Paid Up GUL Question

[BYSFG]

The clock is ticking now, because now you know what's going on.

- You can reiterate that the policy is guaranteed to age 65 at that premium level, but not guaranteed past age 65, and determine if that fits their goals, needs, and objectives.

- Ask ANICO if you can do a policy exchange into their Whole Life (not my favorite WL, but it's available) and do the illustration based on RPU at 65. This should be a non-commissionable option. (The last thing you want is to find out that the wrong policy was sold, and now you make a new commission, so you're getting rewarded for making the error.)

Do two illustrations: one based on the current premium commitment, and another based on the face amount needed. (Yes, there will be a price/premium difference.)

Document these conversations carefully along with all non-commissioned options you research.

But I wouldn't sit on this too long. By being pro-active, you can avoid a potentially even bigger issue down the road.

Why Clients are Successful in Arbitration & Litigation with their Advisers - Thought Leaders

Thanks for the help, it is much appreciated. Part of me right now doesnt even want to deal with field/agent support, but it is a must.

Luckily, 1 was just approved and is a month in. A couple others are pending or have not been delivered due to unavailability. Will do my best to reiterate it and see what I can do. Trying to wrap my head around what the best option here is considering this was based off of the few conversations I had with field support.

The goal was just protection, cash value didnt matter hence the GUL. Will see if I can work something out most likely to guarantee the level premium til maturity. Will bring up your recommendations and see which path is taken. Time to see if if they will even remain said clients of mine.

What a way to start the weekend. Just glad I caught this early.

 

[DHK]

If you relied on field support... and you documented the conversations... then throw them under the bus. Just "own up" to it because they're YOUR clients and you want to take care of them properly.

If it's within the 30-day free look period, have them surrender/'free-look' the policy (that would be the easiest way to go). Then do it right.

Be calm. Do your research for available options first. I'd contact Field Support via email (this way you'd have a response in writing as well) and even talk to their compliance department. Tell them the situation and what you were really wanting to do, and how this won't do what you said it would.

Document EVERYTHING with field support and every interaction with your policyholders.

You'll be fine. It's an easy mistake to make. But you are taking pride in your work and you want to make it right and correct for your clients without any issues with understanding of what they really have.

 

[mwpuck01]

I can show the guarenteed values of a UL and can show it as a paid up policy usually starting with year 8 or 9 if the client wants to pay that much.

 

[DHK]

That's not "paid up". That's called "break even" when policy cash values are equal to or greater than premiums paid. That doesn't mean you can stop making premium payments and keep the same death benefit in force on a UL.

 

[BYSFG]

I can show the guarenteed values of a UL and can show it as a paid up policy usually starting with year 8 or 9 if the client wants to pay that much.

From my situation so far, I would go as far to say the expenses are still ongoing in your scenario as well?

 

[mwpuck01]

I would say so, I don't have my work laptop right now I am out of town on vacation but when i get home ill see if i can add the pdf file. I'm just going off of memory since we were just doing illustrations like this a couple weeks ago and specifically looked at the guaranteed values.

 

[scagnt83]

Certain expenses are always ongoing, such as COI. Others are not such as Premium Load. But you will always have COI no matter what on a UL all the way to age 100. Even if it is "paid up" it still has expenses coming out no matter what UL it is or what options are chosen.

 

[yelchevelle]

I am not second guessing you guys, I just want to make sure I am understanding this topic. I get that a UL (GUL in this case) is never a true paid up policy because you can technically stop making payments or continue making payments basically at anytime as long as the policy is in force and the money or rider is there to pay the COI. This is unlike a true 10 pay or whatever variety of paid up whole life policy where you are contractually not allowed to pay anymore into it. What I need clarification on is what y'all are saying about the guarantees. I personally prefer a whole life chassis better than a UL because to me it puts all of the cards on the table, but I do use UL's if that is what the client wants or needs.

DHK, is what you are saying that the guarantee section of the illustration or policy summary is not guaranteed? Even if the policy shows that no more premiums are paid in, and the guaranteed side shows a death benefit to age 121, it is possible for the policy owner to have to pay premiums in the future to keep the policy in-force ? If so, that is dirty. Maybe I am misunderstanding what y'all are talking about. I have not written any policies under Anico's new GUL, but I wrote some under the old coverage continuation rider on their executive UL. I remember running illustrations where you could pay for 10,15 20, etc. years, and the guaranteed side of the illustration covered to 121. You paid more during those years compared to just the minimum amount for the rest of your life, but it illustrated that you had death benefit to age 121. Are you saying that they could change the guarantee part of that illustration even if the client upheld their end of the bargain?

I specifically asked my internal rep about this, and he confirmed it, and then I made him get an actuary to confirm it. I am not saying you are wrong. I am saying I want to know the truth so I don't sell someone a package that blows up 20 years down the road. I hate having to tell people that their well intentioned life insurance agent from the 80's or 90's really messed up. I don't want the same to ever be said about me.

 

[scagnt83]

DHK, is what you are saying that the guarantee section of the illustration or policy summary is not guaranteed? Even if the policy shows that no more premiums are paid in, and the guaranteed side shows a death benefit to age 121, it is possible for the policy owner to have to pay premiums in the future to keep the policy in-force ? If so, that is dirty. Maybe I am misunderstanding what y'all are talking about..

If the Guaranteed Illustration shows the DB going to age 100 then it is Guaranteed. Period. Based on whatever Premium is shown on that Guaranteed Illustration. Guaranteed is Guaranteed. Nothing dirty at all.

If Loans are taken then that can void the Guarantee. Of course Loans from a WL can cause it to Lapse too...

 

[yelchevelle]

Okay, I guess I misread the earlier text. I have always understood the guaranteed to be guaranteed, but I read the earlier posts to mean that was not the case with a UL. I was trying to figure out why. Thanks for clarifying that.