Help With Knocking Out a UL

[Rearden]

OK -- to make sure I get this right -- GULs guarantee the premium regardless of the underlying cash value or illustrated cost of insurance?

So... playing devil's advocate here... the annual contributions to this man's illustration were $2050. He's 65 now. In 30 years he will have paid in $61500 -- odds are by 95 he's dead.

Even considering interest rates, admin costs, etc... Why would any insurer think its prudent to lose nearly $40k on a policy? Return on investment couldn't be that good.

So far, that sounds too good to be true. Plus, I've come across several of these products that have "blown up" by the time the insured reaches their 80s. Sounds like it's the traditional UL, but still...

Additionally, if these GULs are so good, why would anyone need WL anymore?

Also, thanks for the help so far. Obviously this UL/GUL business is unfamiliar territory for me.

 

[rousemark]

OK -- to make sure I get this right -- GULs guarantee the premium regardless of the underlying cash value or illustrated cost of insurance?

So... playing devil's advocate here... the annual contributions to this man's illustration were $2050. He's 65 now. In 30 years he will have paid in $61500 -- odds are by 95 he's dead.

Even considering interest rates, admin costs, etc... Why would any insurer think its prudent to lose nearly $40k on a policy? Return on investment couldn't be that good.

So far, that sounds too good to be true. Plus, I've come across several of these products that have "blown up" by the time the insured reaches their 80s. Sounds like it's the traditional UL, but still...

Additionally, if these GULs are so good, why would anyone need WL anymore?

Also, thanks for the help so far. Obviously this UL/GUL business is unfamiliar territory for me.

Most people are going to be paying a much higher premium because few are qualify for that rate..And, you also have to take lapse ratios into consideration.. Not all policies are going to result in a benefit payment.

 

[jdeasy]

OK -- to make sure I get this right -- GULs guarantee the premium regardless of the underlying cash value or illustrated cost of insurance?

So... playing devil's advocate here... the annual contributions to this man's illustration were $2050. He's 65 now. In 30 years he will have paid in $61500 -- odds are by 95 he's dead.

Even considering interest rates, admin costs, etc... Why would any insurer think its prudent to lose nearly $40k on a policy? Return on investment couldn't be that good.

So far, that sounds too good to be true. Plus, I've come across several of these products that have "blown up" by the time the insured reaches their 80s. Sounds like it's the traditional UL, but still...

Additionally, if these GULs are so good, why would anyone need WL anymore?

Also, thanks for the help so far. Obviously this UL/GUL business is unfamiliar territory for me.

For people that want a higher face amount permanent insurance and not worried about cash value then GULs can be great.

They are not great for the FE market because if a payment is missed the guarantees of a GUL are usually out the window.

For the middles class people that have always had a checking account and have always paid their bills GUL can be a very good option.

I can't think of a case now where regular UL would be good for anyone. Might as well buy a term.

In this case you need to find out exactly what the guy has before you can consider replacement. What about replacing all those other policies? Looks like you have stumbled into a potential gold mine.

 

[scagnt83]

They are not great for the FE market because if a payment is missed the guarantees of a GUL are usually out the window.
.

Not true.

First, you have a window to pay the premium before the Guarantee goes away.

Then, even if the Guarantee goes away, you can catch up on premiums within a certain time period and it is reestablished.

Also, sometimes the face can be reduced to establish a new Guarantee and slightly lower premiums moving forward.

And what happens to a FE/WL policy when premiums are missed?... last time I checked it lapses; unless it has a non-forfeiture option...

 

[jdeasy]

Not true.

First, you have a window to pay the premium before the Guarantee goes away.

Then, even if the Guarantee goes away, you can catch up on premiums within a certain time period and it is reestablished.

Also, sometimes the face can be reduced to establish a new Guarantee and slightly lower premiums moving forward.

And what happens to a FE/WL policy when premiums are missed?... last time I checked it lapses; unless it has a non-forfeiture option...

Them FE people are always good about catching up back premiums.

