Advisor Calls Out ‘Critical Flaws’ in Universal Life Policies

[Lloyds of Lubbock]

most often, of the way it was designed (by the agent), the way it was sold, the way it was funded, and the way it was serviced and managed (actually, the way it wasn't, LOL).
BINGO!

 

[DHK]

Let's not forget that illustration standards weren't codified until 1997. I blame the companies until that point.

 

[wxwatcher]

I replace 5-7 UL policies every single week due to a lack of funding. Agents have got to start selling UL policies properly and fully explaining - in layman’s terms - how they work to their customers.

 

[rousemark]

I replace 5-7 UL policies every single week due to a lack of funding. Agents have got to start selling UL policies properly and fully explaining - in layman’s terms - how they work to their customers.

Why just have policyowners increase the funding?

 

[rousemark]

Falling short of expectations and lapsing are two entirely different subjects.
While your policy may not offset or distribute as much income as illustrated, if you pay the premium the policy will not lapse.

Simple solutions... Sell Non Par. Will always meet projections.

 

[Allen Trent]

Apples and bowling balls. Clearly you see the difference.

not with how some agents position WL & how much will be distributed to the client in supplemental retirement checks, etc. Just look at how a client that bought a Ohio National Policy 5 years ago will look long term. Sure, it wont lapse if base premium paid, but many were projected to not pay premiums after a period of time & take out enormous amounts of cash. I agree with many points in the book, I am just saying that WL is not immune from falling short of projections & no one is buying those WL plans for the guaranteed minimum face & paying premiums. If they were, they would likely be buying a no lapse UL/IUL or a non participating WL that buys more face .

 

[Allen Trent]

Why just have policyowners increase the funding?

most policies cant overcome the years of too little premium & withdrawals/loans. Those policies are subject to the pre-2022 new premium guidelines, meaning most dont have enough room to fit the amount of premium needed to save the policies. This is partly because of the escalating ART cost of insurance, sometimes face reductions completed or needed (which restarts the 7 pay test), etc. Basically, past the point of being able to make them last long term & they have become ART term insurance that will only last X # of years. (very costly term insurance at that)

Shockingly, the primary carrier I work for allows UL clients to convert their UL policy to either a paid up participating WL or a premium paying WL policy without proving insurability. It was designed as an option for those clients that couldnt save their UL contracts & in many cases were no longer insurability. There are also tons of very good performing ULs on the books, especially those sold by the agent & serviced for excess funding. There are tons that have so much cash in them, that there is literally nothing more than a tiny corridor of insurance & almost 0 annual COI because they are filled to the brim with cash

 

[PrivClientSG]

not with how some agents position WL & how much will be distributed to the client in supplemental retirement checks, etc. Just look at how a client that bought a Ohio National Policy 5 years ago will look long term. Sure, it wont lapse if base premium paid, but many were projected to not pay premiums after a period of time & take out enormous amounts of cash. I agree with many points in the book, I am just saying that WL is not immune from falling short of projections & no one is buying those WL plans for the guaranteed minimum face & paying premiums. If they were, they would likely be buying a no lapse UL/IUL or a non participating WL that buys more face .

Apples -- WL not performing as illustrated vis a vis premium offset, projected cash value, etc.

Bowling Balls -- UL policies imploding.

Period.

 

[PrivClientSG]

not with how some agents position WL & how much will be distributed to the client in supplemental retirement checks, etc. Just look at how a client that bought a Ohio National Policy 5 years ago will look long term. Sure, it wont lapse if base premium paid, but many were projected to not pay premiums after a period of time & take out enormous amounts of cash. I agree with many points in the book, I am just saying that WL is not immune from falling short of projections & no one is buying those WL plans for the guaranteed minimum face & paying premiums. If they were, they would likely be buying a no lapse UL/IUL or a non participating WL that buys more face .

You're kidding, right?

WL is built upon a series of guarantees, including a guaranteed, increasing cash value.
UL -- even in a no lapse guarantee UL -- is not. Period.

WL shifts risk to the insurance company.
UL shifts risk to the insured.

WL has a guaranteed death benefit.
No lapse guarantee UL, has a guarantee for the death benefit, however, it is a conditional guarantee.
For guaranteed death benefit, you have far more "conditions" to meet with a no lapse guarantee UL than you do with a WL policy.

 

[tippingpoint]

I replace 5-7 UL policies every single week due to a lack of funding. Agents have got to start selling UL policies properly and fully explaining - in layman’s terms - how they work to their customers.

Who are the companies that will let you convert your UL to a different policy without an exam?