Chicago Tribune from Chicago, Illinois on October 30, 1984 · 39
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Chicago Tribune from Chicago, Illinois · 39

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Tuesday, October 30, 1984
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39
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Chicago Tfibune. Tuesday, October 30, 1934 Sect on j - 11 Cash value Continued from 1st Business page aimed specifically at a relatively new kind of insurance, called "universal life," "adjustable life" or "'flexible life," in which part of the premium buys a term life insurance policy and the balance is invested to accumulate a cash value. - In 1384, Congress entirely rewrote the law on taxation of the insurance industry. Because it is a highly regulated industry and its profits come from long-term investments, not collection of premiums, insurance companies always have had a different tax treatment, noted Paul Anglin, a tax partner at Deloitte Haskins & Sells. The recent tax law was an effort to streamline the tax process, he added, although insurance accountants and executives say it's too early to determine whether the new law really will be simpler. As part of that effort, the definition of "life insurance" was further restricted and made applicable to all life insurance products, not just universal life. Policies that don't meet the new definition will be considered investments, and the cash-value build-up will be taxed currently to the policyholder, even if the policy is not cashed in. TO FALL within the new definition, all policies must meet one of two tests. Both tests include actuarial assumptions, such as interest and mortality rates, and one also includes an acceptable "corridor," or ratio of cash build-up to death benefit, based on the age of the policyholder. As the policyholder gets older, a greater percentage of the policy may go to cash value. Under the old law, a universal life policy with a cash value of $60,000 had to have a face value, or death benefit, of at least $84,000. Under i the 1984 law, a policy with a $60,000 -cash value must have a death benefit of at least $150,000, according to the American Council of Life Insurance. "It is impossible for a layman to use the tests, and if you have any questions about a policy, you should get a representation from the insurance company that the tests have been met," said Steven Gardiner, a manager at Arthur Andersen & Co. in Milwaukee who specializes in taxation of the insurance industry. Frederick Williams, vice president of advanced sales for Chattanooga, Tenn. -based Provident Life and Accident Insurance Co., said having a choice of two tests rather than a single guideline actually broadens, rather than restricts, ! the definition of "life insurance." BUT REGARDLESS of which test is used, an insurance policy is allowed to build up less of a cash value per premium dollar under the new law, he added. "It would have more of an impact on the younger consumer," he said. "The new corridor versus the old corridor would produce less cash value over a long period of time. To a person who buys a policy at, say, age 30, you would say it has been detrimental because you would have less cash value at age 65." "As a practical matter, my experience was that