Easiest Way to Explain IUL to Client

Oct 14, 2015

  1. AOKING
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    AOKING Super Genius

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    Hey everybody,
    What is the easiest way to explain IUL to client (policy will be used for death benefit protection focus) so they get it but some NorthWestern/NYL/Mass agent can't come back through and talk them out of it?
    How do you explain the guaranteed column disapearing because we all know that is what the whole life agent will go after. **Background- I am a former mass agent and Luke whole life and use it, but IUL is great too.
     
    AOKING, Oct 14, 2015
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  2. WinoBlues
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    WinoBlues Guru

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    I am in the process of replacing 4 American National IULs with GULs because of the guarantee columns. These were strictly DB needs and the IULs were minimum funded. That column is very strong.

    Tyler (scagent) helped me understand how a properly built IUL v a minimum funded compared.
     
  3. Newby
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    Newby Guru

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    Just explain it as this is a cheaper monthly payment option for you that may work out for you but if you live too long you may lose all your money like many others who have come before you.

    Then show them the payment for GUL and a third one for whole life.

    Let them decide.
     
    Newby, Oct 14, 2015
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  4. WinoBlues
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    WinoBlues Guru

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    >>......but if you live too long you may lose all your money like many others who have come before you.

    Ouch!

    Yup, by showing the options I feel that I am doing two things. One, showing that I did the work to review options. Two, eliminating the options of the old agent or someone coming in behind me.
     
    Last edited: Oct 14, 2015
  5. Justin Bilyj
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    Justin Bilyj Guru

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    Sounds like the 3 ways to pay idea from TPG forums. Term, GUL, WL or IUL (rent, lease-to-own, own)
     
  6. pfg1
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    pfg1 Guru

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    I explain that it actually could happen, though its not likely. I'm not gonna hide it, I want them to understand that in comparison to a guaranteed product (ie: whole life) there is risk with this type of policy. That said, I design my IUL's with min DB max cash, and I make sure they overfund it. Then I believe that they will have a good chance of it doing well.

    Probably not the answer you wanted, but that is how I explain it. I also run my illustrations at 6%, vs the max allowed. Gives a more realistic and potentially achievable illustration imo. I tell them if they want guaranteed performance, they need WL. If they want potentially better perf and are ok with some risk, IUL is their solution.

    The hardest part about IUL (to me) is that since the product is relatively new, there is no track record to look back on where a client paid into the policy for 20-30yrs, then took out income for 20-30yrs (as everyone likes to illustrate). On paper it looks like it should work great, hopefully they will.
     
    pfg1, Oct 14, 2015
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  7. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    Unless your IUL has a non-lapse guarantee rider... it's the wrong product for a death benefit focus.

    I know Midland and NA have those riders available, and I'm sure many other companies do too.
     
    DHK, Oct 14, 2015
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  8. pfg1
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    pfg1 Guru

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    Good point DHK. I glazed right over that in the original post.
    For DB focus, the adequate no lapse on the IUL, or even a GUL might be better.
     
    pfg1, Oct 14, 2015
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  9. DWPCL
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    DWPCL Super Genius

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    I disagree. There are carriers that have IUL products that are death benefit focused. I also think that a no lapse guarantee is not necessarily needed for most sales.

    If a clients focus is getting the most bang for their buck death benefit wise, current assumption is the way to go.
     
    DWPCL, Oct 14, 2015
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  10. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    I would agree that having a non-lapse guarantee is not needed for most IUL sales.

    However, in my opinion, the vast majority use of IUL is for cash value accumulation within the life insurance tax-advantaged wrapper.

    The OP was asking about using IUL for a death benefit focus... and (as assumed - I hate that word) not necessarily for cash value accumulation.

    If that's the case, then securing a minimum guaranteed premium would be of primary importance... and not securing it, would make the policy open for an ethical replacement because the agent didn't do the job with the right product in the first place.

    Either IUL with a non-lapse rider, a non-lapse guaranteed UL, or a WL policy. Whichever comes out the best, depending on medical underwriting would be what I would recommend.
     
    DHK, Oct 15, 2015
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