Re: Life Insurance = Good Investment

[seeknulfind]

Have you ever seen an IUL illustration? Or a UL illustration?
It really helps to read it and it will answer a lot of questions for you.

You need to realize that you are making blanket statements/assumptions when in reality the answer is situation specific.

There are yearly admin costs (which decrease drastically over the life of the policy) plus the yearly "Cost of Insurance" (COI) (which increases at a very small rate over the life of the policy).


These yearly fees are paid from the Premium; if there is a Premium Payment that year.
The remaining amount is what earns interest.

But most overfunded IUL policies are not set up to pay premiums forever. Most people stop around retirement age.

So in the case of a negative year in the market; if no Premiums were paid, then it is possible that the Cash Value could decrease due to the costs associated with the policy.

BUT, even this scenario depends on the specific policy at hand.
Many IULs provide a Guaranteed 1% Yearly Interest Rate if the Index falls below 1% for the year.
So for a policy that provides a yearly min. guarantee; it would not loose any CV because the 1% min would cover the expenses for that year.

So how a negative Index year will affect an IUL depends on the situation.

But if Premiums are paid that year, then the costs will always (as far as im aware of) come out of the Premium.

You are making blanket assumptions from a quick off the cuff answer that he probably did not have time to fully explain given the time constraints of the web show.

Whenever you make a blanket statement in this industry it is almost always just half-correct.

Yes I have seen an IUL illustration. I have not studied it nor gained a solid understanding of it. Nor am I confident that such a study would in any way make me an expert on universal life policies in general.

Hence I appreciate you taking the time to offer some in-depth explanation.

When I began my comments on this thread, I wanted to air some of the thoughts and sort out some of what I've been picking up. You know much better than I how complex even one category of product can be. Add to this complexity, all the other information surrounding these topics, the stories of problems solved and difficulties faced and, well, at least it takes me time to get any kind of handle on it all. Or even some of it.

As my thoughts came together, I became less concerned with how insurance is defined as pertaining to "investment" than how the unique properties and position of insurance fit in the lives of my potential prospects and clients.

In short, I find my own comments moot.

I'd say my own energies are better spent learning how to best utilize these tools to benefit and serve my prospects and clients.

In fairness to Brandon, after reviewing the segment I referred to, I could not see where he made any remarks I attributed to him. Neither was my characterization accurate. One reason I really dislike reciting from memory -- memories of eyewitness accounts tend to fault on fact.

It was Steven Savant who said on "Income Scenarios (The Competition Desk Series)" (at about 6:50 minutes into the segment -- paraphrased) that telling prospects "you'll never lose any money" could get us as agents could get us in a lot of trouble.

Thanks again for your comments.

Andy

 

[scagnt83]

Yes I have seen an IUL illustration. I have not studied it nor gained a solid understanding of it. Nor am I confident that such a study would in any way make me an expert on universal life policies in general.

Reading an IUL illustration will not make you an expert. But it will give you a MUCH better understanding of how the product works.

If you want to learn about IUL the first thing you should do is READ THE ILLUSTRATION!!!

Anyone who says they want to learn IUL but has not read an illustration is not serious about learning the product.

And to not study it because you dont think it will make you an expert is a sorry cop-out. You dont become an expert overnight, other people dont do it for you, and you dont become an expert by not reading.


Half the questions I get from agents about IUL could be answered if they just took the time to read an actual illustration!!!


The front section the "Explanation of Benefits", is where you want to start. Only after you have read the Explanation of Benefits should you look at the numbers.

For you to imply that you didnt read the illustration because you wouldnt be an expert after reading it is an extremely immature attitude to have.

(many agents dont bother to read the Explanation of Benefits, so your not the only one)

 

[Mimic]

It's an investment but that could be a risky angle to use depending on how knowledgeable the prospect is...

 

[LGilmore]

"It's an investment but that could be a risky angle to use depending on how knowledgeable the prospect is... "

Sooooooo are you saying only stupid people buy whole life?

Why is your assumption that "smart" people will shoot it down?

Explain yourself Lucy.

 

[JoKat]

What do you guys think if you say permanent life insurance is like having term with a savings account that is bundled together. Or like a savings account with a death benefit.

 

[DHK]

Nope. Not a savings 'account'... but a savings component to it. The term 'account' sounds like a bank account with principal guarantees... and I don't think that's the proper way to talk about life insurance.

Just like you have equity being built up in a home... you can have policy equity being built in your life insurance.

You can access it on a tax-favorable basis compared to other savings vehicles. And unlike home equity, it isn't subject to the whims of the market (assuming you're not talking about variable life contracts).

Besides... remember that the word 'term' means TERMINATES. Permanent life insurance won't terminate if properly funded.

 

[draconian]

Nope. Not a savings 'account'... but a savings component to it. The term 'account' sounds like a bank account with principal guarantees... and I don't think that's the proper way to talk about life insurance.

Just like you have equity being built up in a home... you can have policy equity being built in your life insurance.

You can access it on a tax-favorable basis compared to other savings vehicles. And unlike home equity, it isn't subject to the whims of the market (assuming you're not talking about variable life contracts).

Besides... remember that the word 'term' means TERMINATES. Permanent life insurance won't terminate if properly funded.

Love that explanation

 

[Deepsea]

I am a new agent. 2 months in the biz, or rather my career contract is 2 months old...went right to career because of the big policy on wife. Other than the policy I bought on my wife, which was a sizeable 10 pay. I have been able to sell 3 more lives with FYC without the one on the wife is about $4400, and then I get a financing bonus on top of that.

Anyway, I kinda look at the policy of the wife as an investment, 30% fyc, plus about a matching financing bonus, and then the renewal comp.

For me being the selling agent and being able to get the commission + financing.....is that such a bad financial plan ?????

 

[DHK]

Always do for yourself what you would recommend to others if they were in your situation.

Basically, would you still recommend the strategy if you weren't getting paid on it? If so, then getting paid on it is a GREAT 'bonus' for doing what you should be doing.

 

[xrac]

I am a new agent. 2 months in the biz, or rather my career contract is 2 months old...went right to career because of the big policy on wife. Other than the policy I bought on my wife, which was a sizeable 10 pay. I have been able to sell 3 more lives with FYC without the one on the wife is about $4400, and then I get a financing bonus on top of that.

Anyway, I kinda look at the policy of the wife as an investment, 30% fyc, plus about a matching financing bonus, and then the renewal comp.

For me being the selling agent and being able to get the commission + financing.....is that such a bad financial plan ?????

It depends upon the company the policy is with to a certain degree. Will you be happy with this product if you do not work for them? However, I will say it is always important to own what you sell.