American General UL Questions?

[jdeasy]

I met with a guy today, 68 years old, non tobacco user that just bought an AG UL about 3 months ago.

It's $100,000 face and he has had some heart issues. It's a table 6 and he pays $535/mo. for it.

He didn't know it was UL. He thought he had bought whole life. Mainly for the guarantees. He said he got out of another UL because the face amount had been reduced.

He has a letter from the agent saying that the premiums on this policy will "never" increase and that the face will "never" decrease.

The policy doesn't say that anywhere that I could find. It also doesn't say "no lapse" anywhere. It did say in the policy that, if it was issued under age 70, {which it was}, that the premiums and the face are guaranteed for 10 years. I take that to mean that his face amount could be reduced or his premiums increased. He says that the agent told him that it did not mean that, thus the separate letter from the agent.

Does AG have a UL policy that guarantees the face and premium? And, if they do, would it be worded in such a manner.

I could get him a whole life for about $20/mo less pending underwriting, of course. He is not really concerned about cash values. He really wants the face and premium guaranteed and, if that's what he has, he is content to leave it alone.

I am puzzled by the separate letter from the agent if the policy is fully guaranteed.

Not being well versed in the moving parts of a UL, I thought I would get some expert opinions here.

 

[xrac]

This sounds like the agent may not understand what he is selling.

 

[jdeasy]

This sounds like the agent may not understand what he is selling.

Or not informing the client what he is selling?

 

[dgoldenz]

Yes, they do have a no-lapse UL....but the premiums at a standard rate show $4187/year for me (or $4431 depending on product), which would come out to about $390/month. If he's at Table 6, those premiums should be more like $1,000/month if it's their no-lapse product. It would be much easier to find out what he has if you can get the signed illustration from him since AG requires a signed one before policy issue.

I would be very, very surprised if you could get him a whole life policy for less than $535/month if his heart issues are significant enough to get him to a T6. The cheapest standard rate no-lapse UL's that I see are Aviva and Sun Life at around $260/month....Table 6 on either of those would put him closer to $650/month. West Coast Life might be less since each of their table ratings is equal to ~17% instead of the usual 25% with most other companies. It would be highly dependent on the underwriting, and it sounds like this is a case where it should be shopped with 10-15 companies to get him the best offer.


If you look at his premiums, it would only take about 15.5 years to pay the entire $100k death benefit....he might be better off with a 15-year term policy for half the premium.

 

[jdeasy]

Yes, they do have a no-lapse UL....but the premiums at a standard rate show $4187/year for me (or $4431 depending on product), which would come out to about $390/month. If he's at Table 6, those premiums should be more like $1,000/month if it's their no-lapse product. I would be very, very surprised if you could get him a whole life policy for less than $535/month if his heart issues are significant enough to get him to a T6. The cheapest standard rate no-lapse UL's that I see are Aviva and Sun Life at around $260/month....Table 6 on either of those would put him closer to $650/month. West Coast Life might be less since each of their table ratings is equal to ~17% instead of the usual 25% with most other companies. It would be highly dependent on the underwriting, and it sounds like this is a case where it should be shopped with 10-15 companies to get him the best offer.


If you look at his premiums, it would only take about 15.5 years to pay the entire $100k death benefit....he might be better off with a 15-year term policy for half the premium.

That no lapse UL would state that on the policy wouldn't it? The only thing he has that says his premiums are guaranteed and the face is guaranteed is a signed letter from the agent that is separate from the policy.

As far as the whole life that I spoke to him about, I called an underwriter and went over the medical conditions. They gave me a "best guess" of a table 4. I told the guy that it was simply a "guess".

He really just wants a guaranteed premium and a guaranteed face amount. Going term may be a good idea.

He is going to contact AG tomorrow about his policy. He is understandably upset about what he thought he had vs. what he has.

 

[dgoldenz]

That no lapse UL would state that on the policy wouldn't it? The only thing he has that says his premiums are guaranteed and the face is guaranteed is a signed letter from the agent that is separate from the policy.

As far as the whole life that I spoke to him about, I called an underwriter and went over the medical conditions. They gave me a "best guess" of a table 4. I told the guy that it was simply a "guess".

He really just wants a guaranteed premium and a guaranteed face amount. Going term may be a good idea.

He is going to contact AG tomorrow about his policy. He is understandably upset about what he thought he had vs. what he has.

A guarantee from the agent isn't worth the paper it's printed on.....the only thing that matters is what is in the contract itself. I would get your "best guess" table 4 in writing from the carrier. Even then, whole life probably doesn't make sense when you factor in the table rating and his age.....policy could be paid up in 10-15 years just like what he has now.

If you want to win over his business, you should get a copy of the contract, policy illustration, and agent letter from him and find out what the real story is. I wouldn't trust an hourly employee from AG's opinion.

 

[xrac]

Or not informing the client what he is selling?

One or the other. Hopefully it is the former. Someone who would put something in writing that the policy doesn't say is not very knowledgeable or crooked.

 

[jdeasy]

A guarantee from the agent isn't worth the paper it's printed on.....the only thing that matters is what is in the contract itself. I would get your "best guess" table 4 in writing from the carrier. Even then, whole life probably doesn't make sense when you factor in the table rating and his age.....policy could be paid up in 10-15 years just like what he has now.

If you want to win over his business, you should get a copy of the contract, policy illustration, and agent letter from him and find out what the real story is. I wouldn't trust an hourly employee from AG's opinion.

I know the letter from the agent means nothing. To the client, it does though. He kept showing me the letter. I tried as politely as I could to explain to him that the policy was the deal, not the letter. I am trying to find out now if I may has misread the policy. It seems strange to me that an agent would give a letter like that to a client.

The stuff I wrote down for him I made clear that it was not binding and that, if he took a policy with me, the final deal would be contained in the policy and any guarantees would be spelled out by the company, not by me.

I just wanted to be sure that there wasn't something out there that I was missing. I've run across some lousy agents before, but, I've never run across one that thought he/she could change the policy.

 

[VolAgent]

I just wanted to be sure that there wasn't something out there that I was missing. I've run across some lousy agents before, but, I've never run across one that thought he/she could change the policy.

Now you know why all insurance contracts include a clause stating that only certain company executives have the right to change the policy, and that it must be in writing. It exists because it has happened in the past, and agents are apparently still doing it today.

Sadly, I would say this is a case of an agent intentionally misleading the client. Only a complete and utter moron would write such a letter and believe it had any real power over the policy.

But as others have said, get AG on the phone. Although I can't imagine leaving this out of the policy's language if it is so important to its function.

 

[bill3173]

The continul extend has a no lapse guarantee, as stated in the illustration.

The illustration is the most important legal doc concerning uls' and is a simple tool for understanding their cash value and reduction.

AG's continul extend is very hard to beat, due to the tables are scaled at 15%. WCL, even if they approved it at the same table, would be slightly higher.