Surrendering FFIUL Now Or Later

A family friend recently informed me that he was sold a Transamerica FFIUL policy from a WFG rep about 1 year ago, and I did a bit of educating on why the FFIUL is a disaster (i.e. high COIs in later years). However for this type of policy, the surrender charge doesn't mirror the cash value until year 15, if we were to do a 1035 exchange.

In this scenario, would it be better for the client to cut his losses, forfeit the premiums paid for the first year, and start a fresh new IUL policy with someone better like North American/Midland? Or is it better to ride out the next decade and a half to do a 1035 at a time when the surrender charges mirror the accumulated cash value? Please explain your rationale.
 
In my opinion, provided the life insurance is being purchased for the death benefit, it's more important to have the right amount first. Then worry about the type. Term can always be converted. What isn't know is why this individual purchased a permanent plan of insurance. IF this individual chooses to purchase a new contract, it's imperative the new policy the contract be in-force prior to terminating the old one.
 
Another thing to keep in mind, client's health is almost guaranteed to not be as good in 10+ years. So healthy rating is likely to be lower. I recently left WFG and am facing the same exact scenario with my own personal policy as well as a few clients' policies. All depends on the person to be honest. Have a conversation with them.
 
Cut that crap contract loose, send me your best NA or Midland Illus and I'll show you an illus that will make you proud to present! Oh. make sure you include the expense report with your illus please.
 
IUL is a long term play. TA's FFIUL has some of the highest charges in the business but it also has one of the highest cap and floor leading to one of the highest AG49 rates (the average of the historical 25 year periods under the current cap and floor) out there. In the end, these lead to an average to above average product. Not the best, but not awful either.
I'd be more concerned about service though than I would product. The product's OK.
 
if the client does proceed to cancel, it is still likely a good idea to 1035 the policy to either a new life product or annuity product. while the client cant take a loss on their tax return for the loss (negative taxable gain), they can 1035 the cost basis from the current contract to a new life or annuity. At least the current loss will move over to a new contract & wash away some future gains in the new contract.

But that topic is secondary to figuring out what the client needs & if a new policy is warranted, etc
 
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