Toronto-based Manulife Financial Corp. (TSX:MFC) has revamped its universal life (UL) insurance offerings, with a new suite of products that boasts simplified features, a new low-volatility investment option and a new commission structure for advisors.
The new suite of products, called Manulife UL, launches on May 26, 2014. It replaces the firm’s current lineup of UL products, called InnoVision, which have been available since 1994.
“We’ve had our current lineup on the market for quite some time, and we really wanted to come to market with a fresh new design,” says David Baker, assistant vice president, insurance products, retail markets at Manulife. “So, we made the decision to come out with a whole new name…and a more straightforward design that makes it easier for customers to understand.”
Under Manulife UL, clients can choose from level cost of insurance (COI) and yearly renewable term (YRT) COI. Two different investment options are available within each version of the product: a balanced fund managed by Manulife’s investment professionals, for clients seeking a hands-off approach; and a customizable suite of investment options, for those who prefer a hands-on approach.
The balanced fund option, called Performax Gold Investment Account, presents a new investment option that was previously available only under Manulife’s whole life insurance product. The fund is designed to reduce volatility by using a mechanism that smoothes out returns over a five-year period.
“That’s something that customers may really value in an insurance product, because they’re looking to take out some of that market risk,” says Baker. “They’d still like to participate in the market, but they don’t like necessarily the volatility that can come with it.”
Another new feature available on Manulife UL is a rate enhancement on managed accounts. Clients who opt to invest in managed accounts will earn a rate of return that is 0.25% higher on bond accounts, and 1% higher on equity and balanced accounts, compared with the underlying retail mutual fund.
In addition to adding some new features, Manulife has removed some of the options that were previously available on its UL offering, in an effort to simplify the product. For example, Manulife has eliminated the wealth enhancers and bonus/no bonus structures that were previously available, as well as the option for multi-life coverage.
“We’ve designed the product to be more straightforward,” says Baker. “We’ve removed some of the complexity.”
In addition, the contracts are written in plain language, and are shorter and more customized, so that clients only see the features that they purchased as part of their UL policy.
“Rather than have features in the contract that aren’t applicable to what the client has selected,” Baker says, “each contract is customized.”
Manulife has also adjusted the commission structure of the new product. In addition to the first year commission, advisors who sell a level COI Manulife UL policy will receive a renewal commission each year for the life of the policy, rather than for a limited number of years, as with its previous UL offering.
“As long as the client is making regular payments into the plan, the advisor will continue to get that renewal commission for the life of the policy,” says Baker.
The company has also tweaked the first year commission structure on YRT Manulife UL policies, to bring those commissions closer in line with those paid on level COI policies.