Creating an efficient whole life policy

Dec 25, 2018

  1. Allen Trent
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    Allen Trent Guru

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    I am not sure I would use the word "sales load" as the most accurate terminology. in the case of PUAR, or SPWL for that matter, it isn't as much a "sales" load, it is more of a 1 time mortality expense load to cover the risk the carrier will have to pay out the death benefit of the PUA purchase. I know it ends up meaning the same to the consumer in that it takes an initial amount of their PUA payment as a load.

    But would we also then say that the base WL has a 100% sales load if it has no net cash value in the 1st year?

    Unlike UL that has both a premium load & COI to cover the mortality risk, it seems to me the load on PUA is the trade off from the owner & carrier for the risk of paying the PUA death benefit
     
  2. Lloyds of Lubbock
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    Lloyds of Lubbock Super Genius

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    Every PUA payment you make carries a sales charge, or load if you wish.
    Even the carriers marketing materials describe it as such.
    Whether it is to cover mortality, contribution to surplus, comp to the agent...its a sales charge.
    As far a 100% sales load in year one......why couldn't you say that?
    Regardless of where the money it was a 100% loss to the client.
     
  3. Lloyds of Lubbock
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    Lloyds of Lubbock Super Genius

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    Also sales charges on PUAR payments can be misleading.
    For example Penn charges 8.5% Guardian 5%.
    If Penns net single premium after the sales charge buys more DB than the Guardian it has a better value the client irrespective of the sales charge.

    I only discovered this forum a few months ago, but thanks for your viewpoints and a happy new years to all!
     
  4. Allen Trent
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    Agree, I just meant that the wording "sales load" might give the wrong impression that it is merely to pay the agent in a similar fashion as how a sales load on mutual fund might happen. You may be correct that it is identified by some carriers as a sales load, I just have not seen it identified as a sales load. I have only seen it listed as a premium load, not a sales load.

    Again, same net difference to consumer. I just didn't want the consumer in this thread thinking an agent was pushing a PUAR for compensation to get the sales load. When in reality, the agents encouraging consumers to utilize PUAR are actually sacrificing a ton of compensation for the overfunding benefit of the client if max funding is the goal.

    All good
     
  5. Lloyds of Lubbock
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    From Guardians website, they call it a expense charge.

    PUA Rider Premiums Guardian’s PUA rider offers more flexibility at a reduced cost. To provide for additional cash value and death benefit growth, 2/3rds of our whole life policyholders add a Paid-Up Additions Rider. Guardian’s expense charge is guaranteed at 5% (unless substandard); MassMutual’s current expense charge is 7.5%, with a guaranteed maximum charge of 10%.

    Personally , I think it is misleading as it is true the charge may be less, it doesn't mean it is a better value to the consumer.
     
  6. Allen Trent
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    you are right. If they are directly comparing merely their puar expense charge to Mass, it is a bit deceiving. reminds me of all the IUL carriers, or even UL carriers, touting their interest rates or caps being better than another carrier, but fail to disclose their COI or policy fees are much higher.
     
  7. Purdue
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    Purdue New Member

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    Can this PUA Rider be added later, after the policy has been bought?
     
    Purdue, Dec 27, 2018
    #17
  8. Allen Trent
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    Some do allow it, but you have to be medically underwritten for it to be added. this is because every added deposit you make buys paid up insurance.

    Best to add it at issue of the policy. But if you already have a WL policy, you could inquire to ask the carrier if they offer the PUAR rider & if it can be added to your policy.
     
  9. Purdue
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    Are dividends in WL the same for the new business and for in force policies?
     
    Purdue, Dec 28, 2018
    #19
  10. Lloyds of Lubbock
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    Are dividends in WL the same for the new business and for in force policies?
    Depends on the company, some companies pay a different dividend to different classes of policies.
    This is common with Mutual Holding Companies.
    If there is a company you are planning to do business with, read their dividend announcement, it will be disclosed
     
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