NLG Lawsuit

[scagnt83]

You stated what the actual problem was (and usually is). IULs aren't the problem. Them being funded improperly is. Agents/Brokers need to know how to ensure that they're properly funded and educate and coach clients towards that end.

To an extent, yes.

But agents have no control over the bait and switch tactics IUL carriers have used with Caps and Participation Rates.

Every few years they release a new product and stop new sales on the old product. And immediately drop Caps and Participation Rates on the old product.

They used to blame it on the decreasing rate environment.
Now its being laid bare for what it really is. Teaser rates.

And we are just now getting into IULs increasing internal fees. Just wait until that hits the fan.

IUL is an inherently risky product, because the carrier is able to reduce your gains whenever they want to.

People blame the whole UL rate fiasco of the 80s/90s on a decreasing rate environment. But many of those policies were taken down to the minimum guaranteed rate, simply because they were allowed to do so.

 

[PrivClientSG]

Just because a State DOI approved a product, doesn't make an absolute. Lawsuits, complaints, etc., have nothing to do with the fact that a product got approved. Every product has to be approved. That doesn't mean the product is a good one, that it is sold well and properly, that it's managed and maintained properly, etc.

Products, and blocks of business, still have to be managed, administered, etc. There are variables, where ranges, minimums and maximums, were approved, but that doesn't mean companies don't make mistakes, decisions that may not be just or proper, and so many more possibilities.

IUL will be the next black-eye on the insurance industry. That statement is not an indictment of the product in and of itself. It is an indictment of the producers who sell it, how it's sold, how it's managed and maintained, etc., and some of the companies who sell it.

 

[Tahoe Ray]

Here is an actual lawsuit.

New lawsuit accuses National Life of misleading IUL illustrations

An Indiana woman is suing NLV Financial Corp. and its two life insurance subsidiaries over a 2023 IUL policy that returned 0% after one year.

insurancenewsnet.com

Thoughts @Sheryl J Moore (since you're quoted)?

 

[Allen Trent]

Here is an actual lawsuit.

New lawsuit accuses National Life of misleading IUL illustrations

An Indiana woman is suing NLV Financial Corp. and its two life insurance subsidiaries over a 2023 IUL policy that returned 0% after one year.

insurancenewsnet.com

Thoughts @Sheryl J Moore (since you're quoted)?

Wow, that was quick. Quite possibly no money had been in the index account to reach its 1st crediting segment by the 1st anniversary. Not defending this company or agent, but this client seems to think there could be a return in the 1st anniversary, which is almost impossible in any scenario

 

[Tahoe Ray]

Wow, that was quick. Quite possibly no money had been in the index account to reach its 1st crediting segment by the 1st anniversary. Not defending this company or agent, but this client seems to think there could be a return in the 1st anniversary, which is almost impossible in any scenario

Not to mention, timing is everything in these contracts.

I have clients in FIAs bought in the same year (over 5 years old) averaging a ridiculous spread between based solely on the month the contract went active.

Maybe they exist, but a DCA bucket in FIAs may make sense.

 

[scagnt83]

Ive had the market timing issues with both FIAs and IULs.

No reason not to DCA or choose Monthly Draft on an IUL. Foolish not to.

 

[scagnt83]

Keep in mind, this lawsuit is more about a Hybrid Index than anything else.

I agree with the description, a "sham" index is what many of the hybrid indexes have turned out to be.

Who would have thought a proprietary index the carrier paid to have created would be bad for the client.....