Agents don't mention PUA rider, why?

[ls015]

Majority of agents don't design WLs with PUA riders. They will blend with term insurance and that's it. Mostly, base premium it is. I wonder why? Is it commission or something else?

 

[DHK]

Vast majority of agents don't know how or why to recommend a max-funded policy to the MEC guidelines. So they ask for how much the client can afford... and design the most protection for the premium, which is usually a blend of base WL and term. Perhaps using the future dividends to convert the term to permanent long-term. (A death-benefit only design.)

And if they work THAT way, then designing a plan with higher expertise will actually cut their commission than if they didn't.

 

[ls015]

Vast majority of agents don't know how or why to recommend a max-funded policy to the MEC guidelines. So they ask for how much the client can afford... and design the most protection for the premium, which is usually a blend of base WL and term. Perhaps using the future dividends to convert the term to permanent long-term. (A death-benefit only design.)

And if they work THAT way, then designing a plan with higher expertise will actually cut their commission than if they didn't.

But doesn't PUA premium generate commission too? Something like 2%? 2% of much larger PUA premium is greater than 1 time of 100% of base premium, isn't it?

I am not sure if it's 2% every year or just one time of PUA premium.

 

[DHK]

Comparing 2% vs 45% for term rider and 55% base WL... which do you think the AGENCY wants you to sell?

If you have $10,000 per year to work with... and you're going to put $5,000 in the PUA rider... that's only 2% x $5,000 = $100. I'm pretty sure the difference into the base WL and term riders will generate a FAR greater commission than $100.

 

[ls015]

Wonder what do insurance companies themselves want? Just base premium or PUA premium?

 

[DHK]

Insurance companies want quality risks to spend lots of money on premium and not die for a long time.

 

[ls015]

Insurance companies want quality risks to spend lots of money on premium and not die for a long time.

Yeah but do they have a preference on base vs PUA premium?

 

[DHK]

Since using PUA for a given amount of premium LOWERS the amount at risk, I would suggest that they *should* want more maximum-funded policies.

 

[ls015]

Since using PUA for a given amount of premium LOWERS the amount at risk, I would suggest that they *should* want more maximum-funded policies.

Do banks want our deposits? No, deposits are a liability for them, they have to pay interest, safe guard.
PUAs are the same for life insurance companies as deposits are to banks. I think they want more base premium. If they wanted more PUAs, they would pay more to agents on that but they pay more on base premium. This is just what I feel, not to prove you wrong or anything. Appreciate your responses.

 

[DHK]

"Fund the box or pay the curve."