Posted by What is the illustration of life insurance?
in"U.S. Life Insurance Guide Insurance Strategies: Misunderstandings"In the article, we pointed out that life insurance in the United States is more like a package of raw materials and tools provided to consumers by insurance companies.
Just as we don't make a "buying a house" decision just by relying on a pile of bricks, cement and a pile of raw materials, we often need to see a model house, or design drawings, and then make a decision based on it.
In the same way, in the process of financial decision-making, what ultimately makes us pay is not "bricks and cement", butLife insurance brokerCandidates, and based on this set of material kits, "draw" the insurance policy design plan.This design plan is often the most important decision-making reference in the insurance process.
A sample of insurance policy design plan value table
And "illustration" refers to the "insurance policy design plan" in the process of applying for insurance. "Illustration" is sometimes called "insurance policy proposal" or "insurance plan".
What is written on the illustration?
A typical lifetime insurance policy design plan usually contains the following information:
- Name of insurance product
- Length of time covered by insurance
- Insured size
- Premium
- Cash value situation
- Expected dividend or interest accrual
- Age/Sex of the insured
- Health rating used
- Additional terms or other options included
- ...
When we are considering applicants for life insurance,brokerWill provide us with this "policy design plan" to show us the functions and benefits of the policy.This "insurance policy design plan", to a large extentIs an educational PPTTo help policyholders understand how our life insurance policies work.
It is worth emphasizing that the policy design plan is not an insurance contract.Except for the part specially marked as "guarantee", the displayed numbers in the insurance policy design plan are for reference and demonstration, and do not belong to the scope of guarantee.
The United States Insurance Regulatory Commission (NAIC) issued a set of specifications for the "Insurance Policy Design Plan"1Many life insurance companies use it as a basis for insurance policies or sales presentations.
It will display the cash value and the “guaranteed” part of the death compensation and the “non-guaranteed” part according to the policyholder’s risk tolerance and reasonable market rate of return. It will also show the costs associated with this policy. And cost.
"Insurance policy design plan", "Insurance policy plan", usually used inSavings Participating Life Insurance.Comprehensive Universal Insurance.Investment-linked insurance.Index insurance,as well asLong-term care insuranceSales and display links.
One of the two major controversies in policy design: complexity
Regardless of whether it is a savings dividend insurance or an index comprehensive insurance, the thick "PPT" of the original formula "design plan" of the life insurance company is for the first time consumers to buy insurance.It's still too complicated to understand.
To make a simple comparison, typical consumer term life insurance, their policy plan documents may only have 5 to 7 pages, but for lifetime life insurance, it usually starts from 30 to 40 pages, and there are thousands of pages on it. Numbers and unfamiliar words.
Such complexity is obvious, because the future does not happen. Life insurance companies need to predict the interest rate environment, company revenue, management costs, and death actuarial costs for a long period of time in the future.
Two major controversies in the policy design plan: PPT war
The process of an insured person's purchase of whole life insurance is a bit like the scene of an investor facing various entrepreneurs who come to visit.
Here, consumers play the role of "investors" and are eager to find a truly high-quality lifelong project to inject capital.The life insurance broker, who plays the role of an entrepreneur, holds a project roadshow PPT (insurance policy design plan) in his hand, hoping to reach a deal with investors.
Therefore, as the protagonist of the story, the PPT (Policy Design Scheme) and the figures shown above affect the success or failure to a certain extent.
In order to enable brokers to tell the PPT story, some life insurance companies have begun to targetCalculus display systemI optimized the design, and in turn changed the design of insurance products to adapt to Illustration-this topic we will introduce in a later industry interview-after all, beautiful values are still something that everyone likes to see.
The result of this is that today’s market competition,It seems to have escalated into a "PPT war".(We pay tribute to those life insurance companies who choose to "exit" the illustration PPT "war".)
"Many good insurance experts tell their clients to forget about the numbers that are not guaranteed and treat them as icing on the cake (at least the cake is guaranteed). The problem is that many other insurance practitioners don’t think much about designing solutions ( PPT) is their ultimate sales weapon." —QuickQuote. 07.03.2020
Our summary view
Speaking of this, our readers may be even more confused. Should we look at the "design plan", and if we look at it, what is the picture?
Our answer is obvious,Look.During the insurance process,The policy design plan is the best educational material.It can help us understand how the products we buy and how they work, and provide additional instructions for each item.The explanations of professional life insurance brokers can help us understand and master the main points of insurance in a simple and simple way, and assist in making value judgments.
For consumers, the "beautiful" numbers on the design plan are really powerful and attractive.And the players who "intentionally" or "unintentionally" join the "PPT war" are even more familiar with it.But because of this, for the conscious consumer, it is only necessary to use this "beautiful" numerical scheme as a benchmark, andProfessional Life Insurance Financial AdvisorCollaborate, through continuous comparison and analysis, to confirm the solution products that can truly protect yourself and your family.
Finally, if a lifetime life insurance product is likened to a car,"Illustration (design plan)", represents the exterior part of the car that our eyes can see, and how it really performs on the road, "chassis" and "engine" are the key. (End)
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appendix
01. "LIFE INSURANCE ILLUSTRATIONS", NAIC, 02/25/2020, Article, https://content.naic.org/cipr_topics/topic_life_insurance_illustrations.htm
02. "Understanding Life Insurance Illustrations", Tim Bain, 07/03/2020, https://www.quickquote.com/other-resources/archives/understanding-life-insurance-illustrations/
