insurance Company' is one
of China's largest insurance companies
and one of the six national insurers
supervised by China Insurance Regulatory
Commission.http://baike.baidu.com/view/3
74869.htm?fr=aladdin Its headquarters are
in Beijing, China. It provides integrated
insurance services, such as life insurance,
property insurance and reinsurance.
https://store.theartofservice.com/the-life-insurance-toolkit.html
Minsheng Life Insurance
1
As of 2012, Minsheng Life employs over
40,000 employees and has established 23
provincial-level subsidiary companies,
including Beijing, Zhejiang, Jiangsu,
Hebei, Shandong, Fujian, Liaoning,
Sichuan, Henan, Shanghai, Heilongjiang,
Hunan, Jiangxi, Anhui, Guangxi, Shaanxi,
Hubei, Shanxi
etc.http://baike.baidu.com/view/374869.ht
m?fr=aladdin
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Minsheng Life Insurance - Asset Management
1
Established in 2012, Minsheng Tonghui
Asset Management is a wholly owned
subsidiary and operates as the asset
management arm of Minsheng Life
Insurance. It is one of China's largest
asset management companies funded by
insurance institutions.
http://www.msthamc.com/_d276090652.ht
m
http://www.amac.org.cn/cms/catalog/previ
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Minsheng Life Insurance - Asset Management
On July 14, 2014, Minsheng Tonghui
Asset Management acquired ZheShang
Fund Management Co.,Ltd, helping
Minsheng Life to become the second
insurance company in China
http://www.equities.com/index.php?opti
on=com_k2view=newsdetailid=34087 to
enter the field of mutual funds since the
promulgation of the measure on
piloting the establishment of fund
management arms by insurance
institutions in 2013.
1
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New York Life Insurance Company
'New York Life Insurance Company'
(NYLIC) is the largest mutual
insurance|mutual life insurance|lifeinsurance company in the United States,
and one of the largest life insurers in the
world, ranking #89 on the 2013 Fortune
500 list, with about $381 billion in total
assets under management, and more than
$19 billion in surplus and AVR
1
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New York Life Insurance Company - History
1
The company was founded in 1845 as
the Nautilus Insurance Company in
New York City, with assets of just
$17,000. It was renamed the New York
Life Insurance Company in 1849. Its
first headquarters were at 112-114
Broadway; the first president was
James DePeyster Ogden. The current
New York Life headquarters was
designed by architect Cass Gilbert and
https://store.theartofservice.com/the-life-insurance-toolkit.html
New York Life Insurance Company - History
As with other early insurance
companies in the U.S., in its early
years the company insured the lives of
slaves for their owners. In response to
bills passed in California in 2001 and
in Illinois in 2003, the company
reported that Nautilus sold 485
slaveholder life insurance policies
during a two-year period in the 1840s;
they added that their trustees voted to
1
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New York Life Insurance Company - History
1
It was also the first American life
insurance company to pay a cash
dividend to policyholders, and the
first U.S
https://store.theartofservice.com/the-life-insurance-toolkit.html
New York Life Insurance Company - History
In the late 1990s New York Life was
one of several large mutual life
insurers to back a New York State bill
that would permit the formation of a
mutual holding company (MHC), a
corporate structure that could
preserve mutuality for policyholders,
while providing a company access to
capital markets without the full
demutualization of the organization
1
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New York Life Insurance Company - Financial crisis of early 21st Century
1
According to their Report to Policyholders
2007, in early 2007 the company's
managers became concerned about the
state of credit markets, so in February
2007 based on our belief that the markets
were acting irrationally New York Life
decided to move much of its cash flow into
safer investments such as US Treasury
bonds. By August 2007, the credit market
problems we had feared were front page
https://store.theartofservice.com/the-life-insurance-toolkit.html
New York Life Insurance Company - Financial crisis of early 21st Century
In November 2008, the company
announced it will not participate in the
Troubled Asset Relief Program. The
company can meet all of its strategic
objectives without government capital, its
businesses are strong and profitable, and
it is committed to remaining a mutual
company operating for the sole benefit of
its policyholders, states a company press
release.