very few people were trying to load their policies up" with cash values, Gardiner said. "This law just says that if you want to, you can't." Anglin of Deloitte Haskins & Sells said the stricter definition 'was "a broad reaction on the part of the government. I think they thought the abuses were broad based." He added that the new definition only affects policies written after this year, and that policies issued earlier will be allowed to stand. tax planning That means the law's real impact is on the insurance companies, which have to make all their new policies conform with the new guidelines by Jan. 1. . The law itself came as no surprise, said D.E. Laughlin, executive vice president and director of marketing for United of Omaha, the life insurance subsidiary of Mutual of Omaha. "Everybody was anticipating there would be this legislation, so I think everybody had it in their product development plans to set aside the resources to make those changes," he said. "We had plenty of warning, so really nobody should have been caught snort on it." . BUT WHILE the new definition of life insurance brought few surprises, it has created some administrative problems. At United of Omaha, for example, two policies alone account for about 60 percent of all contracts written and both have to be changed to reflect the new restrictions, Laughlin said. " Evanston-based Washington INa-tional Insurance Co. is simply scrapping about 10 little-sold products as not worth the hassle of changing, said Gary See, vice president and actuary. The company's biggest seller, a universal life policy, is being amended, he said. "CNA said two of its policies, one a universal life and the other a traditional whole life, are being amended. But a company spokesman said some parts of trie new law are unclear, and CNA is waiting to see what kind of specific regulations the Internal Revenue Service issues. ""ere basically in a holding pat-vr( until we see what the interpre-, i..'. 'ui wiil be," the spokesman said. Mi Provident, officials are making ''minor modifications" to some polities. Williams said. Washington National is changing its data-processing system to monitor action in each policy, See said. "If a policyholder lets his policy drop too low in the insurance part or he pays too much premium or whatever might make the policy not meet the federal requirements, we are changing our data processing so we can detect that and notify the' policyholder." IN ILLINOIS, most of the action so far has been with amendments, said Charles Budinger, supervising insurance analyst with the state Department of Insurance. But the state has no way of knowing how many companies may be pulling some policies off the market. "That's hard to say because they don't have to notify us if thev stop selling a product," he said. ''What we are seeing is that there are more riders coming in than complete revamps of a policy. Thev can get approval on a rider a lot faster than on a whole policy." While complying with the new definition may mean administrative headaches for companies, executives say they have little quarrel with the definition itself. Washington National's See added, "This definition of life insurance is pretty reasonable, and the ordinary-life policy meets this test. The only one that does not meet this test would be one that is very highly investment oriented." Laughlin of United of Omaha said. Y'We don't feel that in our markets we really suffered by the restrictions at all. The consumer is -going to end up with a product that has a little more life insurance than our last product had." - Treasury securities Monday, October 29. 