Why Do Gul Illustrations Only Show the Guaranteed Values?

[scagnt83]

Since there's no disclosure of what the coi or rates are. If a client missed a payment a yr which theoretically takes most Guls from age 121 to age 90 then the company can do what the want and have it run out much quicker as they can adjust the coi.

The COI is fixed. Guaranteed means that is guaranteed no matter what. Think of most GULs as a normal UL without the current assumption rates and expenses, only the guaranteed ones. That is a very basic and incomplete way of putting it. But just read the illustration, not just the numbers but the front part that has the explanation of the policy. Some GULs do have current rates/ expenses, but some just have guaranteed ones. Either way, every GUL illustration will say what the Guaranteed Premium is to make the policy last to age 100 assuming the guaranteed expenses and interest rate. Usually the illustration system will have a Guaranteed Premium option on it.

Also, if the GUL does have both a Current Rate and a Guaranteed Rate, the only difference between the two will be what little CV accumulates for a small amount of time under the Current Rate. The Guaranteed Rate will simply be a Term-100 policy with no CV (generally speaking).

 

[Robert Barney]

They both owned and operated one of the oldest bookkeeping and tax offices in the city. While he was a quadriplegic Xs 40 years he worked every day. Smart guy. As their agent I showed them their opinions. They made their decision. I did show full pay. Their need ends/ended upon his death. They did not expect him to live anywhere near her 90th birthday. They were correct. She called me the day he died and cancelled the policy.

I was just answering your question on why someone would buy a to age 90 policy. At the end of the day I sell to adults. Most are capable of making their own decisions. Whether or not if I agree with them.

I'm not disagreeing with you, they are adults and they get to make up their own minds. It's just that as a consumer, who no one here thinks is an insurance expert, I can't imagine why anyone, given the options, would opt for a temporary product when a permanent product is just a few more bucks.

While I generally do not advocate that the majority of consumers buy permanent products, I personally own about $350,000 of permanent. But then I think I have planned reasonably well for retirement, can continue to pay the premiums until I die, and that it will not seriously diminish my lifestyle in retirement.

My last term policy (the last one I own) will be gone when I am 65. I have no intention of buying another. If forced to retire at 65, I think I can manage. If I die after age 65, then I think my wife can live on what I have planned that the 2 of us can live on. Also note that I intend to work until I am dead. My worst concern is an elderly disability, which is what I rely upon retirement savings to assist with and will continue to pile up money to deal with, should it happen.

Those who buy term should plan to not buy it at some point. "to age 90" is term, and I just can't imagine someone saying they NEED the insurance at age 89, but the NEED for insurance will be gone at age 91.

 

[scagnt83]

I'm not disagreeing with you, they are adults and they get to make up their own minds. It's just that as a consumer, who no one here thinks is an insurance expert, I can't imagine why anyone, given the options, would opt for a temporary product when a permanent product is just a few more bucks.

While I generally do not advocate that the majority of consumers buy permanent products, I personally own about $350,000 of permanent. But then I think I have planned reasonably well for retirement, can continue to pay the premiums until I die, and that it will not seriously diminish my lifestyle in retirement.

My last term policy (the last one I own) will be gone when I am 65. I have no intention of buying another. If forced to retire at 65, I think I can manage. If I die after age 65, then I think my wife can live on what I have planned that the 2 of us can live on. Also note that I intend to work until I am dead. My worst concern is an elderly disability, which is what I rely upon retirement savings to assist with and will continue to pile up money to deal with, should it happen.

Those who buy term should plan to not buy it at some point. "to age 90" is term, and I just can't imagine someone saying they NEED the insurance at age 89, but the NEED for insurance will be gone at age 91.

Generally speaking I always go with more coverage vs. less. But, there are situations when a consumer genuinely no longer needs THAT POLICY after a certain age.

Every situation is different, but I actually have a client right now that only needs a Term policy until age 90. He has two permanent policies that are increasing each year and will be more than enough coverage by age 90, even by conservative estimates. But prior to age 90, his wife would have an income gap without an insurance benefit.

The solution is a 10pay GUL guaranteed to age 90. If he needs coverage past 90 he can pay extra on down the road and extend coverage as needed. But if the WL does as expected then he will have saved a good bit of money.

