Never sell IULs to one of these two types of clients

[Life Hawk]

Ok Mr.Worldwide expert of everything, I see the same old, same old. Why don't you address the real issues of IUL that I have raised.
Let's say you put in a client of your's in a properly designed IUL and he needs to get out. (Let's say covid happened and he can't get a job for 2 or 3 years or the carrier reduced the cap rates ridiculously and he is mad and wants out or some other reason). How would you get him out when you have those surrender fees?

With properly designed whole life, he may still lose some money but atleast he can get out without losing everything. Whole life is not perfect transfer of risk either but better than IUL, if designed properly. I have seen Idiots design whole life just like IUL and that's a different story. A true transfer of risk is a term policy and investing the difference and now arse h*les here will assume that I am Dave Ramsey's follower. Ta Ta! Cheerio!

@phoenixlord, I did ask you a question. I think it helps to establish a place to begin conversation. Do you care answer?

 

[rousemark]

Ok Mr.Worldwide expert of everything, I see the same old, same old. Why don't you address the real issues of IUL that I have raised.
Let's say you put in a client of your's in a properly designed IUL and he needs to get out. (Let's say covid happened and he can't get a job for 2 or 3 years or the carrier reduced the cap rates ridiculously and he is mad and wants out or some other reason). How would you get him out when you have those surrender fees?

With properly designed whole life, he may still lose some money but atleast he can get out without losing everything. Whole life is not perfect transfer of risk either but better than IUL, if designed properly. I have seen Idiots design whole life just like IUL and that's a different story. A true transfer of risk is a term policy and investing the difference and now arse h*les here will assume that I am Dave Ramsey's follower. Ta Ta! Cheerio!

The WL has surrender fees.. The difference is they are hidden where in the UL they are revealed..

 

[phoenixlord]

Look the point I am making is surrender fee, ability to drop caps, increase expenses at will, the way the contract is worded, Index not returning a return every year all these make IULs much more riskier than whole life policies.Term is the least riskiest, inexpensive product. You pay a small fixed price and you get covered, can't go wrong. It's the best thing for the client but I would rather sell a permanent life as I make much more and insurance companies would rather sell a permanent insurance than term. We all know this and most agents agreed in one form or another in their posts. I think I came on as condescending type and you guys are taking the other side just for the sake of it. Wish I can stay and chat but I am not a teenager anymore and can't spend my valuable time like this. Not coming back this time. Cheerio!

 

[rousemark]

Look the point I am making is surrender fee, ability to drop caps, increase expenses at will, the way the contract is worded, Index not returning a return every year all these make IULs much more riskier than whole life policies.Term is the least riskiest, inexpensive product. You pay a small fixed price and you get covered, can't go wrong. It's the best thing for the client but I would rather sell a permanent life as I make much more and insurance companies would rather sell a permanent insurance than term. We all know this and most agents agreed in one form or another in their posts. I think I came on as condescending type and you guys are taking the other side just for the sake of it. Wish I can stay and chat but I am not a teenager anymore and can't spend my valuable time like this. Not coming back this time. Cheerio!

First, you should do the best for the client without regard to your commission.. Second, why do you make more on WL? May have been true in the old days but now many term products pay as much 1st ear as WL products.. So, if you sell the same premium amount, the difference is negligible...

 

[Life Hawk]

@phoenixlord, I did ask you a question. I think it helps to establish a place to begin conversation. Do you care (to) answer?

Hello...???

 

[Tahoe Ray]

First, you should do the best for the client without regard to your commission.. Second, why do you make more on WL? May have been true in the old days but now many term products pay as much 1st ear as WL products.. So, if you sell the same premium amount, the difference is negligible...

All good points.

WL or IUL designed for cash accumulation both have terrible comp vs. term. WL will have targets close to 50% (and if you're selling big mutuals, you're well under 100% comp in 1st year) and IUL is more like 30%.

Term premium is normally all commissionable (save the policy fee).

Solution: Sell larger term cases.

 

[rousemark]

All good points.

