The Moving Parts of the IUL - Discussion

[2112Greg]

I've got a pretty good understanding of how these policies work, but I thought we could all benefit by having a thread dedicated to just IULs for the people that sell them. My recent departure for health insurance finds me (happily, I might add!) in a position that I market college planning using IUL. I'm very excited about this new direction, but I want to gain a deeper understanding of, what I call, the moving parts in the product.

For example, when loans are taken out against it, what are the things that take place in these transactions?

I don't think it will be often that I have to field very specific questions about these, but I don't feel comfortable selling something that I don't understand to a very deep level.

So, I'd also like to open the floor to other questions, suggestions for other things related to IULs, and expert opinion from all is invited and welcome.

Thanks in advance for your input...!

 

[Franz Kafka]

The moving parts of the indexed side are like those of indexed annuity - viz. caps and participation rate. The moving parts of the UL side are like those of fixed UL - viz. cost of insurance. Put 'em together and you get the moving parts of IUL. A deep understanding of the products is good but that doesn't sell the products. Over-simplification usually does. JMO

 

[BNTRS]

I don't think he cares much about having a conversation about marketing this product, but rather a conversation about understanding it from a level he'll rarely--if ever--get into with a prospect or client.

It's a creative way of saying I'm not so sure I'm all that comfortable with all the pieces of this product so lets talk about it.

In a nut shell Franz has done a good job identifying what's important here. Moving parts are primarily the rate and participation caps. But you'll also find variability in how the products actually credit when looking at the index, viz. looking at a month to month change, a year to year change, a biannual year change, etc. The sky is really the limit on new and creative crediting when it comes to these contracts. A company could theoretically decide they are going to average the move in the index every odd day of the market for a month and determine the crediting rate from there with whatever rate and participation caps they specify.

It's important to understand contract language of the contracts you are selling. What are their loan provisions? What do the guaranteed expenses look like, how has the company done historically with expenses (since we're talking indexed UL, the company has less control over the interest credited, but they do have control over issue and participation, how has that been treated?)?

The moving parts bit is more of a blanket statement used by agents who are captive and not allowed to sell these products, so they fall back on vilifying them in order to sell their products. They aren't really that complicated, but there are risks involved. So as is a usual rule of thumb, contracts with well respected companies that have a history for exemplary business practices are better bets.

 

[2112Greg]

Yes, that's exactly what I meant by starting this thread. I am not interested in having technical conversations with clients, but I want to be prepared for it if it happens. More importantly, I want to have complete confidence in my knowledge of the products I'm selling.

As I'm getting out of health, I'm not new to insurance...but selling life insurance that's not term is new to me. So far, I'm appointed with MoO, AVIVA and North American...there are a few others that I can't remember (I submitted all the paperwork at once and can't recall what the others were).

Thanks for the input so far!

 

[BNTRS]

Look at Lincoln, Penn Mutual, and Pac Life, also pretty well known for their IUL.

 

[Guest]

Minnesota Life is great to deal with (and so are the people that help there). LSW has some great living benefits.

 

[Franz Kafka]

Minnesota Life is great to deal with (and so are the people that help there). LSW has some great living benefits.

The last time I checked LSW was the only carrier that included Chronical Illness Rider for free. A conservative no non-sense co. IMO.

 

[SamIam]

The last time I checked LSW was the only carrier that included Chronical Illness Rider for free. A conservative no non-sense co. IMO.

Western Reserve Life does to

 

[scagnt83]

Look at Lincoln, Penn Mutual, and Pac Life, also pretty well known for their IUL.

I would second these, and add ING & Union Central

 

[2112Greg]

Good advice. LSW is also one I already submitted paperwork for.