There are other scenarios, this one had to do with Pension Max. There might be a new source of income around age 90 which would decrease the need (assuming there were other policies).

 

[Robert Barney]

Generally speaking I always go with more coverage vs. less. But, there are situations when a consumer genuinely no longer needs THAT POLICY after a certain age.

Every situation is different, but I actually have a client right now that only needs a Term policy until age 90. He has two permanent policies that are increasing each year and will be more than enough coverage by age 90, even by conservative estimates. But prior to age 90, his wife would have an income gap without an insurance benefit.

The solution is a 10pay GUL guaranteed to age 90. If he needs coverage past 90 he can pay extra on down the road and extend coverage as needed. But if the WL does as expected then he will have saved a good bit of money.

There are other scenarios, this one had to do with Pension Max. There might be a new source of income around age 90 which would decrease the need (assuming there were other policies).

How much is the premium on the 10 pay to age 90, versus the premium for the 10 pay to age 121?

 

[HoosierLife]

I know I ran an illustration for a Foresters Smart UL a few weeks back. Had the guy mess with the numbers to base it off of the guaranteed interest rate. The projections had him paying up (for all intents and purposes) after 18 years. Their Smart UL has a feature that if they live to 100 it's also essentially paid up until 121. ---------- But Foresters still said they couldn't guarantee it 100% because of COI. What determines the COI?

Dang it Barney! Everybody wants to trash you so much that they missed my question

 

[scagnt83]

How much is the premium on the 10 pay to age 90, versus the premium for the 10 pay to age 121?

It was around a $13k cumulative difference over the 10 years. Not huge, but for a 52 year old who is still saving for retirement plus looking to purchase a LTCI policy, that $1,300 per year has much better uses right now from a cash flow standpoint. If he needs coverage past age 90 he will have more than sufficient cash flow from age 80-90 to extend it.

So long story short, that $13k is better used to purchase LTCI.

 

[WinoBlues]

I know I ran an illustration for a Foresters Smart UL a few weeks back. Had the guy mess with the numbers to base it off of the guaranteed interest rate. The projections had him paying up (for all intents and purposes) after 18 years.

Their Smart UL has a feature that if they live to 100 it's also essentially paid up until 121.

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But Foresters still said they couldn't guarantee it 100% because of COI.

What determines the COI?

The company make a decision on the Cost of Insurance up to the guaranteed max. It can be raised. And has been with a number of companies. So lowering interest rates are just one pitfall to watch out for. I do not believe the Smart UL is a GUL.

 

[rousemark]

Dang it Barney! Everybody wants to trash you so much that they missed my question

The company arbitrarily determines the COI..

 

[WinoBlues]

Dang it Barney! Everybody wants to trash you so much that they missed my question

I do not think anyone was trashing him.

 

[scagnt83]

I know I ran an illustration for a Foresters Smart UL a few weeks back. Had the guy mess with the numbers to base it off of the guaranteed interest rate. The projections had him paying up (for all intents and purposes) after 18 years.

Their Smart UL has a feature that if they live to 100 it's also essentially paid up until 121.

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But Foresters still said they couldn't guarantee it 100% because of COI.

What determines the COI?

If they cant guarantee it 100% then it is not a GUL, it is a current assumption UL.

Most UL (GUL/UL/IUL) policies and many WL policies (par WL) endow at at 100 or are paid up at age 100, and coverage extends to age 121. That is very common. There are a few exceptions such as paid up at 65, 10 pay, 20 pay, paid up at 95, etc, but most "basic" par WL products work that way.


Foresters decides what the COI is. There is a "Current" that the policy starts out getting. Then there is a "Guaranteed" that is the maximum that they can charge for COI. It is up to them and how that block of biz is performing and how the company is performing as to what they do. Usually it is not played with on a yearly basis or anything, it is long term type moves. Usually wont happen until 5-10 years into the policy at least.

That is why it is very important to use a quality carrier for traditional UL. Some carriers have much better renewal histories when it comes to rates and expenses than other carriers.


But GUL is set in stone that it is Guaranteed no matter what if they just pay the premium. Different than the product you are looking at.