Definitions: Whole Life Insurance Vs Permanent Life Insurance

[retread]

Re: Definitions: Whole Life Insurance Vs Permanent Life Insuranc

... Additionally, most WL is now designed not to mature or endow yet to solve that tax problem. It still works exactly the same as before, except the company holds onto the money at age 121 until death. Now, I don't know if the cash value continues to build and dividends continue to be paid at that point, but I would assume so.

Are you sure about the carrier holding the money after endowment until death?

With policies that endowed at 100, I was told that at endowment, the FV was paid to the policyholder and he/she no longer had insurance.

It appears this is not realistic now that endowment age has been raised to 121. Still, if someone were to survive to 121, I don't think the carrier has a choice but to payout the FV.

I am not a CLU... I would appreciate some CLU to add to the discussion.

 

[Ami]

Re: Definitions: Whole Life Insurance Vs Permanent Life Insuranc

Originally Posted by scagnt83
Ok. So it said Cash Value, instead of Permanent... any *** can fill in the blanks. Any form of Permanent Insurance is Cash Value Life Insurance, and vice versa.

Correct.

Originally Posted by scagnt83
Technically, he's correct. Both WL and UL can have CSV. GUL will not have CSV.

Correct.

Originally Posted by scagnt83 More specifically, a chart of the growth of the cash inside of a GUL will look like a bell curve. There is some during the middle parts of the policy, but the expenses take over and erode whatever cash is inside the policy. With WL the CSV goes in a straight line up.

The policy contract wording for the GUL determines whether (any) temporary CV that may show at any point(s) on the curve would be available as a draw or loan to the policyholder. Note, however that the wording should be read VERY carefully - and fully understood - to avoid the real risk of loss of the "coverage continuation guarantee" in the GUL.

Re: "With WL the CSV goes in a straight line up" I disagree. The CSV line in WL is not a straight line up but a concave curve, increasing in steepness over the years.

Originally Posted by scagnt83 However, my point was to clarify your definitions. Universal Life insurance is NOT Whole Life insurance. The chassis are different, they work differently, and have different functions.

Correct. I would add that GUL is built on the UL "chassis", with the G - rider (essentially "investment performance insurance rider" or "premium insurance rider" added to insure the insurance. IMO, GUL is a poor and incomplete imitation of the Canadian T100 structure. Regardless, however, GUL is not WL. There are substantial and very significant differences between the two designs and behaviors - way more than sufficient to recognize these as being two entirely different contract types.

 

[Death Cab For Tootie]

Re: Definitions: Whole Life Insurance Vs Permanent Life Insuranc

Well put, Ami. And you're right - the CSV growth curve on a WL policy is a concave one. It signifies explosive growth later on in the policy. Thank you for the correction.

 

[briko3]

Re: Definitions: Whole Life Insurance Vs Permanent Life Insuranc

If you underfund WL, it goes away too. In my opinion, UL is considered permanent insurance. It can be set up not to be, but you can also overfund UL so it can "make up" for earlier years and "stick around".

 

[nycagent]

Re: Definitions: Whole Life Insurance Vs Permanent Life Insuranc

If you underfund WL, it goes away too.

In a WL contract, if you pay the premiums the cash value is guaranteed to equal to death benefit at endowment (now 120). There is no 'underfunding' unless you take out loans or stop making premium payments. No matter what happens to expenses, investment returns, or mortality, as long as you make your premium payments the policy will 'go away' and the cash value at endowment will equal the death benefit.
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the policy will NOT 'go away' - sorry

 

[scagnt83]

Re: Definitions: Whole Life Insurance Vs Permanent Life Insuranc

This one got me laughing.

Death Cab do you want to handle this or do I have to continue being the bad cop?
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The only thing funny is that a 20 year agent doesnt know this stuff...


Permanent Life Insurance and Cash Value Life Insurance are synonymous terms. They are used interchangeably all the time in this industry. Not just with agents, but I have seen companies use these terms as well as CE classes.

Thats presentation your trying to pick apart, is from national underwriters. They provide many CE classes, and technical info for this industry, and are probably one of the most respected info providers of their kind in the industry.

They refer to WL and UL policies that are "permanent" and that build a "cash value" within them; hence the terms.

Again. It doesnt take an genius to understand this...
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And is xrac or Death Cab going to straighten scagnt83 out?

Yes please straighten me out on a product that I have already sold over $80K in premiums in already this year..... please do...

 

[Ami]

Re: Definitions: Whole Life Insurance Vs Permanent Life Insuranc

If you underfund WL, it goes away too.