1984 94141 75 Oct 1984 9 at Hot lfe4 14 38 fcuf 1S4 U 00 h !U 9 38 Dec 14 00 Dec 9 75 Jul 1V94 1VS4 IKS 8 00 ftb lvi5 a 943 Feb IMS a 14 63 Fe-o 1S 8 9 53 rYr iws a UX Mo tv 9.50 Ah IH15 a 375 Wjr I9S5 4 75 rV-ar 197S-8S 9 88 Mar ms a 10 38 Mar 195 a 14 13 Mar 1985 a 14. M Mar 1935 a 14 00 Jua 1985 a 1C 00 Jua Ivns a 10 63 Jul 1V-S a 25 Aua Ins a 9 63 Aue 191:5 a 10 63 Aua lVfcS a lj U Au teas Up 15 88 Sea ID 50 CXI v n Nor ia5 a 10 50 Nor I9S5 a 1175 Nor Kiss a ion Dec imi 14 13 Dec 1995 a 10 63 Jaa Wit a 10 38 Feb 19 a 13 50 Feb 1996 a m Feb 19m a 14 00 Mar 1986 a 11.50 Mar 19&6 a 1175 Apr 1986 a Id Mar 1996 9 a Mar 1996 a 12 63 Mar 1984 a 1375 Mar 1966 a 13 00 Jun 1996 14 81 Jun 1986 a 12.63 Jul 1986 t t.OO Aua 1986 a 11.38 Aut 1986 a I9s$ a is a OSS a IVS5 AUeal etna VW 106 luo 4 .1 C 00 99 31 10. J 10C1 l .... I. 8 ISC 12 .1 99 301 2 ..... lot 21 I X 25 99 26 99 30 .... 99 13 9t 19 .1 99 27 99.31 .... 101 10101.14 99 24 99 28 .1 101 10191.14 .1 fic M ae i i 9t 14 97 144- I7 I )k 9t 19 97 19 J 1 90 99 23 27 .1 10 16 IW,. J m .1 9 95 101 31 102 J 10 06 102 2 102 8 - 1 10 12 lUi 5 10 9 .1 99 21 9 24 .1 100 2 100 6 J ys 14 ye is 99 11 09 lt 9 99 30 100 2 .J 10 54 101 28102.3 3 10 43 100.6 100.10 A 10 51 104 19104.23-.1 10 35 VV 28 100 J 99 3 99 7 .1 99 n 99 36 4 101.1 101.5 J 1 00. 1 100.5 A 103 13103.17 .4 99 22 99 26 J 99 77 100.31 A 10; 79 1(11 9 96 20 98.24- A 10 94 103 26104.30- 10 92 100 18 100 22 .1 10.96 100 26 100.30- J 1074 95 19 95 23 J 10 97 97 16 97 20- J) 11.09 101.29 102.1 - A 11.19 103 17103 21- A 11.10 102.16102 20 .1 11.23 105.10 105.14 .1 11.21 101.30 102.2 - J 11.30 95.4 3 11.07 . 100.0 100.10-1 .1 u.n' fx 6 27 8 31 8 72 181 9 79 9 28 9)7 926 986 966 9 16 W In 10 36 10. 18 10 34 10 50 10 56 10 69 10 55 10 73 10.83 1079 10 90 10.95 i; ia Aua i a s 1 09) S Ira 12 25 59 ! a 11 S3 Oct I96 a 6 13 No 194 11 fci&r tvi 13 81 fcor Iva4 a 16 13 09 19-4 a 10 30 Dec 196 a 9 30 Feb IW a 10 88 Feb 19(7 a 12 75 Feb 17 a 10 25 Mar 1987 a 11 30 Mar 1987 a 12 50 Mar 1987 a 14 30 Mar 1937 a 10 50 Jua 197 a 12 18 Au8 1987 a 1! 75 Aut 1987 a 1113 Sep 19S7 a 7.63 Tror 1987 a 12.63 Nor 1957 a 1125 Dec mil 12 Jan 1998 a 10 13 Feb 19-4 a 12 00 Mar 19:8 a 13 25 Apr I9r8 a t 25 Mar I9-U3 a 9 81 Mar 198 a 12 63 Jua lv-8 a 14 30 Jul 1998 a 10 50 Aua 1948 a 15 38 Ocl 1998 a 11 Jt Sea 1V.8 a ! 8 75 Nor 1998 a : 11 75 Nor 1998 a ' 14.63 Jan 1989 a 1138 Feb 1999 a 14 38 Apr 1989 a 9.25 May 1999 a 1175 Mar 1989 a 14 50 Jul 1999 a 13 88 Aut 1999 a 11.88 Ocl 1989 a 10 75 Nor 1999 a 12.75 Nor 1989 a 10.50 Jan 1990 a ' 3 50 Feb 1990 in .SO Apr 1990 a 8,25 Mar 1990 Ul .4 105-5 4 99.5 -J- .1 91 16 . 12 20 J M Aaaf CM 161 If 29 .1 IX 28 IX 30 .... 15' 19 iffl 22 3 10C '1 0C 2t- .J 91 0 92 .J 99 19 99 2J .1 104 18 1G4 22 .1 ICat 19 !38 2 .1 97 19 9.' 23 4 9i 8 9i 12 .1 96 JI 99 3 J 102 17102 21 .1 97.14 97.18 .1 ioi.il let 15 .i 102.4 1028 1057 105 11 J 97.22 97 5 4 101.30 102 .1 10S.I 105-5 99. 