ThinkAdvisor: IRS Ruling Could Help Fee-Only Advisors Use Life Insurance

[Tahoe Ray]

I am not going to jump into the mud pool about this, but I will say one thing -- no other insurance company, agency, producer group, or agent, nobody, will act upon either of these PLR's. No other person or company, nobody will change the way they do business, the way they charge, their commissions, or their products, based upon either of these PLR's. These PLR's will not help another party, company, or person. They may be a catalyst, but that's it. These PLR's will not change anything for anyone else. Carry on.

Completely disagree but you do you.

Advisory insurance products open up a lot of opportunities for fee only advisors who can't/won't sell certain products because of their (self-chosen) comp structure.

One of the big knocks on advisory life insurance is that taking the fees from the policy hurts the client by reducing basis. The PLR fixes that problem for Protective. I'm sure Lincoln, Nationwide, Ameritas and the others launching advisory products are going to seek similar relief.

These products haven't even been around that long. At least not in their current form.

I feel that it helps the VUL market a lot.

 

[PrivClientSG]

Completely disagree but you do you.

Advisory insurance products open up a lot of opportunities for fee only advisors who can't/won't sell certain products because of their (self-chosen) comp structure.

One of the big knocks on advisory life insurance is that taking the fees from the policy hurts the client by reducing basis. The PLR fixes that problem for Protective. I'm sure Lincoln, Nationwide, Ameritas and the others launching advisory products are going to seek similar relief.

These products haven't even been around that long. At least not in their current form.

I feel that it helps the VUL market a lot.

I didn't say anything about advisory insurance products and fee only advisors. I specifically stated based upon or act upon the PLR's. A PLR ONLY...ONLY applies to the specific person or party who obtained it, and ONLY applies to that one, limited, specific set of facts. A PLR CANNOT be relied upon by someone else -- anyone else. Nobody can do anything because of this PLR. They have to go through all the steps AND GET THEIR OWN. It is not an informality or a given.

Whoever wants to follow suit, must go through the entire process AND get their own PLR. Not opinion. Fact.

 

[Tahoe Ray]

I didn't say anything about advisory insurance products and fee only advisors. I specifically stated based upon or act upon the PLR's. A PLR ONLY...ONLY applies to the specific person or party who obtained it, and ONLY applies to that one, limited, specific set of facts. A PLR CANNOT be relied upon by someone else -- anyone else. Nobody can do anything because of this PLR. They have to go through all the steps AND GET THEIR OWN. It is not an informality or a given.

Whoever wants to follow suit, must go through the entire process AND get their own PLR. Not opinion. Fact.

I know what a PLR is and how it works.

The PLR in this case is at the carrier level for the product (so the letters benefit Protective only at this point).

Other companies are 100% pursuing their own already. It's going to have an effect on the advisory VUL (which is what all of this is about) market as a whole.

 

[PrivClientSG]

I know what a PLR is and how it works.

The PLR in this case is at the carrier level for the product (so the letters benefit Protective only at this point).

Other companies are 100% pursuing their own already. It's going to have an effect on the advisory VUL (which is what all of this is about) market as a whole.

The PLR will ONLY benefit Protective. Period. Other companies have tried this before, and failed to get a PLR. This endeavor is nothing new. Other companies will mimic this PLR but will deviate vis a vis their own wants, desires, etc. -- and like with many, as it's very common -- at a certain point, the IRS will issue a TAM or Formal Notice that will no longer issue PLR's that address this entire topic. Personally, I believe at some point every company will have their hand in this pot and it will not be limited to VUL. PPLI has already seen this. It will eventually impact far more than just one product marketplace. Insurance companies would love nothing more than to find ways which minimalizes the life insurance agent and minimize the life insurance agent's importance, role, scope, etc.

 

[Tahoe Ray]

The PLR will ONLY benefit Protective. Period. Other companies have tried this before, and failed to get a PLR. This endeavor is nothing new. Other companies will mimic this PLR but will deviate vis a vis their own wants, desires, etc. -- and like with many, as it's very common -- at a certain point, the IRS will issue a TAM or Formal Notice that will no longer issue PLR's that address this entire topic. Personally, I believe at some point every company will have their hand in this pot and it will not be limited to VUL. PPLI has already seen this. It will eventually impact far more than just one product marketplace. Insurance companies would love nothing more than to find ways which minimalizes the life insurance agent and minimize the life insurance agent's importance, role, scope, etc.

I'm pretty sure we're saying the same thing.

This already happened with variable annuities in 2019. Now something similar is happening with life insurance, specifically VUL.

 

[scagnt83]

Yes it would however to be accurate they would have to show the 150% in upfront commission and expense payments vs a 30 year amortization.

The 4 largest dividend paying mutuals average 100% in total comp year 1 on a life pay product.

If the agent uses PUAs to fund most of the Premium, they get paid apx 3% on that portion... which should be apx 70% of the total premium if funded up to the MEC limit.

A 10pay might have 40% total comp, at best.