1
https://store.theartofservice.com/the-life-insurance-toolkit.html
New York Life Insurance Company - Financial crisis of early 21st Century
Theodore Ted Mathas, president and
CEO in 2008, said at the time of the
financial crisis that New York Life is
built for times like these. This phrase
became the title for the 2008 report to
policyholders. Ted Mathas becomes the
company chairman on June 1, 2009.
1
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New York Life Insurance Company - Financial crisis of early 21st Century
1
New York Life maintains superior financial
ratings from A.M. Best, Fitch Ratings|Fitch,
Moody's and Standard and Poor's, all of
which have reaffirmed the ratings during
the financial crisis of autumn 2008.
https://store.theartofservice.com/the-life-insurance-toolkit.html
New York Life Insurance Company - Business scope
Both NYL (and its primary American
insurance subsidiary, New York Life
Insurance and Annuity Corporation) are
licensed to do business in all 50 states
and the District of Columbia
1
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New York Life Insurance Company - International Operations
Operation in
Mexico.http://www.newyorklife.com/
about/new-york-life-sell-surety-bondoperation-mexico-global-insurer-acegroup
1
https://store.theartofservice.com/the-life-insurance-toolkit.html
New York Life Insurance Company - New York Life Insurance buildings
The New York Life Insurance
Company has commissioned a
number of buildings under the name
New York Life Insurance Building.
1
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New York Life Insurance Company - New York Life Insurance buildings
*New York Life
Insurance Building,
Chicago
1
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Mr. Serv-On - Life Insurance, Da Next Level after No Limit
Life Insurance was met with
commercial and critical success,
peaking at #23 on the US charts and #5
on the RB charts
1
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Mr. Serv-On - Life Insurance, Da Next Level after No Limit
1
On September 18th, Serv-On announced
his next release will be Boss Certified with
a release date of October 28, 2014. This
album will be distributed through ServOn`s own label, Hot City Music.
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Prudential Financial - US military life insurance lawsuit
1
The company provided life insurance to people in
the armed forces under a government contract
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Non-life insurance
1
'General insurance' or non-life insurance
policies, including automobile and
homeowners policies, provide payments
depending on the loss from a particular
financial event. General insurance is
typically defined as any insurance that is
not determined to be life insurance. It is
called 'Property insurance|property and
Casualty insurance|casualty insurance' in
the United States|U.S. and Canada and
https://store.theartofservice.com/the-life-insurance-toolkit.html
Non-life insurance
1
In the United Kingdom|UK, insurance is
broadly divided into three areas:
personal lines, commercial lines and
London market.
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Non-life insurance
1
The London market insures large
commercial risks such as
supermarkets, football players and
other very specific risks
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Non-life insurance
Commercial lines products are usually
designed for relatively small legal entities.
These would include workers' comp
(employers liability), public liability, product
liability, commercial fleet and other general
insurance products sold in a relatively
standard fashion to many organisations.
There are many companies that supply
comprehensive commercial insurance
packages for a wide range of different
1
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Non-life insurance
1
Personal lines products are designed to be
sold in large quantities. This would include
auto insurance|autos (private car), home
insurance|homeowners (household), pet
insurance, creditor insurance and others.
https://store.theartofservice.com/the-life-insurance-toolkit.html
Non-life insurance
1
ACORD [http://www.acord.org] which is
the insurance industry global
standards organisation. ACORD has
standards for personal and commercial
lines and has been working with the
Australian General Insurers to develop
those XML standards, standard
applications for insurance, and
certificates of currency.
https://store.theartofservice.com/the-life-insurance-toolkit.html
Non-life insurance - Market trends
1
USA was the largest market for nonlife insurance premiums written in
2005 followed by the EU and Japan.
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SBI Life Insurance Company Limited
1
'SBI Life Insurance' is a joint venture
life insurance company between State
Bank of India (SBI), the largest
Government-owned corporation|stateowned banking and financial services
company in India, and BNP Paribas
Assurance. SBI owns 74% of the total
capital and BNP Paribas Assurance the
remaining 26% of the capital. SBI Life
Insurance has an authorized capital of
and a paid up capital of .
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SBI Life Insurance Company Limited
In 2007, CRISIL Ltd, a subsidiary of
global rating agency Standard Poor's,
gave the company a AAA/Stable/P1+
rating.
