How Do You Run IUL Presentation?

Apr 6, 2015

  1. sam816
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    sam816 Super Genius

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    Because IUL is a product that has so many "moving parts", how do you respond to "what if" questions by a prospect during the presentation? Do you run the illustration software on the spot to show a different scenario or do you tell him you need to have someone else rerun the illustration for you?

    Also I heard that Winflex does not work well for some carriers' products. For those of you generate your own illustrations, do you have access to multiple carriers software?

    TIA.
     
    sam816, Apr 6, 2015
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  2. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    You're making it too hard on yourself. You need a better framework for discussing IUL. I like to talk about risk, return, and costs.

    What is the risk? The real risk in an IUL is that the underlying index segment won't produce a positive return for a sustained period of time. There is usually a "fixed account" strategy for that... and some carriers will retroactively grant a minimum amount of interest (3% for example) if that does happen.

    What are the return possibilities? Keep it simple with a 0% floor and a 14% cap for a given index segment (not including dividend performance).
    - If the given index does 14% OR BETTER, then your contract will be credited the maximum of 14%.
    - If the given index does LESS than 14%, you'll be credited with that amount of interest.
    - If the given index is negative, you will not lose anything (due to market fluctuation).

    For a given index segment, there is a given cap &/or participation rate. These are (generally) the only areas that move year to year.

    What are the costs? The illustration will freak you out with "maximum charges" and "zero credited interest". Well, insurance companies would have to file for approval to raise the charges to the allowable maximum. And when was the last time you saw a 50-year stock market plateau?

    Why do UL and IUL illustrations show costs of insurance rising? Because returns are NOT GUARANTEED in this product, so expenses must be disclosed. Just like buying a mutual fund that has variable returns, you need to know what will affect your returns in your contract.

    You will probably be surprised to know that WL has the EXACT same expenses as any other permanent life product. However, because WL has FIXED interest (and dividends are not guaranteed), expenses don't have to be disclosed. Think of it like buying a CD at the bank. You don't need to know the expenses on the CD... because it's guaranteed and insured.

    If you want to run conservative scenarios, I'd look into varying the returns... or just keep the annual returns half of the current cap rate at the most.

    But no, you don't need to re-run illustration scenarios... because illustrations on this product are practically MOOT. It's a concept sale, so talk about the concepts in simple terms, and you'll be fine.

    ----------

    Here's Guy Baker describing "The Box" that is life insurance:
    https://www.youtube.com/watch?v=7WUQYdpSbzE
     
    DHK, Apr 6, 2015
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  3. scagnt83
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    scagnt83 Worldwide Expert of Everything

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    If you are not running your own illustrations you are doing yourself and your client a huge disservice. Illustrations are hands down the best way to truly learn the product. If you have not read the explanation of benefits on the illustration (the multiple pages before you get to the actual numerical illustrations. And read it multiple times until you understand it all. Then you have no business selling IUL.


    Forget Winflex. Use the carrier software. Good IMOs will get you the carrier software for the top carriers. But for 2 of the top carriers, Midland & Penn Mutual, you can contract direct, no IMO needed. Just call their internal sales desk and they will get you set up with software and contracting.
    Other top carriers that require an IMO are LFG, Allianz, Axa, Pac Life. If the IMO will not get you software call the carrier. Many will grant temporary website access. Or just get appointed and then go on the website and download software.


    When presenting you only need one illustration. The illustration has a current/Mid/low column.
    Run current at a reasonable rate, 6%-7%.
    Midpoint will usually show 2% less than Current.
    Low will show if the S&P is never positive the whole time.

    Using a Yearly Point to Point Cap that is over 11%, 5.5% crediting has happened around 98% of the time historically. So explain that around 4.5% would be worst case from a historical perspective, based on the past 50 years.
    Never set up the expectation that the policy will credit over 7% long term!!!


    Most important. Learn how to properly overfund a policy. Unless you run the illustration yourself, there is no way to know if the policy is fully overfunded or not. If you dont know how, then start reading the IUL section here on the forum. There are many posts about it.

    Until you know the explanation section front to back, and know how to run your own over funded illustrations. You have no business selling IUL.
     
    Last edited: Apr 6, 2015
  4. 1963
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    1963 Super Genius

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    IUL is a prime example of the need to know the product at a proficient rate. Scagnt has an excellent idea for gaining knowledge of this product. Know the illustration and acquaint yourself with the historical performance of this product. Don't be guilty of underfunding the policy to get a sale; you would cause the client to have serious problems with you down the road! Make sure you run your current rate so that the client does not have unrealistic expectations of credits to the policy, but don't run current rates so low that the client has no confidence in you or your product. Get one of the old grizzled vets to show you how to determine what is proper funding of an IUL; until you have got it, don't try to sell it! To show lack of knowledge when presenting ANY product is to lose the client's confidence in your ability to serve them!
     
    1963, Apr 7, 2015
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  5. Lloyd Allen
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    Lloyd Allen New Member

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  6. InsuranceIsLife
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    InsuranceIsLife Expert

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    If the client is interested in the cash value aspect and DB protection, but not intending to overfund the crap out of it for max cv accumulation, Protective IndexedChoice IUL (has a no lapse protection) and LFG WealthPreserve IUL (NLG to age 90). Both are great and low cost products.
     
  7. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    First, you're right. If you're looking for a specific death benefit at a given premium, then you sell non-lapse guaranteed products - either IUL or GUL with those protections.

    It depends on what you're solving for.

    It's interesting that I'll read that "clients don't intend to max-fund the policy"... but it's up to US to teach clients how it all works and why they should want to do it. Then, there is FLEXIBILITY, but it shouldn't be done long-term. Yes, they can lower their payment, or even skip payments... but that should be a short-term issue, not a long-term strategy.
     
    DHK, Jul 8, 2019
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  8. jdumond
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    jdumond Expert

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    I believe this to be incorrect. Since you are typically utilizing an IUL for income when you begin taking the income your DB should be doing down, thus decreasing the cost of insurance as the client ages.

    In a whole life contract, the WL company will be taking the total mortality charge for your stagnant DB to age 100, all other charges policy fees ect... and dividing by the clients premium paying period. (whether it is to age 100, 20-pay, pay to age 65 ect..)

    Maybe the IUL's are front loaded to make this a wash calculation?
     
    jdumond, Jul 8, 2019
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  9. Lloyd Allen
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    Lloyd Allen New Member

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    I can help you with that.
     
    Last edited by a moderator: Jul 9, 2019
  10. InsuranceIsLife
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    InsuranceIsLife Expert

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    Stop trying to recruit ^
     
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