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There is a new term life insurance product which some people in our business are calling "flexible term." But it is not a flexible product, in the sense that universal life and adjustable life are flexible. Rather, as we shall see, all of the product's flexibility occurs prior to issuance of the policy. Once the policy is in force, it offers the policyowner no more opportunity to make changes in the contract than any other type of term life insurance.
For that reason, I will refer to this new product as "customized term" insurance in describing it for you in this month's column. But, despite this new product's postissue shortcomings, as we examine it in some detail you will see that it is really quite a remarkable concept.
A LONG TIME COMING
In the 1970s and 1980s, our industry introduced a number of flexible, adjustable and/or interest-sensitive life insurance products: adjustable life, universal life, variable life, variable universal life, interest-sensitive whole life, interest-sensitive single premium whole life, etc. But, except for the premium slashing in the ART marketplace, not much happened in the way of term product innovations. About all we can point to is the development of competitive pricing on 5, 10, 15 and 20-year level term products. Aside from that, as Thomas W. Lambertz pointed out in his article, OmnitermTM--A Flexible Term Product" in the February 1992 issue of the Fraternal Monitor, "existing term portfolios have been pretty much left alone."
Mr. Lambertz, who is vice president of Business Men's Assurance, went on to say: "The consumer's world is changing. The work demographics, the average age of the population, and the financial decisions of today--all are different. The insurance industry certainly needs to establish products that are flexible enough to meet the needs of the market place. OmnitermTM was designed to address the changing term insurance needs of the consumer.
I should add here that BMA makes its Omniterm policy available in three forms to other insurers. The name for its product is a registered trademark of Business Men's Assurance Company.
CHOICE OF AMOUNTS
The applicant for a customized term plan can choose any of the following types of face amounts of insurance: level, increasing, decreasing or any combination of those three....