Earlier this year, The Wall Street Journal published an article, “Universal Life Insurance, a 1980s Sensation, Has Backfired”. The author, Leslie Scism, dives deeply into the ongoing crisis faced by many aging policyowners: a long decline in interest rates has caused their premiums to rise exponentially.
To summarize the article, a once popular insurance product that promised significant ROI to policyowners is now facing backlash due to unforeseen circumstances, such as the 2008 financial crisis in the United States. Universal life insurance policies were designed to function in two ways simultaneously: to provide yearly coverage to the insured that could be renewed annually for a premium amount that exceeds the actual cost of coverage and to build a tax-deferred savings account with what’s left from that premium amount after the coverage cost has been subtracted. All projections of the returns expected in these savings accounts were based on stable, high interest rates. But the interest rates did not maintain the levels necessary to keep premiums low.
Most policyowners who were sold universal life insurance policies were, quite simply, unaware of the possible disastrous outcomes should interest rates not perform as projected at time of purchase. In other words, they didn’t know they would need to monitor for any such changes in order for the policy to remain on track.
If only there was a proactive policy management tools that could solve this common issue. Even when you aren’t watching for it, technologies like Proformex have the ability to monitor and prepare for the unexpected, automatically alerting you before it happens. No weekends, holidays, or sick days off; automated technology is the reliable, constant observational tool you need to ensure your policies are always performing as intended.
Today’s in force policy management platforms leverage automation through technology to help monitor for sudden changes and better prepare policyowners to make more informed decisions when their policy needs some attention. When something doesn’t seem right, technology automatically generates a system alert notifying you that the policy needs to be reviewed or actioned. It can also provide you with potential alternatives should you decide your policy will become too costly to support or that you simply don’t need the coverage anymore.
Had some of the policies mentioned in the WSJ article been managed by these technologies, perhaps the policyowners would have been able to make appropriate adjustments to put themselves in a better financial position today.
What else can technology do?
Proformex, and companies like them, aren’t only there to proactively alert you of potential disasters. These platforms can also help streamline fiduciary duties, securely aggregate data, compile customizable and client-ready reports, and so much more. With intuitive design and robust technology, technology simplifies all aspects of ongoing policy management.
By combining customizable configuration, searchable data, holistic viewing and fiduciary functionality, automated dashboards provide the insight and analytical tools needed to identify at-risk policies or opportunities for expansion and improvement. It works for all policies, no matter the distribution channel or the timing of when the policy was written.
Additionally, these platforms securely store all relevant data and documents needed to monitor and manage all policies, both individually and comprehensively. These platforms give you the ability to assign performance-based criteria that are specific to each policy, giving you a benchmark by which to measure the success of the contract over time. Proprietary ordering and document-scanning technology enables you to aggregate key data points from statements and illustrations that are not often available through standard carrier data feeds, give you the once-unachievable holistic view of performance-related data for each policy in your current book of business.
These technologies have the ability to track five key contract components: lapse age, death benefit, annualized premium, crediting rate and Comdex rating. They quickly identify when any of these five categories falls into an undesirable range based on the specific guidelines set for that particular policy and promptly sends you a notification. These alerts are consolidated and color-coded, making it very simple to see where your attention is needed at a glance. You can then drill down into the more granular details to gain a deeper understanding of how to get your policy back on track.
When it comes time for annual policy reviews or other reports, insurance performance monitoring platforms will not only send you a reminder but will also proactively collect inforce illustrations and other policy-related materials from the carrier, saving you the time and hassle of having to compile that information yourself. Once all the necessary data is returned, these platforms build a thorough, easy-to-understand report that is ready for client consumption. These reports make the data more accessible, helping you to help your customer make the best decisions available for their policies. This intervention by technology reduces liability exposure and minimizes risk for you, because it guarantees complete accuracy.
Headquartered in Cleveland, Ohio and founded in 2016, Proformex is the provider of on-demand, SaaS solutions to life insurance policy owners, beneficiaries, insurance agents and fiduciaries. Designed to proactively alert customers of potential problems with their life insurance policies, Proformex protects policies against lapsing, degradation and asset erosion. By monitoring five key contract parameters – lapse age, death benefit, premium, crediting rate and Comdex – Proformex offers better portfolio oversight and control.