To provide customers with more option in a single product, Genworth Financial Inc. (GNW) unveiled Index Universal Life (IUL), a first of a kind insurance product that combines a death benefit with tax-deferred cash accumulation as well as an optional Accelerated Benefit Rider for Long Term Care Services.
Moreover, the product has the potential to generate higher returns compared to the traditional fixed life insurance products currently available in the market. It also offers the benefit of lower risk compared to variable universal life insurance products.
The product features death benefits along with the potential of higher growth in policy value. It does this by linking the crediting strategy with the S&P 500 Index. Additionally, it insulates from market downfall, offers supplemental income for retirement and Optional Accelerated Benefit Rider for Long Term Care Services (the policy holders will have to incur added cost for this benefit).
The continued low interest rate environment is aiding index UL policies to experience huge sales. It surged to a $1.54 billion market in 2012 from just about $300 million market in 2006. These policies presently contribute about 30% of total UL premiums and 12% of all individual life insurance premiums. Introduction of such a value added product will help Genworth capitalize on the market opportunity.
Genworth has been taking initiatives to strengthen its portfolio. To better focus on generating capital, increasing the financial strength and flexibility of the company as well as simply the business model, Genworth decided to divest the wealth management business.
Genworth has been delivering solid results, surprising the Zacks Consensus Estimate for straight three quarter with an average surprise of 24.5%. With sustained focus on consolidating its portfolio and thus better serve its customers, we expect the momentum to continue.
Genworth carries a Zacks Rank #3 (Hold). Life insurers Protective Life Corporation (PL) and StanCorp Financial Group Inc. (SFG) with Zacks Rank #1(Strong Buy) and China Life Insurance Co. Ltd. (LFC) with Zacks Rank #2 (Buy) are worth noting.
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