IUL Questions

[unic.consulting]

I've never seen or heard of a WL policy lapsing for any reason other than the premiums being discontinued. This is even written into the contract as to what causes a policy to terminate. If there is any WL contract that says it can lapse for any reason other than the non payment of premiums, I'd like to see it.

An insurance company can "guess" all they want, but if it's not in the contract the company is SOL. Remember that policies are "contracts of adhesion" which means that once the client gets the policy the company is stuck with it.

Correct. I'm not saying that the WL will lapse, but if the company guesses bad enough they have the risk of going out of business. I was simply saying that the WL isn't exact, it's a good guess. There's less guessing from the insurance company end on UL, more on the client end. Even more so with VUL. So why would clients go with UL? Because of the benefits that they get.

 

[Jerard]

Correct. I'm not saying that the WL will lapse, but if the company guesses bad enough they have the risk of going out of business. I was simply saying that the WL isn't exact, it's a good guess. There's less guessing from the insurance company end on UL, more on the client end. Even more so with VUL. So why would clients go with UL? Because of the benefits that they get.

Unfortunately the biggest "benefit" most agents tell the client is that they can skip a premium now and then if they need to. Since most agents never come back after the sale there is noone to tell them that skipping payments is not a good idea. And how many clients even read their yearly statements and/or understand them? The client is never told that for each premium skipped that money is no longer there for future interests rates to be compounded on. Compounding is the key that makes the illustration look good in the first place.

This is why the "guarantee" of a GUL is voided if the client misses a payment or, sometimes, if he is even late.

 

[unic.consulting]

Unfortunately the biggest "benefit" most agents tell the client is that they can skip a premium now and then if they need to. Since most agents never come back after the sale there is noone to tell them that skipping payments is not a good idea. And how many clients even read their yearly statements and/or understand them? The client is never told that for each premium skipped that money is no longer there for future interests rates to be compounded on. Compounding is the key that makes the illustration look good in the first place.

This is why the "guarantee" of a GUL is voided if the client misses a payment or, sometimes, if he is even late.

Agents who aren't prepared to give their clients the time they need probably shouldn't be selling UL.

 

[VolAgent]

Agents who aren't prepared to give their clients the time they need probably shouldn't be selling UL.

Yes, because no client has ever refused an annual review

 

[DHK]

Sure. It happens.

Just document it in the file.

If the client refuses client reviews for a few years in a row, "fire" the client.

If FINRA registered reps have to "re-paper" account applications every 3 years... the LEAST that agents should have to do is do a review on a periodic basis.

 

[VolAgent]

Sure. It happens.

Just document it in the file.

If the client refuses client reviews for a few years in a row, "fire" the client.

If FINRA registered reps have to "re-paper" account applications every 3 years... the LEAST that agents should have to do is do a review on a periodic basis.

Pretty funny, because in all the years I've had accounts, never have I had to do that. Now, I do speak regularly when him and now her, but never have I redone paperwork.

More importantly, it takes two to tango. Every person with an imploding UL has received countless annual statements. Particularly since past bad sales practices have received more attention. Each and every statement includes contact information for the agent and the company. Many just ignore it and ignore the new agent who calls up to review it.

Yes, the new agent is hunting for a sale, but it is also a great time to find out more about your policy.

 

[DHK]

The standard might've been an internal firm policy at my old B/D in order to keep compliant with "know your customer" and suitability reviews.

 

[Jerard]

Agents who aren't prepared to give their clients the time they need probably shouldn't be selling UL.

Agreed, which is the root of the problem. There are new agents I've seen on here that actually will ask what the difference is between term and whole life. It's scary to think they may actually be out there selling UL's, too. And when you think that 90+ percent of them won't be around in 3 years...

If there is such a thing as a "safe way" to buy a UL then it would only be from a long term career agent, like those that have contributed to this thread and know how to explain it right.

 

[DHK]

I'm sure you meant "career" meaning someone who's been in the business for a period of time and knows their stuff, rather than specifying a difference between captive vs independent.

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I also freely admit that if you're going to either run or join a "churn and burn" agency... then whole life is the "safer" product to be selling because of its built-in guarantees, which help protect clients who may be left to manage their policies on their own.

 

[Golfnut2112]

DHK

What is the purpose of firing your client? You are liable for that contract whether you are agent of record or not.

The biggest risk I see now with UL policies is not intrest rates but companies raising the cost of insurance. I have been doing this since 1986 and only wrote a handful of UL policies, but I have seen numerous people with UL's that are in trouble and most of them are in their 70's or 80's and the original agent is either retired or dead. BTW I have NEVER seen a WL in trouble and most people love them because of the paid up additions. BTW I only sold a handful of whole life over the years so I am not partial to either one.