Is VUL a good product?

[Lorenzoditonti]

It's an investment vehicle. It's not a good or bad investment. It's just a vehicle. How you use it can produce tax advantages, high returns and life insurance all in one spot. That being said, it's important to know the risk, which is unlimited and the risk appetite of the client.

 

[DHK]

Technically, the risk is not unlimited. The risk is that the policy can go to $0 and trigger a phantom income tax based on outstanding loans.

Unlimited risk would technically imply that you can go way past a zero balance.

 

[Tahoe Ray]

Btw, I can admit my bias towards more safety & security because it took 4 1/2 to 5 1/2 YEARS to rebound from 2008... when it only took 2 months to crash 50%.

I made more money in 2008/2009 in my investment accounts than I have in my life because I was making great money and pounding it into the down market.

Your assumption that someone invests at a point in time is just not accurate for many. It is accurate for retirees, but they're long past where life insurance can be meaningful as an accumulation vehicle.

 

[Tahoe Ray]

It's just me, and I by no means paint your or DK with a broad brush, I just feel these types of products are often miss used.

We can agree with that. But people who know what they're doing with these products and have clients who understand the risk can be rewarded substantially.

People who make a lot of money (in most cases) are pretty sharp. They are the ones who should be buying VUL. Otherwise, a 401k coupled with a Roth and a WL plan is a great retirement strategy.

Selling VUL/IUL to someone not in that category can send things off the rails.

The licensing thing was more along the lines of compliance. If you try to do something way out of bounds, a b/d will decline it whereas an insurance company may approve.

 

[Chuckler]

We can agree with that. But people who know what they're doing with these products and have clients who understand the risk can be rewarded substantially.

People who make a lot of money (in most cases) are pretty sharp. They are the ones who should be buying VUL. Otherwise, a 401k coupled with a Roth and a WL plan is a great retirement strategy.

Selling VUL/IUL to someone not in that category can send things off the rails.

The licensing thing was more along the lines of compliance. If you try to do something way out of bounds, a b/d will decline it whereas an insurance company may approve.

I have someone lined up for a VUL after I’m licensed. I really want to make sure I do it right. Can I message you so you can help me understand how to use it correctly?

 

[Chuckler]

Friday I sold a policy to a third party contract worker for Prudentual. She works at home taking customer service calls from policy holders.

The first thing she asked me was, does this (it was a simple whole life plan) work like a IUL. She new very well the story of policies eating themselves alive. I said "no", and then sold her.

These products are complex and lack guarantees. My personal opinion is they are sold way more often than they should be to people who are unable to understand them by agents who do not fully understand or care about the risks they expose their clients too.

IMHO

Anyway you can get her to sit down and talk about her experiences and concerns with an IUL on a share able and recorded format (say a YouTube video that’s audio only)? I know a certain someone is pushing all of his followers towards an IUL, so it would be nice to get an opposing view from someone that doesn’t sell but does deal with the issues stemming from IULs.

 

[Life Hawk]

Btw, I can admit my bias towards more safety & security because it took 4 1/2 to 5 1/2 YEARS to rebound from 2008... when it only took 2 months to crash 50%.

Spot on... talked to too many folks during that time period that watched their risk products take a beating... that's ok when time is on your side, but when retirement is around the corner, risk needs to re-assed and changes made.

What's funny is that risk is touted when the market is plus and you can't get ahold of your advisor when something like 2008 pops up.

 

[Chuckler]

How about that average vs actual conversation?

Just lots of "potential".

View attachment 6976


Every time the market goes down, this is the return you'd need the next year just to get back to EVEN:
View attachment 6977

Not looking to override what your firm is teaching you, but... I am.

To be perfectly honest, I’ve learned more here than I have in most of my training and I know when companies try to position their sales force to try and do things that generate more revenue but aren’t in the best interest of their customers (my previous employer). I’ve always tried to do what’s in the best interest of the people that do business with me because I just don’t care enough about a few hundred extra dollars or even thousands of dollars to line my pockets at their expense. So please keep educating me on how I can do that in this industry because if I am to be successful - that is the only way I want to be successful (client focused).

 

[DHK]

I made more money in 2008/2009 in my investment accounts than I have in my life because I was making great money and pounding it into the down market.

Your assumption that someone invests at a point in time is just not accurate for many. It is accurate for retirees, but they're long past where life insurance can be meaningful as an accumulation vehicle.

Fantastic distribution vehicle though.

 

[Life Hawk]

Anyway you can get her to sit down and talk about her experiences and concerns with an IUL on a share able and recorded format (say a YouTube video that’s audio only)? I know a certain someone is pushing all of his followers towards an IUL, so it would be nice to get an opposing view from someone that doesn’t sell but does deal with the issues stemming from IULs.

That would be a great idea, but I'm on a working vacation to see family and will headed in the next day or two.

I like leaving a home knowing what can and what will happen with the product I place. From FIA's to life products. I don't want to visit someone and have to explain why there investment just disappeared... regardless who or what the cause. It's just me, but I sleep a lot more soundly at night.