Universal Life Cash Value

[SamIam]

I have a client that use to be a life agent back in the 80's. He wants a universal life that builds cash value for his daughter. I suggested IUL with North American. He is against IUL and really hates whole life. If I just do a reg UL it's really not going to build cash value anywhere close to a IUL. Any suggestions or am I wrong. His daughter is 20 by the way. He mentioned Jackson National, I called them but they haven't called me back.

Any suggestions?.

 

[DHK]

Show him an illustration that will do the job... then tell him what it is.

Put the numerical values on a spreadsheet as a "supplemental illustration". For example - show him a max-funded whole life illustration that will do the job. Get him to get over his preconceived ideas and buy what you recommend to do the job he wants done... not the 'label' of the product.

Remember that back in the 80s, UL was touted as "whole life at half the price". If he's from those days, he needs to wake up.

If none of that works, find a new prospect. He's "too smart" and "too prejudiced" for his own good even with empirical evidence to the contrary.

 

[WinoBlues]

I have a client that use to be a life agent back in the 80's. He wants a universal life that builds cash value for his daughter. I suggested IUL with North American. He is against IUL and really hates whole life. If I just do a reg UL it's really not going to build cash value anywhere close to a IUL. Any suggestions or am I wrong. His daughter is 20 by the way. He mentioned Jackson National, I called them but they haven't called me back.

Any suggestions?.

If he sold UL in the 80s I am surprised he wants a UL at all. Probably every one he sold has or will implode(d). Jackson National does not sell UL, WL or Term any longer. Has not for maybe two years.

Show him a UL from a company like ONL and a comparable IUL and let him make his choice.

 

[cowgoesMoO]

AccumUL; Mutual of Omaha

it has chronic illness rider that pays for nursing home care as well, not based off any index, builds cash value very well. based off interest rates; at 4% right now, will go up any time the fed raises interest rates too.

 

[DHK]

AccumUL is a VERY BASIC UL. I can't do anything "strategic" with it as I can with others.

As for good to build cash value? Well, one of the litmus tests I use is to find out when the policy "breaks even" (meaning that the cash values = premiums paid).

It didn't break-even on the guaranteed column... ever. Then the policy implodes in the later years. Of course, it's being illustrated at 3% and maximum funded premium. And the non-guaranteed side shows 3.15% and a lower cost index.

I can get an over-funded WL to break even between 10-12 years GUARANTEED. And even sooner on the non-guaranteed side.

Basically, I'm not a fan of MoO's AccumUL. Glad I never sold any when I was with Mutual of Omaha.

 

[WinoBlues]

AccumUL is a VERY BASIC UL. I can't do anything "strategic" with it as I can with others.

As for good to build cash value? Well, one of the litmus tests I use is to find out when the policy "breaks even" (meaning that the cash values = premiums paid).

It didn't break-even on the guaranteed column... ever. Then the policy implodes in the later years. Of course, it's being illustrated at 3% and maximum funded premium. And the non-guaranteed side shows 3.15% and a lower cost index.

I can get an over-funded WL to break even between 10-12 years GUARANTEED. And even sooner on the non-guaranteed side.

Basically, I'm not a fan of MoO's AccumUL. Glad I never sold any when I was with Mutual of Omaha.

When you are comparing UL, IUL and WL are you comparing the same premium and Face amount?

 

[DHK]

I do my best to compare premium and face amount as best as I can.

I usually compare a $10,000 annual premium, standard non-smoking, age 36 (basically as if it's for me) and see what happens. My "solves" are to maximum fund the lowest death benefit possible.

Because of how UL is structured, I can't match it for face amounts because of how it's "unbundled" compared to a whole life with value enhancement riders (cash dump-in riders).

But I try to keep my comparisons as equal as possible.

 

[WinoBlues]

I do my best to compare premium and face amount as best as I can.

I usually compare a $10,000 annual premium, standard non-smoking, age 36 (basically as if it's for me) and see what happens. My "solves" are to maximum fund the lowest death benefit possible.

Because of how UL is structured, I can't match it for face amounts because of how it's "unbundled" compared to a whole life with value enhancement riders (cash dump-in riders).

But I try to keep my comparisons as equal as possible.

Thanks.

Couldn't you do a WL then use the same premium and face for the UL and IUL?

 

[abacusadvisors]

I have a client that use to be a life agent back in the 80's. He wants a universal life that builds cash value for his daughter. I suggested IUL with North American. He is against IUL and really hates whole life. If I just do a reg UL it's really not going to build cash value anywhere close to a IUL. Any suggestions or am I wrong. His daughter is 20 by the way. He mentioned Jackson National, I called them but they haven't called me back. Any suggestions?.

John Hancock has a nice cash value UL product with an interesting story. DM me if you want some details....

 

[DHK]

Thanks.

Couldn't you do a WL then use the same premium and face for the UL and IUL?

That would work in theory... but it doesn't always happen. I'll upload what I mean.

I've uploaded a policy illustration with Assurity life's whole life. I'm using a $10,000 annual premium (to keep the math and numbers easy). I'm solving for "Input Premium for Max CV Accumulation" in their software. Generally this gives me about 60% cash values in the first year, and the rest is "commissionable premium".

To keep it fair, I'm not going to include ANY other riders on this comparison - no disability waiver of premiums - nothing.

The summary for the attached illustration is:
- $6,023 guaranteed cash values in year 1
- $261,686 initial death benefit and increases from there.
- Policy is GUARANTEED to "break even" in year 12 ($120,000 paid, $120,036 cv)
- Policy is NON-GUARANTEED to "break even" in year 9 ($90,000 paid, $93,356 projected cash values)

That's a pretty good policy design.

Now let's compare with AccumUL Plus (since that was the product that was brought up). I have access to that product design through WinFlex online.

Parameters: Age 36, male, standard non-smoking - just as before.

Face Solve - maximum funded premium based on $10,000 per year.

Initial Death Benefit: $935,712. With that huge increase in death benefit, it erased any accessible cash values for the first two years.

The policy still doesn't break even after 20 years (guaranteed). It does break even after 13 years on the non-guaranteed side.

This is just an example of comparing policy strategy. I know there are more ways to skin a cat, and I keep trying various strategies while still trying to preserve a decent commission for me too.

EDIT: I just did a new illustration with AccumUL with a specified face and premium... and it's definitely skewed. Not something I could show a client because after two years, the premiums are forced to be reduced to about $700/year. I don't think it MEC'd... but it might as well have.

Also, a non-max-funded WL from Assurity would have a higher death benefit, but take closer to 30 years to "break even" guaranteed and 19 years non-guaranteed.