Agents don't mention PUA rider, why?

PUAs are the same for life insurance companies as deposits are to banks.

Banks are insured by fractional reserves.

Insurance companies are 100% legal reserve institutions. They must be able to pay out all claims on all policies at a given time. That requires reserves.
 
Also, understanding the formula for net death benefit will help you.

Net death benefit = cash values + amount at risk - any outstanding loans.

The more cash values increase, the amount at risk decreases. (Not including using dividends for paid up additions to the policy to increase the face amount.)

The more cash values for a given policy, the less amount at risk for the insurance company.
 
I think the answer to "do insurance carriers want to sell PUAs?" Well what was the commission again? :)

Doing the right things sometimes means you make less. Doing the right things for clients often leads to more commissions than what you're giving up.

And even if it doesn't, think of how your children think of you? Money is temporary, it comes and goes if you do this long enough. What your kids think of you, well to me it matters.
 
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?
Why do you feel the majority don't use PUA? What is your experience that is telling you that? I use the most PUA I can in almost every situation (with or without term blend), and many of the reps I know do the same.
However lately it seems more sell IUL than WL these days because that is what all the IMO/FMO marketers push mostly, which is ok as long as they are desinged max funded.
 
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.

Actually, I believe they would first prefer the base premium because that premium is contractually required to be paid for the base policy. PUAR can be discontinued at any time without any consequence to the client or base policy. PUAR are merely SPWL policies with each deposit & create no future committed premiums that will continue to be paid.

in an ideal world, it should be both. But we have all seen UL, IUL, VUL with no overfunded premium designed into the policy by the agent. With PUAR & excess UL premium going straight to the cash value for the client benefit & a very small commission, I believe the bulk of the problem is "commission needs analysis" by the producer. Like you said, if a client says they can afford 10k per year, the agent likely locks into $5500 commission coming in if it all goes to base policy compared to a $4k base & $6k PUAR paying $2320. If they are with a carrier that also pays commission based bonus's, the math likely plays into their thinking too.

The best agents plan PUAR into the designs for the client benefit & long term performance & building in the safety net if the client changes their mind or cant commit to entire premium forever after a divorce, bankruptcy, job loss or medical catastrophe
 
Banks are insured by fractional reserves.

Insurance companies are 100% legal reserve institutions. They must be able to pay out all claims on all policies at a given time. That requires reserves.

WHOA, stop as that is extremely wrong.

When it comes to the general fund, yes they are a 100% reserve institution. They must have funds equal to the aggregate cash values of their policies. As is the same with separate accounts, but then that money is never the insurance companies and can never be used to satisfy its obligations.

When it comes to claims and paying benefits, that is a completely different story. Not even NYL, NWM, Mass, Guardian or State Farm have enough assets to pay ALL death benefit claims, not even close.

But they are actuarially sound and can pay all claims under adverse conditions.

As to the original question, I would say insurance companies love lots and lots of premium, period. However, PUA since it doesn't generate as much need for reserves above and beyond the actual deposit and gives lots more money for the company to invest. Of course, that is JMO, your opinion my differ.
 
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.

actually, I think you are misunderstanding what a PUAR is. The reason a PUAR cant pay more commission is that it is fully liquid paid up insurance (like a single premium WL). so, a client can surrender any pro-rata amount of PUAR value at any time whether the PUAR was bought from a lump sum PUAR deposit, a modal PUAR deposit or a PUAR bought from Dividends. They cant pay 40,50 or 55% commission on it if the client can pull the PUAR out at any time and it provides a leveraged death benefit if they die. The base policy pays the higher commission because the premium is committed for decades & the base policy builds little to no cash value for many years (partly because of commissions paid to agent).

Even then, the cash value that builds in the base policy is not liquid & cannot be partially surrendered/withdrawn. The base policy cash value is only accessible by loan.

If the commission on PUAR was the same as the base policy, it would look horrible & there would be no reason for the client to use it as a way to accelerate their values.

Banks also don't have to pay a leveraged death benefit on the money they took on deposit. An insurance company may have to pay a $10,000 death benefit for the $1,000 deposit they received for a PUAR deposit. Also, the same carrier may allow those PUAR deposits for another 20-50 years, allowing a client who may be completely uninsurable to continue to buy leveraged death benefit each year, potentially decades after they were underwritten for the policy
 
You're right. I should've said something closer to "actuarily calculated anticipated claims".

That is definitely correct. And generally the more conservative you are in that, the better your rating (one of many factors of course).

I believe it is NWM or NYL that says they have more than $1 Trillion of life insurance death benefit in force? If they had to 100% reserve that, the life insurance industry wouldn't exist as we know it, and if it did get anywhere near as big, the companies would basically control the economy.
 
When it comes to the general fund, yes they are a 100% reserve institution. They must have funds equal to the aggregate cash values of their policies. As is the same with separate accounts, but then that money is never the insurance companies and can never be used to satisfy its obligations.

Um... Net death benefit = cash values + net amount at risk - any outstanding loans.

The cash values of the policy IS invested in the reserve, and by definition, is used to satisfy claims. Where else would the net amount at risk come from?

And technically speaking, the cash values belong to the insurance company, but the policy holder has access to them. If accessed, death benefits are reduced by the loan or withdrawal of the cash values. Until borrowed or withdrawn, they belong to the insurance company as the reserve for the given death benefit.
 
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