1 91 102 It 102 20 99 3 99 101 31 lff 99 10 Su. 9 X I 100 30 101-2 A 104 12104 20 A 90 18 90 26 A 94 21 95 4 .J 105 18 105 20 J 106 20106 28 J 96.14 96.20 J) lit 111.14 99.5 99 7 A 91 911- J 1004 1001 J 1094 1012 .2 98 .24 99 J 108 22 108 .; 91.23 91.31 3 99 27 99 31 A 109.8 109.14 .4 1074 107.8 3 100 12 100 20 .1 96.7 96.15 J 103 16 103 18 A 94 27 95.3 .1 887 (9 7 .1 94.19 94.27 J 86 21 17.5 .t l0 a 9t a i-'-o a l9a 191 a I99i a 1991 a li a 1991 a 1991 1991 a 1991 a 1992 9(;-9J 1992 1972 a 1999 93 Wi 193 1991 a 1993 a 19HS91 1993 1993 a Y" I BneMK Dale I! J7 II S JUi II 32 10 75 Aut 11 2S 11 SO 0:1 II 27 13 JO Nor 10 40 II '5 Jan 11 16 12 Apr II 24 14 SO Mar 11 23 li 75 J 11 21 14 98 Aut 11.35 12 25 Ocl 11.33 14 25 Nor 11.40 14 63 Feb 11.43 13 75 Mar 1132: 4 25 Aut 1145 2 25 Aut 11 1? 10 50 Nor 11.47' 4 30 Feb 11.52 8 75 Feb 11.54) 7 81 Feb 1147 10 88 Feb 10 99 10 13 Mar 11 5aV 7 SO Aut 11 SS 163 Aut 11-581 11 at A. 11.63 163 Nsr 1941 11.61 11 75 Nor 1993 a U S' 9 00 Feb 1994 1148 4 11 Ur 198994 11.59 13 11 Mar 1994 1170 8 75 Aut 1994 11 66 12 63 Aug 1994 1160 1013 Nor 1994 11 68 3 30 Feb 1995 1163 10 SO Feb 1995 11 52 10 II Mar 1995 11 67 1 2 63 Mar 1995 11. 7 II. SO Nor 1995 11 61 7 00 Mat 1993 91 11.74 3 50 Nor 198 11-57 ISO Mar 1994-99 1176 2 81 Feb 1995 00 83 1 38 Aut 199S-00 I 85 11.75 Feb 2WI 1171 1313 Mar 2001 117! 1(70 Aut 196-01 11.79 13 31 Aut 2001 II 79 15 75 Nor 2U01 5 901 4.3j eeo 2002 11 l 11 63 Nor 2002 11-44. 10.7S Feb 2003 K Asm Crajt 95 14 ti 22 J 9i 14 , K S 98 14 9e 24 A 10j ll 104 .1 9. I 94 14 4 it: i it.-i .1 111 15111 J1 ,J 107 29 , 58 1 4 1126 I i 14 A lr: si if.i r.j. r 10 16119 24 A I'i 24H3 ,J 10 22 1W 30 J ti 12 89.12 4 711.(7 79 I i K 24 93 4 17 2a 88 71 4 7S 14 7! K 4 79.14 79 30 4 94 It 94 24 A 90 14 90 23 .1 77 11 77 27 4 82.14 12 22 A 99 11 99 17 .1 t2 9 82 17 4 98 24 98 30 J 83 29 84 5 .1 88 I 89 I 4 106 10 1 06 14 i 82 6 82 14 4 10 3 27 1 03 31 .1 90 10 90 18 A 88 1 89 2 Ji 92.4 92 12 .4 91.7 91 15 A 104 14 104 22 .1 98 8 98 16 t 69 11 69 27 . 17.30 88 30 .4 77.8 77 22- .2D 72 2 72 10 .... 7) 8 75 16 98 22 98 10 108 25109 I 72 16 73 110 10110 II 121 126 8 11. f( II. 19 1 US Ht'eMar Dae 1"! 1 2 3 18 75 11 13 11 88 12 Jt 13 :5 II 63 H AS1 91 I 9' "4 U 1 9. 9 99 25 I . Aut A. ft It 9 11 11 91 It 9 11.91 5 99 II 'Si 11 69 5.: II 29 11 72) 11 Svl 11 91 11 56 11 9S1 11.96) 11 83 II 9J it n 0 it 8? II 93 II 75 4 33 I 25 iVjr 7 63 t-ee 7 98 Nor I 38 4 47 I 75 9 I 9 13 6 r 10 31 Nor II 75 Feb 1C 00 Mar 12 7S h 13 81 iVar 14 j0 h 10 38 Nor 12 A ut 13 23 Mar 12 SO Aua N6n U ,4 I u A 99 3 K 7 . . 7! it r: ? ; ti it a-1. 49 9 1: 67 ..111 1! 75 117l II 4 J 2 0 f. o Q 1 ii 8 1 II 2-. e 11 i 7 11 1 III t. 9-14 111 16 .' 2009-149 10- 11 S. ci ien cse S 25 5 ... ii no -.1182 30 75 17 7- 10 at 8 9 l 99t 9 7 6:. 4 I- '3 106 Ti 16! 31 1!5 25 IH 1 116 28117 4 88 12 88-20 it 11 77 101.7 It', lit - " t 1181 1 1 - 11.84-" I 1 3 it 79 1 8 1 1 'I 'i tb- ttotain9 Itret. a Treasury -;rcav- wry note and no U.S. urn tam, lit vilMwidint Uxet. -BIHt W At VaJ Dor M Ask VK 21 942 9 18 9 7 . 11 i 11 61 11.84 II 75 II 43 4.51 11.73 11 83 11.84 II 90 II 87 11.71 II 91 11 85 II 84 11 88 11.90 I- I II- I II 15 II 23 9 35 917 9 41 I 79 I 71 IS5 I IS I 77 I 92 9 04 8 98 9 1 11 29 8 9) 1 87 9 0 12. I 98 I 90 9 1 0 ay in tii I 97 I 99 9 11 1.97 1.89 9.14 12 II 12 20 12 27 1965- I- 3 I 10 1-17 1-24 1 11 ?. 