1
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SBI Life Insurance Company Limited - History
1
When the government of India opened
the life insurance sector to private
companies, State Bank of India|SBI
started SBI Life as a joint venture with
BNP Paribas in 2001. While in its
initial stage its business was mainly
from bancassurance channel, now it is
developing its own agency team for
selling its life insurance products.
https://store.theartofservice.com/the-life-insurance-toolkit.html
Mitsui Sumitomo Insurance Group - Non-life insurance
1
*Mitsui Sumitomo Insurance Co.,
Ltd.
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Mitsui Sumitomo Insurance Group - Life insurance
*Mitsui Sumitomo
Kirameki Life Insurance
Co., Ltd.
1
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Mitsui Sumitomo Insurance Group - Life insurance
*Mitsui Sumitomo
MetLife insurance Co.,
Ltd.
1
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Garden State Life Insurance Company
1
'Garden State Life Insurance Company' is
a small direct life insurance company
located in League City, Texas. It is a
subsidiary|wholly owned subsidiary of the
Galveston, Texas based American
National Insurance Company.
https://store.theartofservice.com/the-life-insurance-toolkit.html
Garden State Life Insurance Company
1
The company celebrated its 50-year
anniversary in 2006, but has not been
located in New Jersey, nicknamed the
garden state, in many years. The
company was previously a subsidiary
of GEICO but was bought by
American National in the early 1990s
and moved from Maryland to Texas.
https://store.theartofservice.com/the-life-insurance-toolkit.html
Garden State Life Insurance Company
1
Garden State Life has made a name for
itself over the years by featuring
personalities Barry Van Dyke (son of
Dick Van Dyke), Mickey Rooney and his
wife Jan, and most recently Meredith
Baxter in its television commercials. It
has also been featured in the United
States Postal Service change of
address packet since 1998.
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Ameritas Life Insurance Company
The 'Ameritas Life Insurance
Company' (established in 1887 as 'Old
Line Bankers Life Insurance Company
of Nebraska') is a mutual insurance
company. Its headquarters are in
Lincoln, Nebraska, United States.
1
https://store.theartofservice.com/the-life-insurance-toolkit.html
Ameritas Life Insurance Company
In 1999, the Ameritas Life Insurance
Company merged with Acacia Life
Insurance Company|Acacia Mutual
Holding Company. The latter had been
formed in 1997 when Acacia Life
Insurance Company of Washington,
D.C., converted from a mutual life
insurance company to a stock
company subsidiary|wholly owned by a
mutual insurance holding company.
1
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Ameritas Life Insurance Company
On January 1, 2006, Ameritas Acacia
Mutual Holding Company merged with the
Union Central Life Insurance
Company|Union Central Mutual Holding
Company of Cincinnati, Ohio, and became
the UNIFI Companies|UNIFI Mutual
Holding Company. Union Central Life was
originally established as a mutual life
insurance company in 1867, and it had
formed its own mutual insurance holding
company in 2005.
1
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Indian Postal Service - Postal life insurance
Due to the popularity of postal life
insurance, it was offered to other
departments of the central and state
governments. Postal life insurance is
available to employees of all centraland state-government departments,
nationalised banks, public-sector and
financial institutions, local
municipalities, district councils and
educational institutions receiving
government subsidy. It was extended
to all rural residents on 24 March
1
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Indian Postal Service - Life insurance
1
* Suraksha (whole-life assurance)
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Indian Postal Service - Life insurance
* Suvidha
(convertible wholelife assurance)
1
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Indian Postal Service - Life insurance
1
* Sumangal (anticipated
endowment policy)
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Indian Postal Service - Life insurance
1
* Yugal Suraksha (joint life
endowment assurance)
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Indian Postal Service - Life insurance
1
For the general
public:
https://store.theartofservice.com/the-life-insurance-toolkit.html
Indian Postal Service - Life insurance
1
* Gram Suraksha (whole-life
assurance)
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Indian Postal Service - Life insurance
1
* Gram Suvidha (convertible
whole-life assurance)
https://store.theartofservice.com/the-life-insurance-toolkit.html
Indian Postal Service - Life insurance
1
* Gram Sumangal (anticipated
endowment assurance)
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