Advisors Blog

Below is the full text of the recent Lincoln Financial memo with transition rules and deadlines. For a PDF version of this announcement, click here.

January 7, 2017

Upcoming Life Product Updates:

Our industry is operating in a challenging and changing environment. We continue to face nearly a decade of persistently low interest rates, including recent historical lows late last year, volatile markets, and an evolving regulatory landscape. Lincoln is committed to proactively managing our business in this environment to ensure we are operating responsibly, and continuously positioned to deliver on the long-term promises we make to our customers. At times this requires Lincoln to make fair and responsible adjustments to our products; all of which are guided by our decision-making philosophy of balancing impact across all of our key stakeholders, including policyowners, partners and shareholders.

As we navigate today’s environment, we also continue to keep our sights on finding new ways to help our partners grow their business and reach new customers.

As such, we want to inform you of the following important life product updates:

• Effective January 23, 2017, Lincoln is pleased to announce pricing improvements to Lincoln LifeElements^® Level Term and Lincoln TermAccel^® which will solidify our position as a top 3 carrier in each product’s target market with the lowest price in select scenarios.

• Effective February 13, 2017, consistent with Lincoln’s strategy of prudently managing our product portfolio in light of interest rates, we are increasing pricing on new sales of the Lincoln LifeGuarantee^® Survivorship UL (SUL) product. These pricing changes help ensure Lincoln sustains a presence in the SUL market by providing valuable solutions appropriately priced for market conditions.

• Effective with new indexed account segments opened on or after March 15, 2017, Lincoln will be making changes to the caps, participation rates and spreads of the Indexed UL (IUL) product suite. This is similar to the competitive trend seen across the industry in the past 24 months. This is Lincoln’s first IUL cap decrease since February, 2013 and only our second since entering the market a decade ago. Even after these changes, Lincoln’s IUL products will offer caps in-line with industry averages, while also offering some of the industry’s strongest guarantees such as a guaranteed 1% floor, guaranteed persistency bonus, guaranteed cap reduction protection and guaranteed loan rate charge – which are important to risk-averse clients who are often interested in an IUL solution.

Coming Soon! Lincoln LifeElements^® Level Term (2017) – 01/23/17:

Effective January 23, 2017, Lincoln is pleased to announce the launch of the Lincoln LifeElements® Level Term (2017) – 01/23/17 with pricing improvements which will solidify key competitiveness at ages 45 and above with face amounts of $500,000 and above.

Highlights

Goals of the reprice include being a “top 3 carrier” in the following core cells with the lowest price in nearly half of the scenarios:

• $1 million of death benefit at ages 45+ for all term periods
• $500,000 of death benefit at ages 45+ for 15/20/30 year term periods
• $500,000 of death benefit at ages 55+ for 10 year term period

The 2017 product generation also complies with the new Principle-Based Reserving (PBR) requirements and the 2017 Commissioner’s Standard Ordinary (CSO) mortality table adopted by the NAIC and approved by the majority of states for use beginning January 1, 2017.

• PBR is a new method for calculating reserves that better captures risks of product features and results in more appropriate right-sizing of reserves.
• The 2017 CSO mortality table is used to set the maximum cost of insurance rates that can be charged within a policy which is also part of the reserving calculation.
• Please note that the contract has been refiled to improve consumer readability including a consolidated table of total premiums. All previously separate amendments and endorsements have also been incorporated into the base policy.

Transition Guidelines

For states that are approved at rollout, there is a 60-day transition period which begins on January 23, 2017 and ends March 23, 2017. The 2017 product will not be filed at this time in Alaska, Massachusetts, New York and Wyoming since they have not approved the use of PBR/2017 CSO. These states along with any unapproved states will continue to use the current Lincoln LifeElements® Level Term (2014) product in the interim.

• New applications received on or after January 23, 2017 and applications currently in underwriting that will be issued on or after January 23, 2017 will automatically receive the new Lincoln LifeElements® Level Term (2017) – 01/23/17 lower premiums if applicable. A request to use the lower rates will not be required.

• For policies already issued, Lincoln will accept a written request to change to the Lincoln LifeElements® Level Term (2017) – 01/23/17 product.

• For policies already placed, Lincoln will not allow rewrites to the Lincoln LifeElements® Level Term (2017) – 01/23/17 product.

• For states approved after rollout, the above will automatically apply based on the availability date.

Illustration Availability

Illustrations for Lincoln LifeElements® Level Term (2017) – 01/23/17 will be run on Lincoln DesignItSM Illustration System (v35.0 D). If you have an active internet connection, the software will automatically update to include the new product on January 23, 2017. If you need to download the Lincoln DesignItSM illustration system, it will be available on the Lincoln producer websites or from Field Office Technicians.

Available Riders

The following riders are available on Lincoln LifeElements® Level Term (2017) and have not changed from the versions available on Lincoln LifeElements® Level Term (2014):

• Accelerated Death Benefit Rider
• Children’s Term Insurance Rider
• Waiver of Premium Rider