Allianz Vs National Life IUL base and term blend.

[sponnaz82]

Am trying to educate my self to understand IUL base & term blend, below explanation taken from their respective sites, National life is clear, term remains until maturity and blends with base IUL DB with additional cost for term rider, but am confused with Allianz, when I compared the illustration I got from separate agents both came out pretty much same, it called out that term insurance stops(along with fee) as soon as the premium stops(after 20th policy year) however the DB didn't drop, the illustration as good as National life, can someone throw more light on how alliance IUL base + term work in Allianz, does it blend like national life or the term coverage amount drops as soon as term coverage ends? It states term insurance is convertible to base coverage within 10 years? if its already blended as per the illustration why conversion required? And additional cost if converted?

• Supplemental Term Rider
  • Initial supplemental term amount: $XXXXXX
  • Stop year: 20( Premium payment years)

Allianz:

Supplemental Term Rider = Adds extra term insurance up to 10 times (or five times depending on age and underwriting) the base death benefit amount of your policy and is convertible into base coverage within the first 10 policy years or until age 75, whichever is sooner.

A maximum cumulative conversion amount may apply. Additional cost at the time of issue.

National Life:

Additional Protection Benefit Rider (APB)

Provides extra death benefit protection
The Additional Protection Benefi t Rider provides extra death benefi t protection at a cost that is generally lower than the cost of the base coverage and thus, will reduce the overall premium per thousand. The cost per thousand of coverage under the APB Rider is essentially the pure cost of insurance. There is no target premium and no other costs or charges associated with the portion of coverage provided under the APB Rider. Adding the APB Rider can increase the total death benefi t protection without signifi cantly increasing the cost. The death benefi t provided by the rider follows the same rules regarding death benefi t options, DEFRA, increases, decreases (& etc.). The maximum rider amount at issue is three times the amount of the base policy.

Availability This rider will be available at issue and after issue on the same issue age and rate classes as the base product. The maximum APB to base blend is 3 to 1 for FlexLife policies. The minimum sum insured is $25,000.Charge

There will be no commissionable target premium. Cost of insurance rates will be the same as the base product.This rider will have a charge per thousand of sum insured, minimum monthly premiums, and minimum guaranteed premiums.

 

[Allen Trent]

99% of the time, I am not a fan of term riders. on many UL products, the term is still charging ART COI rates for the term compared to level premium term like stand alone term would be.

the biggest reason I wont suggest term riders in most cases on the base insured is because many clients have a future financial or income problem (or become Dave Ramsey disciples) & you cant cancel a base UL or WL policy & keep the term. in these situations, most people want to cancel or reduce their cost for the higher cost/commitment base policy, not the term component. So, the client who is now 2, 5 or 15 years older & possibly not insurable, has to qualify for new term to replace the existing coverage & go through a new contestability period. those are never fun so why tie costlier term to a UL/IUL/VUL/WL if you dont need to.

the 1% of the time I find it OK to add term on a base insured on a permanent plan is when the client wants to max fund a contract & adding some additional term coverage opens up more government 7 pay & MEC premium guideline room.

Lastly, same reason I dont like spousal term riders, but even more so because of the divorce potential & that many policies only cover the spouse if they die 1st because when the base insured dies, all riders on the policy end & the spouse is too old to convert, if any, or not insurability to buy their own coverage. Most states also prohibit coverage continuing on a spouse or being a beneficiary after divorce in the standard divorce decree language

 

[Life Hawk]

Lastly, same reason I dont like spousal term riders, but even more so because of the divorce potential

I make it a point to never provide one policy for just this reason. Divorce gets messy and the things that I have seen are disgusting. I even interject that into the conversation prior to paper work.

You hit the nail on the head there.

 

[hunschuld]

With Allianz the supplemental term rider is generally used to either lower the premium or increase cash values. It is also used when there is a temporary need for additional insurance coverage but a person wants to get something for the additional premium vs a standard term policy that when the term ends there is no cash and no insurance. If the cash builds well it adds to the death benefit thus in essence retiring the term insurance. That is what you are seeing. You are probably over funding rather than minimum funding.