A new hybrid universal life insurance product, three years in the making, is aimed at helping consumers adapt to their changing realities over the long term by providing greater flexibility in investment options.

The product, called EquiBuild, was developed by PPI Advisory and Industrial Alliance Insurance and Financial Services Inc. (iA Financial Group) and provides policyholders with level premiums, a variety of investment options, guaranteed surrender values and an annual bonus.

EquiBuild contains investment choices that include fixed-term guaranteed interest accounts based on the main stock-market indices, and a new EquiBuild Account which is based on an EquiBuild Fund that is managed by iA, as well as a Life Investment Account.

Bonus feature

Clients can use the bonus feature to purchase paid-up additional insurance or they can invest it in an accumulation fund. The bonus is calculated annually and is based on the declared return on the EquiBuild Fund less a threshold of 3.5%. The EquiBuild Fund, which is designed to provide stable returns and low volatility over the long term, has a guaranteed return of 5.5% through 2019. The fund is composed of fixed-income securities, mortgage securities, real estate assets and stocks.

Industrial Alliance said clients who invest in the EquiBuild Account will receive a guaranteed return of 4.25% through 2019. After that, the return credited will be equal to the declared return on the EquiBuild Fund minus a management expense ratio of 1.5%.

Another investment option is a Life Investment Account, which becomes available to a policyholder on either the 10^th anniversary of the policy or the policyholder’s 40^th birthday, whichever comes later. This account provides a fixed monthly return.

Jim Burton, chairman and CEO of PPI, said EquiBuild was designed to enable clients to have a long-term guaranteed product but with the unique flexibility of dealing with life-changing events like a job loss or divorce.

“We wondered if we could design a product from scratch that let us give the customer a product with a long-term guarantee but also still gave them the ability to custom build and change the product as their plans and dreams changed,” said Burton.

He gave the situation of a person who wanted to buy a life insurance product but lost his job a few years later. In many cases, said Burton, that would mean the person would have to cancel his policy since he couldn’t afford the premiums. “In this example, we have developed a product that allows you to stop paying premiums, but still keep the insurance coverage. The coverage would stay for a number of years allowing you to get through that rough spot and then you can begin to put additional money in and continue coverage. It’s not an all or nothing proposition anymore.”

In addition to the fixed investment accounts there’s a significant amount of value built into the product early on so that clients can have access to either the value inside the product or if needed, they can cash in or borrow on the base of the policy, he said.

Burton said EquiBuild can also act as a kind of disability or long-term care product, in that policyholders can access some of the money in the policy if they need it to look after those special needs. Alternatively, policyholders can use the money to take a holiday or take advantage of a business opportunity.

Built in compensation

It’s because of this kind of flexibility that Burton said the product will be good for insurance advisors as well as clients. “Our feeling is that not only is  this product good for consumers but also a great product for insurance agents because it will more effectively allow them to customize their products rather than trying to fit their client to a more rigid type of insurance alternative.”

He also said PPI has built in compensation to advisors over time to service the client regardless of whether the client has paid a premium. PPI is currently rolling out the product to advisors across the country.

Industrial Alliance was equally upbeat about the new product.

“We are proud to be able to offer such a flexible universal life insurance product that combines liquidity, growth and security to clients looking to grow their wealth and take advantage of sizeable surrender values,” Pierre Vincent, vice president of Individual Insurance at iA, said in a news release.