Lost a 300,000 Gul to a Mutual Fund
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- 8,707
agentjhc said:
The problem is there is definatly no handle on what the client wants to accomplish because what a GUL accomplishes is totally different than a mutual fund.
- 3,764
GUL is considered an investment? Or is it an insurance product?
GUL is insurance but as has been pointed out GUL and a mutual fund are different critters. My point is someone who switches from one thing to another may not understand market risks.
- 3,764
110% agree with that statement. I think you summed it up nicely
Insurance product - look at an illustration - most (not all but most) GUL will have limited cash value growth (guaranteed or assumed) - client pays a guaranteed premium for a guaranteed death benefit (to heirs). A mutual fund is a different animal...buy shares, hope they increase in value....no death benefit. The only way I would consider GUL an investment is as a non-correlated asset (IRR not tied to interest rates, equity performance etc). You (really your heirs) receive a pre-determined tax free rate of return based on your date of death -- die sooner, larger return as you've paid in less premium. Good vehicle to leverage dollars for future of your heirs, but you need to be able to pay the premium and not want your money back except in the form of a death benefit.
- 120
Its not very clear what your asking but I'll take a stab at it. There are 2 different types of accounts; Qualified and Non-Qualified. Tax Qualified accounts house pre-tax dollars and have special tax benefits. 401k, 403b, mutual funds, annuities, IRA's etc can all be tax qualified. Non qualified are post tax accounts and only the interest earned is taxable, not the principle. Things like a checking, savings, CD'S, IRA'S, life ins., and also mutual funds and annuities can also be non qualified. You can't fund a life insurance policy of any kind with an IRA or Qualified account transfer aka a 1035exchange or direct transfer.
- 8,707
I think he is asking a question about a deposit fund which is an account some life carriers offer which allow you to give the carrier more money than is required currently for the premium the carrier puts the excess into a deposit fund and pays interest sometimes very attractive interest.
Those things are great. I had a carrier a few years back, that rather than discounting the term conversion for a UL would take all of the money and put it into a deposit fund. The way this thing was set up, the client could withdraw all of the money with no penalty.
I don't think the carrier realized what they had done when the product was designed. One of my clients converted a term after a year and then withdrew all of the money in the fund and canceled the policy. They had de facto covered him for a year, paid me a commission which was equivalent to 80% of premiums paid, and then essentially refunded his premium.
Nothing came back on me after the situation was explained. I thought sure they'd cancel my appointment, but they didn't, they basically said we screwed up.
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