7 2-14 9 42 9 14 9 77 44 I Jt 9 II t 44 I 31 9 13 1 45 9 31 9 98 t 47 9 41 9 92 rSJ 9.47 18 01 55 9 49 10 35 2 28 3- 7 1-14 121 3 21 4 4 4.11 4- 18 r TO y.S 'U 19 425 9 55 9-5 n0 II 5- U 1 57 9 53 1 0 K 413 1S6.9S210.17 7-11 y rt y iu 9 02 19 124 9 15 9 09 1 18 I II 9.13 1.44 9 29 9 25 9 59 9 34 9 30 9 6 9 3 9 32 9 70 9.40 t 34 9.74 SutXrct lo tatMral taiet bat ran tt tlatt Income la set. , J 9 64 9 se c li : 9-8S 9.64 t '. 0 36 10. 9 64 9 60 10.44 10-11 144 9.60 I0.S1 Standard & Poor's yield averages COMMON STOCKS 400 Industrial! 20 transport 40 utilities 40 financial 500 composite Preferred stock AAA Industrlirt AA Industrials Uliimes Comaosiit I Industrials Ulilllies Composltt Industrlalt Ulililies Composite Government (taxable) Long term Intermediate term Short term ' Municipal Ittg This Last week week 3.99 121 192 5.01 4.54 11.57 11.58 BONDS 4.06 3.27 8 90 5.07 4.62 Last rear 3.97 2 64 1.62 5. 4 31 10.901 11.77 12.22 11.14 12.12 12 62 12 2 12 80 124J 1291 12 46 13.16 132 1371 13.04 1370 11 59 1209 11.70 12.27 11.13 1168 10.13 10.35 12.121 12.441 12.28 92 4.1 12.72 12.571 13.00 13.51 13.26 11.58 11.41 10.691 9.79 1 Exclusive Midwest stocks Final pricaa sales Ms High Low Last Clio. Bomark .40e 10 147 a 14'fl 147a FslMich .381 1 109 10V4 10'4 GrellBr .32 . 4 20 191 I9W- A PipeuaH .20a 1 I5'4 1 5 ' i 15'. rlrVlcke 31315-14 Vt Vt- Vtj - 10 moat actlva ReyMdlnd 504,800 Ms- H Soulnern Co 269,900 17!a 'M Elhyl 235,300 29H2' PopeTtlbt .1 202,400 16. Teiaco Inc 153.100 14rt Noeasl Ulll 152,700 I3S 98 Momeiltlte 107,900 25' i Burlral Ind 104,800 2". 9t Sen Food 101,900 55' MoMI 100,700 1099 'I London stocks I London Financial Times! Net . , , Close chge. Industriths 878.2 5.0 Public authority bonds Issue, rate, maturlir Bl SI Dev A9C9 4! -'91 Chao Cal Strwy 319 -'95 lliatj Do, 4t .-9) lllall Ches. Bar Bfdg 8 Ton 54-'00 Choo Ret Ports 4-'95 III. State Toll Hwr 34 -IS Do, 41 '98 Do, 66 -'10 tnd. Toll Rd. 31 --94 Kansas Tpke 119-l-'94 Kentucky Tpke 475-'04 LlvomaAAIch.lDR -4,'97 Ifltt) Mackinac Bridge 5'i-'94 , Oklahoma Tpke 4.70-'O6 W Va St Tptt 3H 13 rat Do, 49b -12 t'89 Source: William Blair t, Co. rlilon, Chkago. BIO 75 45! 51 68'i 58 90 57'7 76 97 60 7 35 97 - 65'1 79 82 Ask 79 49 "1 S 61 92 01 v 79 101 65 101 tl'i 87 17 Bond averages 20 10 10 1 " rails Ind. bills. iter enra. T u.l - v.i Monday 58.1 80.6 1984 high 58.7 81.9 1984 low 5J7 77.7 10 ton. 0.3 unch. 97 993 949 Government finances' IO00.O00 omllledl Ocl. 25, 1904 11,600.064 12,341 ' 153,638 174,200 175.342 Tolal public deM Interest on public debt Sea. interest rise! year thru Sea. Prolected deficit llscal '14 Actual budoet dettcll '84 Receipts tiscal rear thro Sep. Receipts same period year ago - - 000, 562-Outlays fiscal rear thru Sep. - 841,830 Outlays same period year ago - r95.9l Gold assets thru July ' .11,099 The toremment't flKal rear runt Oct. I through Sept. 30. 668,457 Silver and gold, SILVER-Chicaoo-MrdAmerlce l,m tror ounces Noyember, S7.1 per troy ounce: December, $7,205; January, '85, $7.36; February, $7.37; April, $7.55; December, $8.03; nerloul rolume, 45 contract. GOLD Chlcaoo-MldAmerlct 13.! Iroy' ounces December, $337.60 per tror ounce; April. '85. $349,001 orevloui trolume. 