UL Gurus: Let’s Discuss the Future of Our Clients.

[DLY311]

Quick background on me I worked for a WS for about 4 yearsand they loved whole life but had an excellent GUL product and an average fixed UL. I had tons of current clients who had exploding ULs from the 70s and 80s soI know how ULs work pretty well. I have been working in manufacturing and commercial sales for the last year and I may go back to insurance. I got anoffer from AGLA but am not even close to accepting until I have a firm understandingof everything involved there.

Anyway my questions pertain to two things I thought about today when I sat in on an advanced markets meeting at the local AGLA office. 1.Lets assume that all of these Index ULs work out, are the agents honestly going to fill out a loan form every month/year for these clients to take out theirtax free withdraws. Are agents REALLY going to monitor these policies in the distribution phase while they are still trying to produce and do everythingelse that these career shops want them to do? The way I see IUL isn’t foreveryone but it seems like AGLA is going to be pushing it on almost everyone.

I just see these as being very service intensive and that’snot really something that allot of these life agents will be used, especially 20-30 years from now when these clients retire that same agent will more thanlikely not be there anymore. Also does anyone know of anyone who right nowtoday is supplementing their income from fixed or VUL honestly!?

2. Also regarding these guaranteed to 70, 80 and 90 UL policy designs I think that they are just asking for trouble with this kind of design.Most clients are realistically not going to remember this when the time comes.I was told they never write whole life because it’s not competitive ( I guessthey don’t understand the difference). What are your guys thoughts on what willrealistically happen vs what an illustration says, just looking for others options.Thanks

 

[Norwayguy]

I'm not with AGLA but to respond to a couple things. In all honesty most agent that sell a policy today will never meet with the client again, they won't do the service work down the road. Just ask Wino on here how that has been very good to him as he has worked lots of orphans. Now in regards to your situation you mentioned at W&S you worked with a lot of imploring ULs I am assuming orphans whos agents are long gone I can see no reason for that to be different at AGLA nor will the problem of policies being underfunded stop. I sell IULs now and I always set them up funded to the Guideline Premium limit and will service them yearly like I have serviced my 403b annuity clients. I will go back and review it because its the right thing to do plus they should be increasing there contributions which means an increase in db.

Old life insurance agents rarely retire fully (ok at least that is my experience having dealt with producers in the business for 50+ years). 30 years from now you should be able to make contract assuming your still captive relatively easily from a large book of clients and referrals and doing a loan form will be even easier that today, think how many clients has fax and scanners at home now, heck I can scan a form with my smart phone and email to someone. What I'm getting at is you can take a phone call and get the form done on your end in 5 minutes.

The real question is will you be one of the few still here in 30 years.

 

[DLY311]

The real question is will you be one of the few still here in 30 years.[/quote]


I understand what you mean but the point of my post was moreabout the industry in general and how most of the products will really work notabout me.

 

[rousemark]

The real question is will you be one of the few still here in 30 years.

If an agent is an AGLA career sales agent, then when they quit, retire, die, etc. the accounts are given to another agent for service (since the career agenta aren't vested) so the client will have someone local they can call on.

As for products that are only guaranteed to 70 or 75, I no longer sell them no matter what the projections say. Spent too much time consoling clients that other agetns had written ULs in the 80s that are now imploding.

I am now a SR with AGLA and if I write an AGLA UL I normally choose the Accumulator product with a Guarantee to 121 rider. The premium will be very close to what a WL will cost. AGLA has just come out with a GUL but it seems to be overpriced.

 

[Norwayguy]

I understand what your saying. I was speaking of Insurance agents selling IULs in general.

 

[scagnt83]

1.Lets assume that all of these Index ULs work out, are the agents honestly going to fill out a loan form every month/year for these clients to take out theirtax free withdraws. Are agents REALLY going to monitor these policies in the distribution phase while they are still trying to produce and do everythingelse that these career shops want them to do? The way I see IUL isn’t foreveryone but it seems like AGLA is going to be pushing it on almost everyone. [/SIZE][/FONT]

If the agent is still in business then most probably they will... why wouldnt they?

Sure there are lots of agents that sell a policy and are never heard from again, but those are mostly the ones who are out of the business after a couple of years.

I have met extremely few established agents who would not take the time to help a client with withdrawals/loans.



But here is the problem you (and the industry in general) have:

- AG/(insert your favorite Career shop or IMO), sees it as their job to promote their products. Especially anything new.

When the new product is a new term feature, or GUL, its usually perfectly fine.
When the new product is as complicated as UL/IUL, then it be a bad thing at times. Especially when its pushed upon a green sales force (which most career shops have lots of inexperienced agents).

To compound the problem, the "trainers" and managers at those career shops often do not fully understand the product.
IMOs tend to know the product and how to design it a bit better than career shops, but not always.

The truth is that an agent should not be selling UL/WL/IUL unless they are established in the business. If not, then they should be working with an established agent and splitting the case. Both for the clients protection and for the agents education.


As far as AG pushing IUL on everyone. Thats about right.
As I said before, the Insurance Company sees it as their job to sell the new product first and foremost, so they will push agents (especially new/green agents) to sell it to anyone who fogs a mirror.

