I debated putting this into the Canadian bulletin, but as most of you know different companies are messing around with different renewal schemes in the Canadian market. While we haven't seen the following scheme (yet), it will help everyone to understand that if/when we run into it, we already have a way to deal with it, which is to NOT show renewal premiums when face amounts decrease.

Compulife is one a very few third party quoting platforms, and is one of an even smaller group of those, which offers our customers (agents and agencies) the ability to see renewal premium costs for term life insurance products. We also give you ways to compare those renewal premium costs.

During this past month we published a midmonth bulletin that was designed to "grab" our customers' attention. The reason was quite simple. We discovered that for a period of almost 3 months we continued to quote two companies' term life insurance products showing the previous renewal system which offered a level face amount and increasing ART renewal premiums. Unfortunately the companies had changed that at the end of January and neglected to mention that change to us. In the example given in the midmonth bulletin, the face amount for the quote we first saw decreased the face amount to 5% of the initial face amount. In that particular example the face amount dropped from $1m to $50,000. Not something an unsuspecting widow would want to discover after it happened, and after the insured suddenly died.

Clearly we were not the only folks ignorant about the change. It was brought to our attention by a subscriber who, like us, was unaware of the change until they examined a newly issued policy. He was completely taken back by what he found, and once I got a copy of the renewal premium schedule from that policy, I went into panic mode. I gutted the reference to renewals from those products and placed a midmonth update on the web, all within a couple of hours. I worried about how many sales of those products had been made accompanied by a quote from Compulife showing a level face amount continuing after the level period. I wanted to make sure that our customers were made aware of the problem and so my bulletin was very LOUD.

To summarize, we do say at the bottom of every quote (and we mean it):

NOTE: Every effort has been made to assure the accuracy of this information
but we cannot guarantee accuracy and are not liable for errors or omissions.

We put that on each quote because we are human and mistakes can and clearly do happen. The sad part about this one was that no one caught it for over 2 months and we were not informed by the company of the change until we asked about it.

In response to the bulletin I got this email from a subscriber:

Bob, I know you must be fielding a lot of attention regarding your "updates" on AIG. I emailed you twice last week too and here is another.

While you are focused on educating the field force about AIG, I think you should share your opinion about other carrier product designs that function like AIG.

Two carriers to start with could be Protective Life and Lincoln as both 'feature' a similar product design on one of their term products with the face amount "plummeting" so to speak, at the end of the level term period. Whether it is a "drop off the cliff" or a less significant drop that is levelized for a period of time or simply begins to act like a decreasing term plan, how many agents know and how many consumer care or did they just sell and buy the cheapest term for the period chosen. How will the insured/consumer/their family feel if the insured is convalescing at the end of the term period and when beyond the conversion?

This face reduction design is not new. And in my opinion, it is a consumer/agent "issue" waiting to happen. You already have agents telling you they didn't know about AIG's even though you have seen the home office documentation... I know "no one" ever reads all of that though or even the policies as evidenced by a change made in January just coming to some of their attention.

To their credit, when Protective introduced their product they did a whole mail out campaign around "no surprises in your mail box" sending out little squishable "stress" mailboxes and postcards over and over again with the marketing focus on having a decreasing face amount instead of increasing premium after the level term period as a benefit to the consumer. YET agents still don't seem to realize what they sold or are still selling.

The term life sale is still too often who has the cheapest premium, otherwise terminal illness riders, living benefits and even conversion opportunities would be more readily sold in the market place.

With Compulife and other comparison engines term is commoditized and not based on "value" way too often. Embarrassing as it is, I have "lost" a term sale over 16 cents a month b/c of comparisons and consumers who "don't care" about anything but price. That was a haven life product that beat everyone else by 16 cents. The fact it offered no conversion privilege meant nothing... just it was 16 cents cheaper.

So while you are at it I would like to see you address nonconvertible term plans offered in particular by haven life and then hit on some of the conversion time limitations on products such as for 5 years only or cutting off conversions prior to the end of the term period or before the traditional age 65. Afterall, education of the agent and consumer is important. There is a lot of variation in term plans and even in some cases in the multiple plans offered by the same carrier.

As a GA and as an agent, I applaud you championing the education of the consumer and field force alike. Maybe you can help put value back into term sales beyond the price. This is not an "AIG" thing, it is a market thing.

The agent who wrote the above email is quite right. In fact there are now about 4 companies in total that offer term or term-like products that do not have level face amounts after the initial level period.

In fairness to Protective Life, they have two product lines, one which behaves as is explained above (it's the last of the term-like, no lapse UL's still in the market) and the other which offers a traditional level face amount after the initial period. Regarding that product, Protective has introduced a grading calculation into the renewal premiums which makes their ART rates after the intial level period much more attractive for a handful of renewals. And yes, you can compare those renewals with other companies using our agent software. But it's also worth pointing out that that product has a conversion period that ends at least 2 years before the end of the level period and for level premium periods longer than 20 years, it ends after 18 years (and never exceeds age 70). So, one thing that is positive, another that is negative.

Hard to tell the players without a program? Compulife is the program that makes it easy to get the basic facts. I don't know how anyone keeps up with this stuff without Compulife.

Back to renewal premiums. Products that do not offer level face amounts after the initial level premium period are shown in our software as ONLY renewable for the initial level premium period, which is why you will not see renewal information beyond that period. If the face amount starts going down, our quote ends. If you want to see the roller coaster ride from there, you will need a life company illustration.

As to convertibility, I've been in thie business for 40 years and I have watched the back and forth debate over that issue and it is one of those things where agents will have to agree to disagree. We show the period of convertability and that's all. Beyond that you will need to make up your own mind about what you emphasize to your customers. It's not our job to take a position one way or the other.

And finally, I can only respond to the well written email by saying what I say to consumers at our public website term4sale.com:

While initial premiums are a very important part of comparing term, the fact is that the cheapest product is not always the best. COMPULIFE recommends that you speak with an agent in order to investigate which products and companies would be best for you.

To obtain a list of the 3 COMPULIFE subscribers selling insurance in your area, use one of the "How to Purchase" buttons in the quote results.

Once again, the lowest cost policy isn't always the best policy. There are other differences that you should consider before choosing the company and product that is best for you. Many of those other differences are subjective. This means that they cannot be compared by simply placing values side by side on a piece of paper, as we can do with premiums.

COMPULIFE Software cannot advise you with respect to specific products or how they are different from others. COMPULIFE does not have a license to sell life insurance. COMPULIFE produces and sells a much more complex term comparison software program to over 3,000 life insurance brokers and agents throughout the United States and Canada. Your best course of action is to locate a properly licensed agent who uses the COMPULIFE program.

And if you are a life insurance company reading this, and provide information to Compulife about your products, and want to avoid attention in our midmonth bulletins, please don't skip over changes to your products like this. They are IMPORTANT.