147 cnn .tracti. EDIG Continued from 1st Business page House. . Lugar said the Reagan adminis-. tration's top concern , will beuecor-notnic growth on the assumption that that would lead to a reduction in the federal deficit. ' Lugar ruled out higher taxes next year, but said the door is open to tax restructuring and reform. "There's a need for tax simplification," he said. "Probably one or-another flat-tax proposal will be considered." Paul W. Prior, league chairman, repeated his call for action by Con- ress and the administration to re-uce the deficit and hence interest rates. "We dare not sacrifice economic growth, no matter how encouraging we find the recent decline in interest rates, a decline that was in-, Bpired by slower economic growth,"' said Prior, chairman and president of Henry County Savings & Loan Association of New Castle, Ind. SEPARATELY, a panel of economists predicted a slower rate of growth of the nation's economy coupled with declining unemployment but rising interest rates during the next two years. Lacy H. Hunt, executive vice" president and chief economist for CM&M Asset Management Co. Inc. of Philadelphia, said the nation's" gross national product would grow at a 4.7 percent annual rate in the fourth quarter. The GNP, however, will taper off to 3.1 percent by the end of next year and to 1.6 percent in the third quarter of 1986, Lacy said. Unemployment will drop from 7.4 percent in the third quarter to a low of 6.2 percent by the second quarter of 1986, Hunt said. However, the prime lending rate will rise from today's 12.2 percent to a peak of 13.64 percent in the second period of 1986, he said. Rates on 30-year, fixed-rate mort-, gages will go fr$m 13.93 percent ' today to 15.6 perudnt this time next year and to 16.2 percent in the third quarter of 1986. n r n " n Fn, O fr?rrrf?rrrf?l r7Tn,t, r?rr?. nr ffr A I I - - J I j! I"1 . . A6SC . 09 .- i I - i : 4M995 W. : I I j L i f L J On September 20, the Centrex System from Illinois Bell was.repriced, restructured .and renamed. Simply put, this me-ans that now, with Custom Centrex, it's even easier to get exactly what you need in a business communications system. Not only .are you .allowed greater freedom in assembling your own feature package, your com-p-any may be one of the many that'll benefit from new reduced rates. In addition, Illinois Bell is now offering 3, 5 and 7 ye.ar fixed-rate contracts. The longer your contract, the lower your cost. It's that simple. r x Of course, these .aren't the only advantages that Custom Centex offers. It's still the only advanced electronic system that's centrd-office based. So you don't have to pay for lots of equipment. Or hire extra operators. Or face increases in utility bills and insur-.ance premiums. What's more, our offices are equipped with emergency power, so you can depend on your system's continuing operation. With Custom Centrex, you don't have to worry about outgrowing your system, either. It offers both unlimited lines .and over 50 special features. So your service can grow as your needs grow, regardless of your size. For more information, call Illinois Bell. Once you know the facts, the choice is simple. Suburban businesses call: 1 800 533-0100 Cbrnmunication Wthout Complication. AN JemEuMiZxii COMPANY C-Illinois Bed. 1984 .1 ' l m A;et9hAJ49k.ja6.4T. 43V49" 9.jVJ . 4l k V -.- - 9V fru-V 4..a4K.

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