Hmmm... pls elaborate.

In my opinion, UL is considered permanent insurance. It can be set up not to be, but you can also overfund UL so it can "make up" for earlier years and "stick around".

As it concerns permanency of insurance, UL with a YRT as its underlying "insurance" component is in a practical sense just as "permanent" as Yearly Renewable Term" (YRT)... same clunker but with saw-dust in the transmission to conceal the squeaks.

 

[scagnt83]

Re: Definitions: Whole Life Insurance Vs Permanent Life Insuranc

I would also agree that traditional Universal Life is NOT permanent life insurance in that you can tailor it to lapse before you die. Underfund it and it is toast.

And you can have a no lapse guarantee that is much less than the lifetime of the individual. For example, Genworth has rolled out Term UL, which is a UL product with term like guarantees for 10, 15, 20 or 30 years - definately not permanent insurance. West Coast offers all kinds of no lapse UL scenarios for ages that end well before a person's lifetime. None of that is permanent insurance.

On the other hand, I would argue that no lapse UL with a guaranteed face/premium to age 121 is permanent insurance simply because you can't outlive the coverage.

Robert,
You are not understanding that there is a difference in the way others are using the term "Permanent Insurance" and the way you are using "permanent insurance".
We are having the same problem with the term "whole life insurance".

Technically both of us are correct; but you are not correct in the context of being a professional in this industry.


In the LI industry "Permanent Insurance" is used to describe Life Insurance Policies that last for a persons entire life, and that build some type of a cash value.

I would agree, that a UL designed for only 20 years is not permanent, in the sense that it doesnt permanently stay in force.
But it is still considered a "Permanent Life Insurance Policy" because the product itself could be permanent if funded to be.

Your reference of "whole life" is speaking of the fact that a policy stays with someone for their whole life, but its a misleading statement because their is a totally separate product thats called "Whole Life Insurance". Its different than UL in many ways.
The term "Permanent Insurance" is used to avoid this confusion.

Whole Life is the name of a type of product. Not a term describing what a product does.
You are using it as a term to describe what all permanent policies do. But it will cause confusion in the conversation because their is a separate product called WL.

 

[briko3]

Re: Definitions: Whole Life Insurance Vs Permanent Life Insuranc

If you don't pay the required premiums to keep a policy going, it goes away. Same with Whole Life as it is with UL. The point brought up earlier in the thread was that WL was somehow more permanent because you could underfund a UL which to me means you aren't paying in the amount you need to carry it to your death. The cheapest permanent insurance is a GUL.

In a WL contract, if you pay the premiums the cash value is guaranteed to equal to death benefit at endowment (now 120). There is no 'underfunding' unless you take out loans or stop making premium payments. No matter what happens to expenses, investment returns, or mortality, as long as you make your premium payments the policy will 'go away' and the cash value at endowment will equal the death benefit.
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the policy will NOT 'go away' - sorry

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All "permanent" insurance has term as a base. GUL is permanent and I'm not quite sure what "hidden" problems you see with it. Please elaborate on that.

Hmmm... pls elaborate.



As it concerns permanency of insurance, UL with a YRT as its underlying "insurance" component is in a practical sense just as "permanent" as Yearly Renewable Term" (YRT)... same clunker but with saw-dust in the transmission to conceal the squeaks.

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Although I agree with your "cash value" point from a technical standpoint, I think you'd agree that you would never present a GUL policy as a "cash value" policy. (Unless you were talking about a GUL plus policy) It's just not set up to accumulate cash value.

The only thing funny is that a 20 year agent doesnt know this stuff...


Permanent Life Insurance and Cash Value Life Insurance are synonymous terms. They are used interchangeably all the time in this industry. Not just with agents, but I have seen companies use these terms as well as CE classes.

Thats presentation your trying to pick apart, is from national underwriters. They provide many CE classes, and technical info for this industry, and are probably one of the most respected info providers of their kind in the industry.

They refer to WL and UL policies that are "permanent" and that build a "cash value" within them; hence the terms.

Again. It doesnt take an genius to understand this...
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Yes please straighten me out on a product that I have already sold over $80K in premiums in already this year..... please do...

 

[Dave020]

Re: Definitions: Whole Life Insurance Vs Permanent Life Insuranc

Whole life generally has an APL (Automatic Premium Loan) provision on it. Premium loans against CSV to keep the policy in force. Or you could (if applicable) apply the dividends to pay the premium (or some part of it and use APL for the remainder). Or take a paid-up reduced policy.

Lots of moving parts to whole life.