Simple Dumb Question - Life Insurance Guarantees

[Milkman1265]

If it is shown on the guaranteed table and it outlines the years for premium and benefit... the company can not change the policy correct?

just trying to figure out what target premium is, i always though this is what they THOUGHT will cover you for the rest of your life, butt things change, cost of insurance etc... and then they bill you again.

But on some illstruations i see that its on a guaranteed table. to 95.

 

[Josh]

Butt things do change Sorry, couldn't resist.

 

[VolAgent]

Target premium is the maximum premium upon which you receive full commission on a UL. Generally, it is the premium that will get the policy to reach maturity based upon age, gender and underwriting class, but not necessarily.

As an agent, all target really means is that it is the maximum fully commissionable premium.

On an illustration, the guaranteed column is the worst case scenario. It is the worst it can get, so if the planned premium gets the guaranteed column to run out to maturity, then they have nothing to worry about as long as they pay the planned premium on time.

 

[Milkman1265]

ah i see, that makes sense. i see a lot of UL pay only 20 years and then lapse at 95. and 96 is like 150k per year. crazy

 

[LGilmore]

"i see a lot of UL pay only 20 years and then lapse at 95. and 96 is like 150k per year. crazy "

That is why you avoid ULs and look more at a GUL if you're going that route.

 

[VolAgent]

ah i see, that makes sense. i see a lot of UL pay only 20 years and then lapse at 95. and 96 is like 150k per year. crazy

You can make a UL do almost anything. It may have only been designed to last 20 years. If so, then yes year 21 is going to be ugly if you want to keep it in force.

The flexibility of a UL is also its downfall. In the hands of an ignorant or greedy agent, a UL is a dangerous thing.

 

[LGilmore]

"The flexibility of a UL is also its downfall. In the hands of an ignorant or greedy agent, a UL is a dangerous thing."

Very well put.

I remember years ago when I was with a certain mutual, that the "boys from NY" had to come into the office I was at and visit around 300 policyholders in that office whose UL were on track to blow up. They needed to fix them and explain that minimum premium when interest rates decline does not make for longevity of a UL policy.

 

[Milkman1265]

i have a couple p&c clients with AIG UL I that will lapse at 65 whether they pay or not. their 59,

isnt paying pointless? it also started asking for money as well. it was sold as pay 10 years and guaranteed to 95.

as long as its shown on the guaranteed side, the company can not say OH sorry you need to pay X to get it back right?

I've seen some continue coverage secondary riders that makes the guarantee side pay 10 years 3k then 0 until 95 but the death benefits will still be all the way to 95

also for the guaranteed pay up in 10 years, what if they missed 1 payment just because they forgot. can they pay double next year or this will "change" the whole UL structure and then its goes into crazy mode.
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seems like everyone is pulling out of GUL as well.

 

[LGilmore]

Get a current illustration and make sure your suggestion are sound. Doesn't matter what they did or didn't do in the past, wasted energy. See what you can find for them now.

 

[rousemark]

i have a couple p&c clients with AIG UL I that will lapse at 65 whether they pay or not. their 59,

isnt paying pointless? it also started asking for money as well. it was sold as pay 10 years and guaranteed to 95.

as long as its shown on the guaranteed side, the company can not say OH sorry you need to pay X to get it back right?

I've seen some continue coverage secondary riders that makes the guarantee side pay 10 years 3k then 0 until 95 but the death benefits will still be all the way to 95

also for the guaranteed pay up in 10 years, what if they missed 1 payment just because they forgot. can they pay double next year or this will "change" the whole UL structure and then its goes into crazy mode.
- - - - - - - - - - - - - - - - - -
seems like everyone is pulling out of GUL as well.

If the guarantee side of the illustration shows it lasts until 95, it will last to 95 as long as all assumptions are met. One of those assumptions is that premiums will be paid on a certain schedule. If premiums are not paid as scheduled, then the illustration is void...Skipping premiums and then making them up later affect the amount of interest paid to support the illustration.