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Even as those lucky enough to qualify for the newer policy enjoy prospectively lower mortality charges, the group remaining in Opus will likely incur higher costs. The smaller, less healthy group will likely experience earlier deaths, driving up the claims experience of Carrier A and forcing it to raise its mortality charges even more. By drawing out the best risks from the pool of Opus UL policyholders, a less healthy group remains. The transition from Opus to Magnum Opus is another example of adverse selection. Earlier in this guide, readers saw an example of adverse selection in the discussion of why homeowners insurance doesn't work at older ages - only people about to die would continue to pay term's huge renewal premiums and insurance companies would go bankrupt if their policyholders had that kind of economic control. However, we've just described the initial stages of adverse selection. Many do, and almost everyone's happy. In all likelihood, agents are going to encourage the eligible Opus policyholders to make the switch to Magnum Opus. Carrier A stops selling Opus (technically "closing the block" of policies it has sold) and begins touting Magnum Opus in many of the same ways it introduced its predecessor. And indeed, based on new data and in anticipation of longer life expectancies, Magnum Opus UL is born. At some point, Carrier A is going to have to go back to the drawing boards.

Yet after a period of selling Opus UL to more than its share of new policyholders, other insurers in the same market space are going to catch up, improving their illustrated numbers accordingly. Trade press suggests that Carrier A's newest UL is a clear winner in the marketplace. Of course Opus UL is a success! An insurer is generally going to want those numbers to look as attractive as possible compared to their peers in the marketplace, and Carrier A's actuaries and marketing specialists look closely at their own data and experience - and that of the competition - and bring forth their finest creation to date: Opus UL out-illustrates every Universal Life policy currently being sold. And of course competitiveness is going to be measured by the numbers shown on the policy illustration. When it addresses the development and marketing of a new policy, Carrier A is viewing the policy from the standpoint of its competitiveness and potential contribution to the bottom line.