Ohio National - Demutualization

[DHK]

Im saying the increase in a funds expenses creates a lower return for the client than they originally planned around. Same as WL dropping dividends... the net effect to the client is they get less money than originally planned on.

Clients most certainly look at the two categories as having the same effect to their finances.

YES! The net EFFECT may be seen similarly, but the CAUSE is different.

And OUR job for our clients is to NOT conflate the issues and to put the 'blame' squarely where it belongs.

 

[scagnt83]

It's paid up.

Try again.



The CLIENT is responsible for the policy's earnings in a WL policy?

No. That's what the GUARANTEED columns are for.

I think... you're confused.

You are assuming all 10pay WLs are past y10 and fully paid up.

The client is responsible for paying the adequate premium to create enough CV in the policy to have enough interest to cover the ongoing expenses. Same as a 10pay UL.

Not only are they responsible for paying those premiums (thus creating enough earnings to cover expenses. But they are responsible for RISKING those premiums by trusting them to the insurance carrier.... just ask your ON policy holders about that risk... it blew up on them.

 

[scagnt83]

YES! The net EFFECT may be seen similarly, but the CAUSE is different.

And OUR job for our clients is to NOT conflate the issues and to put the 'blame' squarely where it belongs.

Our job is to advocate for our clients. The client doesnt care which insurance term screwed them over, all they care is they were screwed over.

The point PFG made is that they are both types of risk that the policy holder assumes. He never said they were the exact same technical risk... he said they are the same net effect to the client. Doesnt matter if its a, b, c, or x.... a loss is a loss and a risk is a risk.

 

[DHK]

You are assuming all 10pay WLs are past y10 and fully paid up.

The client is responsible for paying the adequate premium to create enough CV in the policy to have enough interest to cover the ongoing expenses. Same as a 10pay UL.

Not only are they responsible for paying those premiums (thus creating enough earnings to cover expenses. But they are responsible for RISKING those premiums by trusting them to the insurance carrier.... just ask your ON policy holders about that risk... it blew up on them.

The guarantees are exactly the same as they were. After 10 years, the policy will be paid up. No more premiums due. (That's what it means!)

Do you know WHAT "blew up" on them? It was utilizing a 10-pay (or other limited pay policy) as a source of retirement cash flow entrusting that the cash values could continue to grow while taking a measured loan against the policy.

THAT is what "blew up" on them. Now, the cash flow is far lower. Closer to 3-4% instead of 6%.

But the policy itself... is guaranteed paid up for the death benefit. That never changed.

Again, I believe you're confusing a short-pay UL strategy with a limited-pay WL policy.

 

[DHK]

Our job is to advocate for our clients. The client doesnt care which insurance term screwed them over, all they care is they were screwed over.

The point PFG made is that they are both types of risk that the policy holder assumes. He never said they were the exact same technical risk... he said they are the same net effect to the client. Doesnt matter if its a, b, c, or x.... a loss is a loss and a risk is a risk.

If you don't know which 'term' screwed them over, how in the hell can you address it going forward?? I believe that clients LIKE it when their agent doesn't just say "Your policy is screwed. Let's go to THIS one!" I believe it makes far better sense to have a level, educated discussion of "Here's what happened, here's what's going on with your policy, and there are some options. What would you like to do?"

It's not like the policyholder is necessarily stuck with the policy.
- Insurable risks can do a 1035 to another life policy.
- Non-insurable risks can either stay where they are, or they can 1035 to annuities.

And unless the company is in RECEIVERSHIP (which it is not), the policyholder has the right to determine their new needs based on decisions that were outside of their control with a company that decided to back-track on the premise that the policy was sold under.

 

[DHK]

As a complete side-note, I do find it annoying that Ohio National ads are on the forum... but someone might as well profit from all their blunders. Might as well be Sam.

 

[scagnt83]

The guarantees are exactly the same as they were. After 10 years, the policy will be paid up. No more premiums due. (That's what it means!)

Do you know WHAT "blew up" on them? It was utilizing a 10-pay (or other limited pay policy) as a source of retirement cash flow entrusting that the cash values could continue to grow while taking a measured loan against the policy.

THAT is what "blew up" on them. Now, the cash flow is far lower. Closer to 3-4% instead of 6%.

But the policy itself... is guaranteed paid up for the death benefit. That never changed.

To summarize what you just said.... the supplemental retirement income plan their agent sold them is what blew up. A 50% reduction in anticipated income to be exact.

A 10pay is not designed to be sold in protection based scenarios, it is a CV product and CV is the primary focus of most 10pay clients. So trying to focus on just the DB is being disingenuous and certainly not what 10pay annual reviews are centered around... especially when the agent sold that client a supplemental retirement income plan with that 10pay.

 

[scagnt83]

Again, I believe you're confusing a short-pay UL strategy with a limited-pay WL policy.

Im not confusing them at all. You can create a 10pay UL that is every bit as guaranteed as a 10pay WL. You dont seem to fully understand how UL works.

 

[DHK]

To summarize what you just said.... the supplemental retirement income plan their agent sold them is what blew up. A 50% reduction in anticipated income to be exact.

A 10pay is not designed to be sold in protection based scenarios, it is a CV product and CV is the primary focus of most 10pay clients. So trying to focus on just the DB is being disingenuous and certainly not what 10pay annual reviews are centered around... especially when the agent sold that client a supplemental retirement income plan with that 10pay.

Again, conflating things.

What YOU said was that the policy had ongoing expenses AFTER it was "paid up".

I countered saying no, it's paid up.

Now you're saying that the 10 pay is purchased for cash value purposes and now the supplemental retirement plan is in danger.

THAT is correct.

But the PLAN is in danger... NOT the policy.

Big difference!

As Diamond and Silk often said: "Don't get it twisted!"

 

[DHK]

Im not confusing them at all. You can create a 10pay UL that is every bit as guaranteed as a 10pay WL. You dont seem to fully understand how UL works.

If I'm selling WL... why do I need to know how UL works?

And again, there's a big difference between a short-pay strategy and a limited pay policy.

Yes, I know there are SOME (very few) UL policies that can be limited pay.
Do I know how those work? No.
Have I ever sold one? No.

Can I guess that they would be front-loaded with cash and then have that cash eroded over time, but still have the death benefit guaranteed? That would be a logical assumption to later be proven.

In that instance, your earlier explanation would be correct.

It doesn't apply to limited pay whole life though.