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Life insurance due diligence has gone into a ditch. Let’s put it on a road that can lead somewhere.

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Send your thoughts to Glenn Daily (gdaily@glenndaily.com).

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The Future of Life Insurance by Glenn S. Daily

Webinar: Glenn S. Daily, "Advanced Life Insurance Due Diligence: Reimagining the Process", Advisors4Advisors.com, February 28, 2024

What is due diligence?

Answer from ChatGPT

Chatgpt answer
  • What credited interest rate should be used for deterministic indexed universal life illustrations? Should a selected rate create parity across economic value or the cost of production?
  • Should stochastic illustrations use an economic scenario generator with market-consistent assumptions for all asset classes and derivatives?
  • How can performance measures be updated for stochastic illustrations?
  • What rules should be used to dynamically adjust premiums and/or death benefits in a stochastic illustration?
  • What can stochastic illustrations reveal about the risks of premium financing?
  • To reduce the asset/liability management risk of premium financing, is it possible to design a life insurance policy that explicitly links the cost of borrowing and the credited interest rate?
  • What can operations research (e.g., dynamic programming) say about optimal premium schedules?
  • What are the pros and cons of using a variable universal life chassis for variable, indexed, and fixed-interest options?
  • What is the value of the smoothing of returns created by book-value-based accounting?
  • What is the value added by active management of insurance company general accounts?
  • What mortality rates and discount rates should be used in expected present value calculations?
  • Is life insurance an asset class?
  • Are policyowners being adequately compensated for risk?
  • How does the insurance company’s financial strength affect policyowners?
  • Can statutory financial information be used as a proxy for product-specific pricing assumptions?
  • How can policy documents be designed more effectively?
  • What is the impact of better information on consumer behavior?
  • How can insurance regulators improve the marketplace?
    • Stochastic illustrations
    • Clear explanation of guarantees
    • Clear terminology (meaning of underwriting classes, variable universal life net rate of return, cash value vs. account value)
    • Public information about pricing changes
  • How can curated product platforms gain market share?