School me on Equity Indexed Universal Life...

fjman · 07-07-2008, 10:30 PM

So my understanding of WL and UL are great. I really just sell WL and term. I had an initial meeting with a prospect who very openly told me they were interviewing other agents/reps for their insurance needs. They wanted to hear different perspectives... yadda yadda yadda

So turns out they like me and want to do business with me but another agent turned them onto Equity Indexed UL. They want to know if I can get them this product and/or throw in my 2 cents if it sucks.

I know EIA are getting some heat right now but what about thte UL version. Is it just like a UL but a portion of the company general account has exposure to the DOW, S&P, etc...? Good idea for a growing young family that currently has some small UL policies? If yes, what companies lead teh way in this product?

Thanks

ims01 · 07-08-2008, 08:36 AM

EIUL is a very popular and useful product. Depending on what you client wants to accomplish and how they are going to fund it, there are several good options. I would look at American General, Indy and LSW.

JMO Fan · 07-08-2008, 08:56 AM

If it pays higher commissions, EI UL is unlikely to perform as well as competitive declared-rate UL. EI UL is likely to be classified by SEC as a security soon, along with EIA. It's wise to be prepared.

Like EIA, most of the EI UL funds (after paying commissions & expenses) are invested the same as other UL & WL (i.e., mainly bonds). A small amount is invested in stock index future options, which only pay if the index goes up, and are worthless if it goes down. The cost of these options dilutes the company's ability to credit higher interest, which the actuary takes into account in calculating the index-crediting formula, in addition to the cost if the EI UL pays higher commissions.

bluemarlin08 · 07-08-2008, 10:40 AM

In what scenario would you see EIUL as a good fit?

fjman · 07-08-2008, 11:11 AM

So it sounds like something where the upside potential is often mis-sold. Sort of like agents illistrating a 12% return in a VUL. When are they good products? Do they generally have long surrender charge periods? Given the current market, wouldn't a regular vanilla UL perform just as well? I'm having the prospect send me a copy of the illistration. Let's see how it looks. Anything I should be looking for?

fjman · 07-08-2008, 11:14 AM

Originally Posted by ims01

EIUL is a very popular and useful product. Depending on what you client wants to accomplish and how they are going to fund it, there are several good options. I would look at American General, Indy and LSW.

Ed,
can you expand on this? how do you present these products? Who is ideal? Thanks

bluemarlin08 · 07-08-2008, 11:17 AM

Show the client a ULSG, he will have a guaranteed preium for life.

Corey · 07-12-2008, 02:08 PM

Originally Posted by ims01

EIUL is a very popular and useful product. Depending on what you client wants to accomplish and how they are going to fund it, there are several good options. I would look at American General, Indy and LSW.

+1

Originally Posted by fjman

So it sounds like something where the upside potential is often mis-sold. Sort of like agents illistrating a 12% return in a VUL. When are they good products? Do they generally have long surrender charge periods? Given the current market, wouldn't a regular vanilla UL perform just as well? I'm having the prospect send me a copy of the illistration. Let's see how it looks. Anything I should be looking for?

If you want to email me a copy of the illustration (cover up the client sensitive information), we can take a look at it and give you our feedback and come up with some alternatives we find (if applicable). They might have a great product in front of them or there could be a better solution out there.

As Ed mentioned earlier; In order to properly structure a plan, we really need to know what they are trying to accomplish and how they plan on funding it.