Insurance Agent Forum

[InsuranceDan]

On Compulife, you will see that usually Aviva comes up the best on rates for no-lapse UL's. However, they are so large and that type of leverage is sometimes scary for cash value-based UL's. Take a look at AIG's internal costs and you will see they (the government) needed to hit higher profit numbers for their shareholders, so now the policies will perform lower than expected.
Here is what criteria runs through my mind when suggesting a UL. If it's a guaranteed death benefit UL, then lowest price/value wins.
If it is a cash value policy, we should all take a look at our conscious if we recommend a public company after seeing that same company being whipped around in the market and losing most of it's market cap. I see the hands down winner for cash value policies is a strong private company if you actually want to sustain internal costs for duration illustrated. I really like Midland National for stability in cash values. Midland's investment portfolio survived the economic downturn better than any other major insurance carrier. I also want to like Ohio National, but every week they come out with a new email with something they are cutting to keep their rating. I feel Ohio National is committed to policy holders though.

[scagnt83]

A few things on indexed ULs:
1.
I agree that there should be no such thing as an "affordable" IUL. This is a cash accumulation product, and that is not synonymous with affordable; its synonymous with large premiums. It would be like wanting the cheapest VUL you can find...lol. Any well designed IUL is designed to be over funded way past any target or guaranteed premium values.
2.
For a cash accumulation situation you have to go with a strong and stable company...especially these days. Not just for your clients benefit but for your own protection too down the road. This means a high A rating from the big 3, preferably mutual, stable, and a good track record....especially with indexed products.
3.
The interest rate caps in a quality IUL should be locked in. Yes companies can always play with the fixed account rate, but a good contract will have locked in caps, or at minimum guarantee them for 10-20 years.
4.
There are products out there with a 10-12 year surrender period.... even no surrender charges at all if it is run through a business.

An IUL can be a great fit for a client who is looking for a lower risk/tax advantaged way to accumulate money.

Lincoln & Pac both have a great IUL product. And a friend of mine whom I trust says that Mutual of Omaha has a good IUL product along with a traditional accumulation UL....but I havent checked them out yet...and their financials arent as good as some others.
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Originally Posted by InsuranceDan

I also want to like Ohio National, but every week they come out with a new email with something they are cutting to keep their rating. I feel Ohio National is committed to policy holders though.

Ohio National is a good company in my opinion. They are huge on communication with their brokers ( a little bit too much, i get way too many useless emails from them) and constantly announce every little tweak, down to a specific products renewal rate for the quarter. All companies do this, they just dont always announce it with mass emails.

I havent really gotten to like their UL products yet, but they have great whole life products. And seem to have decent fixed annuities.

[BNTRS]

Good EIUL = oxymoron

[CFP83]

The National Underwriter magazine has been giving a lot of attention and information this year regarding all companies who participate in the IUL marketplace. I second the notioned mentioned by several already that a company's financial strength must be the number one variable considered.

Aviva doens't have excellent financial strength ratings. Taking into consideration what they have done this year with their Equity Indexed Annuity brokers and marketing channels and I don't trust this company one bit.

Check out the National Underwriter Magazine's website and search IUL articles. You'll find that Minnesota Mutual and Penn Mutual have among the highest caps in the industry and are extremely financially sound. I would also take a look at Midland as well.

[ATM]

Originally Posted by bluemarlin08

Call AVIVA and ask for a history of renewal caps, participation rates. Personally, I don't like these products for the very reason that the moving parts can change values and the insurance company has no incentive to keep these parts competitive.

An absolutely excellent point and one I think most other agents disregard.

I've looked at all the indexed UL policies and companies and I am scared by the promises made and what can and probably will happen in the future.

The first thing I would look at in choosing an Indexed product is the companies crediting history over time - and not just with indexed products. How do they treat their policy holders and how do they calculate their participation/cap/margins etc? Is it new money old money/ portfolio etc? How have they done on fixed products over time?

I did some background checking and came to my decision on what I bought personally and which companies products I sell. The last thing I want to own or sell is a product that was basically a teaser rate and my client is screwed because they are locked in by surrender charges and high front loads.

[CFP83]

ATM, and others on this post expressing concerns about IUL's, I too agree with your points regarding how companies have the ability with the "moving parts" of an IUL to bring down caps and participation rates on their inforce.

However, if we really think about it, can't a company offering great dividends on whole life do the same thing? Consider this, many companies in the past have illustrated excellent "projected" dividend performance and in the end fell far short of their projections (Sorry Western Southern producers, but your company has been guilty of this as much as anyone).

A life insurance company determines their annual dividend on whole life policies by looking at four main components: Lapse rate, actuarial experience, expenses, and investment returns. If they miss their projections in any of these areas, they will compensate for this by lowering the next years declared dividend rate.

The concerns here regarding IUL's are valid. A company could lower their caps and participation rates in the future on all inforce policies because of worse than expected operating experiences. However, the same holds true to whole life as well regarding a companies ability to change midstream. The only real difference is that on whole life a change in dividends affects new and existing customers alike when the dividend is lowered, and with IUL a company could lower their caps/participation on existing customers but not for new customers.

Just some food for thought

[ATM]

All companies reserve the right to change certain parts of their products performance, be it whole life, UL, IUL or whatever.

I think the point is that choosing the company carefully is the biggest concern because I have looked at the IUL market and I have to say that many of the bigger players scare the beejeezus out of me. I wouldn't seel some of the products simply because of how the products are illustrated, let alone the crediting track record of the carriers themselves.

Whole Life brongs awhole new level of uncertainty and frankly poor knowledge on the part of the agents. I met with a new agent today and was giving him some advice when he mentioned he had had some personal problem with his own whole life policy issued by a very large, very quiet company.

He had sent in some extra premiums because he was so enamored withthe contract (and they didn't tell him it caused the policy to become a MEC). He borrowed some money from his contract and they told him it was a wash loan and wouldn't really cost him anything. of course he was assuming he would receive the money tax-free. He was also assuming he would maintain his dividend at the same rate.....

The best advice I could give anyone is to forget about the illustrations and start first with the history of the company focused on their actual policy performance and how often and why they have adjusted their interest rates and crediting rates on IUL. You'd be amazed at the differences.

I'll take my chances with the better history because that's the only comparative measure we really have in determining which company's product is most likely to perform the best over time because if it comes down to it and the comapny has to screw the client they will because they have to remain viable. Some companies take advantage of the power to adjust and some are forced to use that power and others seem not to try to change the rules. I'm looking ofr number 3 no matter what product I'm selling.