In one of the first truly innovative product changes in the structured settlement profession in approximately ten years, Pacific Life today began formally notifying structured settlement brokers that a new index rider is going to be made available on their structured settlement product line.
While the formal launch is announced for April 1, 2014 and the product will not be available for cases until that date, the process of educating the settlement profession is commencing, following a series of recent settlement company meetings in which Pacific Life started the process of sharing information about this innovation.
Note: After conversations with Pacific Life home office, an important clarification on this is that April, 1, 2014 is a soft date for launch as final compliance and launch issues my require a later date. Also, this product is very different and distinct from any retail EIA product and is designed specifically for the structured settlement sales channel. As such it will not compete with current retail products on the market, but instead be primarily focused on the personal injury litigation market and the requirements that market demands so as to maintain tax compliance.
The Settlement Channel will report on the full details once we have the complete underwriting guidelines from Pacific Life and have had the opportunity to discuss the details with their structured settlement staff, but essentially what makes this so important is it is the first innovation involving some degree of enhance yield and payments on a structured settlement to hit the market since the ill-fated Met Life Variable structure product which was rolled out in the 1990's. It is our opinion that what will make this rider fundamentally different from that earlier effort, is that this innovation will mirror one of the hottest selling annuity products, the Equity Indexed Annuity, which in it's most basic form provides a minimum guaranteed yield and also provides enhancements to an annuity income stream through use of an Equity Index Rider. This ability to have a floor income, plus some long term growth using some element of an Equity linked index, should have a great deal of appeal to injury victims and attorneys in this low interest rate environment, as well in future years when the base guarantee will probably adjust to meet market conditions.
While it won't be the savior of the industry, Pacific Life should be commended for having the vision to actually put some brain power and marketing muscle behind a much needed innovation. Unlike past equity efforts which were a combination of variable products, which required the agent to be a registered representative and licensed to sell securities, this product avoids that complication and as such should receive a much wider following going forward.
Watch for our comprehensive update on the structured settlement index annuity riders later this month.