Whole Life Illustrations

[leo]

The guaranteed column are gross numbers correct? I have an agent telling me that is not the case.

 

[scagnt83]

The guaranteed column are gross numbers correct? I have an agent telling me that is not the case.

Not sure what you mean by that. But its the net amount the client would have in the policy if the Dividend or current interest rate was not paid.

Client is correct.
You might want to find someone to help mentor you with WL.

Guaranteed Column is without Dividends being paid. (or the current interest rate if it does not receive dividends)

Current Column is with Dividends.

The Illustration explains in detail what each column is and what the features are, if you read the explanation of benefits in the front of the illustration.

 

[SamIam]

Not sure what you mean by that. But its the net amount the client would have in the policy if the Dividend or current interest rate was not paid.

Client is correct.
You might want to find someone to help mentor you with WL.

Guaranteed Column is without Dividends being paid. (or the current interest rate if it does not receive dividends)

Current Column is with Dividends.

The Illustration explains in detail what each column is and what the features are, if you read the explanation of benefits in the front of the illustration.

No, I don't think that is what he is asking. Guaranteed Column is the without dividends like you said, which the illustration shows. But the illustration doesn't show the internal fees that would be subtracted from that number on the illustration. So the guaranteed column is a gross number. Just like the dividend is a gross number, the net dividend would be after the internal fees are subtracted. I never pay that much attention to the guaranteed column, but I'm pretty sure I'm right. If not, correct me.

 

[scagnt83]

No, I don't think that is what he is asking. Guaranteed Column is the without dividends like you said, which the illustration shows. But the illustration doesn't show the internal fees that would be subtracted from that number on the illustration. So the guaranteed column is a gross number. Just like the dividend is a gross number, the net dividend would be after the internal fees are subtracted. I never pay that much attention to the guaranteed column, but I'm pretty sure I'm right. If not, correct me.

Incorrect.

All figures in the illustration ledger are NET of any internal expenses. For both Guaranteed and Non-Guaranteed.

You are correct that it does not show the fees (for WL at least).

But those fees are accounted for within the figures provided on the illustration ledger.

And you can see this fact for yourself on a UL illustration if you run the expense report. It shows the gross/net on the expense report. And you will see that the Ledger shows the Net.

Regulatory agencies would never allow it to be the Gross amount with unknown fees being deducted and unknown Net amounts to the client. Its literally law in all 50 states.

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If you sell a WL, you will see at the 1y review this is true as well.

The CV and dB will be exactly what the sales illustration shows in the Current column. Because the Dividend has already been declared and committed to.

 

[SamIam]

I didn't know that, especially with the Non-guaranteed side.

 

[scagnt83]

I didn't know that, especially with the Non-guaranteed side.

With WL, the only variable impacting the illustrations figures is the declared Dividend each year. If they pay the same dividend as illustrated every year, the sales illustration will be 100% exact to the clients account. (assuming no loans or withdrawals)

UL/IUL has the variable of the "Current Fee Schedule" being increased in the future.

But even with UL, the Guaranteed side is 100% guaranteed and uses the maximum expenses and is all Net of those expenses.

 

[DHK]

@scagnt83 is exactly correct.

Just think of it this way: Whole life is a bundled contract. Premiums and expenses (everything) is all bundled in the premium.

Why? Because whole life insurance must mature. (Cash values = death benefit at maturity age). I think of the disclosures like a CD at the bank. Do you need to know the costs of a CD at the bank? No, because the terms and interest rate are disclosed based on the amount and time period chosen.

(I can detract the conversation to talk about variable whole life, but that's a separate animal because the cash values may not equal the death benefit at maturity age.)

UL is an unbundled contract. UL does NOT have to mature (cash values = death benefit at maturity age). Many lawsuits have happened because life insurance simply cancels out and the cash values are refunded to the policy owner.

https://www.wsj.com/articles/happy-100th-birthday-there-goes-your-life-insurance-1500548402

When it's unbundled, all the fees and costs must be itemized and disclosed. I think of it like a money market mutual fund prospectus. Every mutual fund has fees and costs and must be disclosed because they impact the performance of the fund. Same principle applies with UL illustrations.

The nice thing about whole life insurance guarantees (which as was said before is the policy without incorporating any dividend performance) is that - even if the company is bought out, demutualizes, or anything else, whoever takes over these policies MUST perform at least at the guaranteed levels. (Dividends may not be the same as you may be cashed out of your participating ownership in the company and get stock certificates or some other financial consideration.)