As for keeping it in force on a whole life the cash value will pay the missed premiums. The guarantees don't go away the way it will with GUL.

But, if you want to sell GUL to the FE market, have at it. I would love to follow you.

 

[WinoBlues]

OK -- to make sure I get this right -- GULs guarantee the premium regardless of the underlying cash value or illustrated cost of insurance?

So... playing devil's advocate here... the annual contributions to this man's illustration were $2050. He's 65 now. In 30 years he will have paid in $61500 -- odds are by 95 he's dead.

Even considering interest rates, admin costs, etc... Why would any insurer think its prudent to lose nearly $40k on a policy? Return on investment couldn't be that good.

So far, that sounds too good to be true. Plus, I've come across several of these products that have "blown up" by the time the insured reaches their 80s. Sounds like it's the traditional UL, but still...

Additionally, if these GULs are so good, why would anyone need WL anymore?

Also, thanks for the help so far. Obviously this UL/GUL business is unfamiliar territory for me.

Those would have been the Accumulator type policy. Great opportunities there.

If you really want to see the benefit of a GUL over a SIWL policy do a closer apples to apples comparison. Use the same premium for the same face amount. The GUL will be paid up early. Then more likely will be in force when the client dies.

 

[VolAgent]

OK -- to make sure I get this right -- GULs guarantee the premium regardless of the underlying cash value or illustrated cost of insurance?

So... playing devil's advocate here... the annual contributions to this man's illustration were $2050. He's 65 now. In 30 years he will have paid in $61500 -- odds are by 95 he's dead.

Even considering interest rates, admin costs, etc... Why would any insurer think its prudent to lose nearly $40k on a policy? Return on investment couldn't be that good.

So far, that sounds too good to be true. Plus, I've come across several of these products that have "blown up" by the time the insured reaches their 80s. Sounds like it's the traditional UL, but still...

Additionally, if these GULs are so good, why would anyone need WL anymore?

Also, thanks for the help so far. Obviously this UL/GUL business is unfamiliar territory for me.

You are forgetting about lapses and earnings on reserves.

But you are also right. Lincoln just pulled one of their GULs off the market and made some tweets to other products. If interest rates stay where they are, expect to see more changes from more companies.

Kind of a buy it now situation. The policy is contractually guaranteed as long as payments are made, so even if there are future changes you are safe.

 

[scagnt83]

Them FE people are always good about catching up back premiums.

As for keeping it in force on a whole life the cash value will pay the missed premiums. The guarantees don't go away the way it will with GUL.

But, if you want to sell GUL to the FE market, have at it. I would love to follow you.

Yeah they are good about it like they are at paying regular premiums.... lol.

I admittedly dont work the FE market actively. And consider FE to be more of a SI/GI type product/situation.

But from the FE I have sold there isnt a whole lot of CV to pay premiums for too long... its more than a GUL with the same premium, but not with the same DB....
And technically UL CV does pays the expenses when premiums are missed.


Different products for different situations. Most GUL is $100k+... most situations that most consider "FE" are less than that.

And since its LFGs GUL, its at least a $100k DB here...

 

[Franz Kafka]

Naturally if they want a DB of $100K (or even $50K) and are in good health FE's are not meant for them.

To Reardon: If you want to compete with a GUL, you must attack the weak links.

Are they in good health? Will they have absolutely no need for cash access in future? Do they even want cash access in future in case of emergencies? Do they want to pay until they're over 100? (quite possible nowadays if they're in good health) Do they realize GUL premium will get lower if and when interest rates start to move up? Do they want a policy with a LTC coverage rider? etc

If their mind is set on GUL, can they find a better risk class or premium offer somewhere else?

 

[WinoBlues]

Instead of attacking the product maybe like Franz said quote a better priced product. I also would cut the the other agent's knees out from under him. Why the hell did he write him a SIWL 6 months before he quoted him Prfd+. Why not a pref'd Whole Life product? Is he low balling him on the GUL quote?