How IUL's use options

[scagnt83]

You and I are VERY good about splitting hairs.

However, unless there's something I'm missing... how can a limited pay WL policy, with premiums set by the company, have ongoing fees to the client after it is contractually paid up?

If you can show me a client invoice or billing - not talking about loans or interest charges for loans - but a 10-pay (or similar) WL policy, contractually paid up, and somehow... it has ongoing fees... I'd like to see it.

Fees are different than Premium.

Just because a Fee is covered by interest earned, does not mean it ceases to exist.

Again, a limited pay policy only guarantees no more premium is required to cover ongoing expenses. It does not eliminate the ongoing expenses of the policy.

Just because a client does not pay that expense out of pocket, does not mean they are not paying that expense internally from the policy.

Do you actually think the actuaries build the policy so that M&E lasts just 10 years on a 10 pay???

 

[scagnt83]

Also, if 2 people age 65 buy a SPWL policy (or 10 pay) with total payments of $100k, wouldnt they perform the same if there were no embedded costs to the client even if 1 of them was a female super preferred & the other was a male tobacco Table F? Any variance in initial cash values or performance over time would indicate that the pricing for each product varies due to the internal costs & assumptions priced into the product by the carrier.

Excellent example Allen.

By DHKs logic, policy performance would be exactly the same after year 10 for all 10-pay WL policies sold by that carrier.

Obviously they are not... because the ongoing expenses in each one are different.

 

[DHK]

Still waiting for the billing example that shows that the CLIENT is responsible for ongoing fees after it is contractually paid up...

 

[scagnt83]

Still waiting for the billing example that shows that the CLIENT is responsible for ongoing fees after it is contractually paid up...

Again, internal expenses are different than Premiums.

My whole point throughout since you asked the 10-pay question:
Is that the asset the client owns, is still liable for covering ongoing internal expenses that last the life of the policy.

I never said they are sent a bill for it.

A 401k account does not send a bill for the internal expenses... a mutual fund does not send a bill for the internal expenses.

Just because an expense is not billed, does not mean it does not exist.

 

[Allen Trent]

Still waiting for the billing example that shows that the CLIENT is responsible for ongoing fees after it is contractually paid up...

so, to use Home insurance as an example, if I don't see a billing deduction for the cost of various embedded coverages (ie 10% of my house value providing coverage for my other structures or 1000 for a small boat or 5000 for lawn tractor, etc), then that cost is being paid by the carrier?

wouldn't it be more accurate to say the policy pricing included the costs of expected claims for that embedded coverage & added overhead & commissions connected to settling those claims? A client is paying costs for these items whether they even have them or not & in some cases are paying more if they have a higher value house or live in a more dangerous area

Granted, a HO contract price is only locked in for 1 yr.

 

[DHK]

Again, internal expenses are different than Premiums.

My whole point throughout since you asked the 10-pay question:
Is that the asset the client owns, is still liable for covering ongoing internal expenses that last the life of the policy.

I never said they are sent a bill for it.

A 401k account does not send a bill for the internal expenses... a mutual fund does not send a bill for the internal expenses.

Just because an expense is not billed, does not mean it does not exist.

I just deleted my previous responses, because I think I mis-interpreted what you said.

You just said "the asset... is still liable for covering ongoing internal expenses".

That is true.

That's why I said that any internal costs on a contractually paid up policy is the liability of the company. It's the company's job to have properly priced their limited pay policy so they can meet those expenses - as long as the client paid their premiums.


Somehow, we keep agreeing in disagreeable ways. lol.