General opinions on UL?

[NHB_MMA]

What do you all think about UL?

I am not a UL expert, but my immediate concern is that it will end up costing an outrageous premium or end up fizzling out. I think it would be hard to truly think of it as permanent insurance.

I'm just really talking about UL and not VUL, which has some additional investment components that can yield more in the interest bearing portion, although I can't imagine someone not surrending that at some point either.

Thoughts?

 

[Sam]

Today, most UL products offer guaranteed death benefits. In my opinion, to sell otherwise is criminal. Many companies will commission you on target premium, even if you underfund it, thus creating an incentive for agents to do so. However, a properly funded UL can be a great product, as long as the grantee is there.

It is important to note that with most companies, if you ever take a loan on the policy, the guaranteed db disappears. This means that you cannot sell it as a "retirement plan" that also has a db, since you cannot grantee that it will have both.

 

[James]

They have become a staple within the industry and basically is today's permanent insurance product as W/L has seem to taken a back seat to the UL overall. While in any true comparison the UL is more expensive then the W/L dollar for dollar, remember there is no free lunch and you have to pay for the flexiblility.

So what we have is a flexible contract that if used properly has its advantages. Such as what was brought up by the previous poster, sure if you borrow against the CV it effects the DB but you have a choice in that, such as option commonly known as A or B. You can collect on the DB or the DB and CV, which means borrowing against the CV will not effect the DB at collecting time. Now you also have another choice, as in most competitive UL's you can choose between option A or B during the life of the contract or you can choose the cheaper option A and then at a time you know you're taking money out or in the sad case of knowledge that the DB will soon be needed you can switch options with a thirty day notice.

Outside of that you now have the SGUL or the secondary guarantee of a DB, which is quite advantageous for most policies. By adding the SGUL you have pretty much taken off the table the ill effects many have come to relate with the UL.

Now the UL is braving the frontier of the Equity Index, which should be a sight to behold to see how this animal performs over the next twenty or so years!

 

[NHB_MMA]

Today, most UL products offer guaranteed death benefits. In my opinion, to sell otherwise is criminal.

But even if the DB is guaranteed, it's only guaranteed as long as you pay your premium, right? I've seen what NYL will charge for term insurance as you get into your 80's and approach 90 and it's unbelieveable. So, NYL is higher than many companies on their term rates? But let's cut it in half and you still have an outrageous premium. If you're 90 years old, is there going to be enough in there to fund the 25K premium on a 250K policy? Is it truly "permanent" insurance? I cannot imagine buying a UL without intending to cash it in at some point.

Maybe I'm not understanding it, which is why I'm asking.

 

[James]

Today, most UL products offer guaranteed death benefits. In my opinion, to sell otherwise is criminal.

But even if the DB is guaranteed, it's only guaranteed as long as you pay your premium, right? I've seen what NYL will charge for term insurance as you get into your 80's and approach 90 and it's unbelieveable. So, NYL is higher than many companies on their term rates? But let's cut it in half and you still have an outrageous premium. If you're 90 years old, is there going to be enough in there to fund the 25K premium on a 250K policy? Is it truly "permanent" insurance? I cannot imagine buying a UL without intending to cash it in at some point.

Maybe I'm not understanding it, which is why I'm asking.

Yes I understand, the SGUL or Secondary Guarantee takes care of that problem. Got to read the contract, if it states you have XX benefit as long as you pay the XX premium till age XX you are good to go. In other words the SGUL makes it more like a W/L contract so it is more expensive from the start, in fact it approaches the cost of the W/L, TINSTAAFL.

Ps, it may even be more costly if you start adding in riders such as the LTC and other great riders!

 

[NHB_MMA]

Thanks James. I'll have to check into that and learn more about it. I'll have to see if my plans have an SGUL feature and how the things illustrate.

 

[James]

Thanks James. I'll have to check into that and learn more about it. I'll have to see if my plans have an SGUL feature and how the things illustrate.

This is what you have:

No Lapse Guarantee Rider (NLGR)13,14
Guarantees that if the specified premium requirement is met, the policy will not lapse even if the policy cash surrender value is insufficient to cover the monthly deduction charges due. NLGR, which can only be purchased at issue, is available for 10 years, 20 years, to age 85, to age 100, and for the lifetime of the insured. Issue ages 0-90.15

 

[James]

You also have this which I haven't look at closely but it has potential even though I'm sure they have a W/L with the same ryder that may be of a better design.

NYLIAC Asset Preserver

Acceleration of Benefits for LTC
The Monthly Benefit for long-term
care is calculated by dividing the net
death benefit (death benefit minus
loans and loan interest) by the number
designated in the LTC Benefit
Payment Option selected when the
policy is purchased (LTC 24, LTC 36+
or LTC 48+).
Benefits will be paid under the
Acceleration of Benefits for Long-
Term Care provision when the
insured is certified as chronically ill
under the terms of the policy, and
after a 90 day waiting period. To be
certified as chronically ill, a person
must need substantial assistance with
at least two of the following six
Activities of Daily Living (ADLs):
■ Bathing
■ Transferring
■ Eating
■ Dressing
■ Toileting
■ Continence
Alternatively, care or substantial
supervision arising from cognitive
impairment, including AlzheimerÂ's
Disease, will also qualify for benefits.
Qualified long-term care services
include:
■ Nursing Home Care: Skilled,
Intermediate, and Custodial
■ Home Health Care
■ Assisted Living Facilities
■ Hospice Care
■ Adult Day Care (50% of the
monthly benefit)
■ Family Care
Family Care
When the caregiver is a spouse,
other family member, or friend, the
Family Care benefit will pay an
indemnity benefit equal to 1/60th of
the LTC monthly benefit per day of
care up to a maximum of $100 per
day for a lifetime policy total of 365
days6. This benefit will be paid
monthly.
Acceleration of Benefits for Terminal
Illness7
100% of the policy death benefit, less
a discount factor and processing fee,
is payable to the policyowner upon a
physician's certification that the
insured has a terminal illness, as
defined by the policy. No further
benefits are payable once this option
is elected.
Benefit Increase Provision
Each year, on the policy anniversary
date, you have the option of paying
the lump-sum premium necessary to
increase your monthly long-term care
benefit by 5%. This option must be
exercised within 30 days of the policy
anniversary, or it is forfeited for the
life of the policy.

Sometimes I find it helpful to add value to ones product. Adding LTC to your UL or WL is rather beneficial view to a Life Contract.

 

[rocky top buzz]

I have started referring to no lapse UL's as "term to age 100." Why?

- Lose the stigma associated with UL and WL
- Since there's essentially no cash value growth, it's basically term insurance with an endless term
- People like term insurance

In my opinion, SGUL should always be quoted alongside a term so people know what they're options are. Life Insurance is the only insurance you can guarantee you will need (we may not all crash our cars or burn down our homes, but we will at some point die!), so why buy a limited term policy when you have no idea when you're going to die. If a client says they need $500,000 of term because their kids are young, and once the kids are older there will no longer be a need, quote the client $100,000 of 'term to 100' and $400,000 of 20 year term. If you use the same carrier you can do all of this with relative ease.

If you're interested in comparing rates, you can do so on our website at American Brokerage Company - Making the Best out of Life.

Anyone on here selling IUL? That may be a different topic, but just thought I'd guage opinions on that product.