WL or IUL designed for cash accumulation both have terrible comp vs. term. WL will have targets close to 50% (and if you're selling big mutuals, you're well under 100% comp in 1st year) and IUL is more like 30%.

Term premium is normally all commissionable (save the policy fee).

Solution: Sell larger term cases.

My point exactly if you truly believe that term is best for the client's needs..

 

[DHK]

First, you should do the best for the client without regard to your commission.. Second, why do you make more on WL? May have been true in the old days but now many term products pay as much 1st ear as WL products.. So, if you sell the same premium amount, the difference is negligible...

Our triggered friend should read this article from Burt Meisel:

Why Didn't Burt Tell Us to Buy Whole Life? | ThinkAdvisor

First, his comments on UL:

I am sensing a current wave of sentiment toward more whole life sales. With the wild, downward ride of the stock market at the start of the 21st century and the accompanying difficulties in interest-sensitive policies, I find a comfort level among many prospects with straight life. I repeat, I have no problem with universal and variable policies, and I sell them. But they do require tending, and clients want to think of their insurance policies as solid and enduring and not questionable and tentative.

When these policies first came out, the interest rates were high, and when it came to running illustrations showing various premium options for the desired coverage, too many clients chose skinny funding. Too may of us allowed this to occur without some sage counseling and tougher selling. The low premiums had the same effect of other programs we had in the past, such as retired lives reserve or deposit term. Given these choices, too many clients chose under-funding with great hopes for the future.

Now his comments on whole life compensation:

The third call started the ones I really was expecting. I knew I would be hearing from the “termites.” This man said in a direct, abrasive tone, “You guys only sell whole life insurance because you make more money.” I’m sure most producers have heard that before. I asked him if making more money was a bad thing if the ultimate benefit was to the consumer. He blurted out, “Yes.” I told him I had read Professor Brown’s book, Harcourt Press, Toronto, $24.95 Canadian dollars. If making more money were bad, why did Professor Brown not have the book produced on the cheapest, lousiest, thinnest paper possible and on page one tell the reader to invest $21.95? In fact, Northern Tissue would have been a good choice. He hung up on me. I also had four of those on that day.

Now they were coming at me. The next guy said that the client always could do better investing himself rather than the insurance company and that I only sold whole life because I made more. I told him in the long run I make more on term. He said that was impossible. I explained that if we made the assumption that the commissions on a permanent policy were 50% and the commissions on a term policy were 50%, ultimately, I would make more on the term. That frustrated him. I gave this example: “Let us assume the client wants $100,000 of protection and the premium for whole life was $1,000 and the premium for term was $100. ” At this point he interrupted me, saying, “ $500 commission is more than $50 commission.” I agreed that his math was right but told him that was not the end of the story for this single policy. The premium for the term was $100 today but would change in the future one way or another, and that is costly for the client. If I wanted to stick to a term-only formula, I would change the policy from time to time when the rates might be better, as we saw in the term wars a few years ago. Then the replacement policy might be cheaper than the published rates in the old policy. If the client replaces, I get paid a new commission again at a new age. If it goes on a few times, I make more.

Another thing can happen. For health or economic reasons in the future, the client may want or need to convert the policy. Then the stupid insurance company pays me a new commission on the same contract, at a much higher amount. Therefore, in the long run, I make more on that kind of term arrangement. I told him I had been in the business a long time and intended to stay a lot longer, so if money were the only criterion, I would agree with him and sell only term. He hung up on me. I had four of those that day, too.

 

[fed up]

Phoenixlord, if you sold your client a term policy and he wants out he has lost everything including the coverage. If you sold him WL and he wants out he has paid significantly more premium and gets back very little unless the policy has been in place a long time and has lost coverage. Any UL allows for minimum premium which keeps coverage in times of hardship. Return of premium when quitting a policy is never an issue I focus on. Your client is not treating you fairly if he is upset over his decision to quit the policy

 

[WinoBlues]

I have been staying out of this one.

However, This guy sounds like a politician. Ignores questions, Sticks to his agenda regardless of new information, And replies with half statements.