At the end of the say Its the agents job to decide what the best product is for the client, not the Insurance Company.
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. Also does anyone know of anyone who right nowtoday is supplementing their income from fixed or VUL honestly!?[/SIZE][/FONT]

Yes.
I actually service an orphaned account where the client has pulled out $20k per year for over 15 years now.
The original agent died, so the company passed it on to the regional who passed it to me.

I jumped on it. And have gained a good bit of FA biz from him since.
Which is the reason most experienced agents would take on an orphan who has an overfunded policy.


Out of policies I have written myself, I have two business policies that were used for Deferred Comp that have started loans to pay out benefits.


The product works when designed correctly.
Its up to the agent/client to follow through.
But that can be true with equity investments too...
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2. Also regarding these guaranteed to 70, 80 and 90 UL policy designs I think that they are just asking for trouble with this kind of design.Most clients are realistically not going to remember this when the time comes.I was told they never write whole life because it’s not competitive ( I guessthey don’t understand the difference).

Im not a fan of them. Agents feel that its an acceptable safety net and like to minimally fund these products to make an easy sell.

Having the premium take the guaranteed values out to 90 is one thing, but to fund at Target and rely on the guarantee is piss poor.
Target Premium should only be considered in comp. A UL should hardly ever be funded at Target.
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What are your guys thoughts on what willrealistically happen vs what an illustration says, just looking for others options.Thanks [/SIZE][/FONT]

Realistically, it just depends on what the assumed rates are.

Traditional UL ran at a Rate that is average for "Current" Rates, will probably look very similar to the illustration in 30 years, especially considering the historically low interest rate environment.
UL illustrations at a higher than average rate, then they have a bit less of a chance.


IUL is a bit different.
At 5.5%-7%, pretty good chances, especially considering the historical numbers.

Over 7% or at the current 20/30 year lookback, the chances drop into the 60%-80% range depending on the product and the illustrated rate.

 

[2112Greg]

I think IUL is going to be the next big black eye for the insurance business. Here's a recent example why. It's not so much the product, really, as it is the agent who has no clue how to illustrate and show this product in a realistic fashion.

Over the past few weeks, I got a referral for a client who wanted to fund an IUL with 260,000 each year for 5 years, for a total of 1.3m into the contract. A colleague and I drove to meet with him. Clearly he's the real deal, etc. In our early conversations, I asked him to send over the illustration so we could take a look at it.

He's 57 and wanted to supplement his retirement as he's going to retire in a year or two and want to get 150k a year out of it in perpetuity (I think it illustrated to 99).

The illustration showed a North American Builder IUL that grew in cash value to something like 8 million dollars AFTER taking out 150k every single year until age 95. It created a loan amount of 22m and this crazy arbitrage with all kinds of other problems.

The client didn't think it was pie in the sky, even though it showed an 8.3% interest credit on the S&P with an annual point to point. He had taken the medical exam for this thing the week before! Of course, average returns vs. actual returns were never mentioned to this client. Neither was, yea, it has a floor of %0, but what if there is a down year(s) and there is no interest credited? What on earth happened to the M&E? Who will be paying for that. He didn't know that HE would be. A guaranteed floor is not a guarantee against loss...this is not how it was shown to him.

My colleague puts about this kind of money in his whole life policies every year, so that's why I wanted him along so he could give some real world examples of how to do this. He speaks from big experience.

The problem is that this guy was ready to pull the freaking trigger on this thing!

Now the real killer. I have an old friend who recently left the mortgage business (we all have those friends) and is now starting with World Financial Group. He's been to all the big conventions, is drinking the Kool Aid and just got his S6.

Out of curiosity, I sent him the illustration to see what either he or his upline would say about it. Happily, they did catch the arbitrage loan problem. PHEW!

However, he said that with the right Transamerica product, he could actually double the client's returns!!! DOUBLE!

THIS is the problem with these products. It's not (necessarily) the product design or its chassis, it's people out there being completely retarded...

IULs, IMO, are a flavor of the month and I think the way that things are going, they'll be many-a lawsuit over these things. I don't touch them, even though I looked into them a few years ago. I told my friend that I hope he's got good E&O...and beware ye World Financial Group. It's groups like this, and poorly designed/illustrated products, that people need to watch out for.

This, ladies and germs is going to be a big, nasty problem.

 

[agentjhc]

So, 2112, you use WL or CAUL, both?

 

[2112Greg]

Participating WL. Only UL I touch is GUL.

 

[BNTRS]

While I can respect a whole life die hard, I think we're being at tad sensationalist here.

Illustrating above 8% (in fact above 6%) is foolish and misleading for the most part.

However, the hate on UL is somewhat funny to me. It's also incredible that I'm hear jumping somewhat to it's defense (never used to).

I came from the career mutual world where UL was a dirty dirty word. I once had a guy (who is 40+ years in the business) tell me:

"I've never sold a UL in my life, and the way I see it, I've sold one too many."

I thought it was cute at the time, but that sort of arrogance and ignorance is just as dangerous as the *** agents out there showing IUL at 8.3%.

The product is over hyped, no doubt about it. It does however accomplish certain things and does allow certain things that whole life will not do.

I've decided to make up for all the dumbass things I said publicly about UL, so I'm going to follow UL hate around with a statistic from the SOA. 20 year lapse rate on UL is only 100 bps higher than whole life. The UL time bomb is a myth.