Underwater ULs from the 80s...why don't insurers call up these clients?

[Aaron JM]

well i should point out once the alert system is created, there are going to 1,000s of ULs that are struggling

$450 per year, for 40 years, to get a $125k DB and $11k in cash. Is actually a pretty damn good deal.

She could walk right now and only have paid $7k total for 40 years of a $125k DB.

I assume you looked at ways to save the existing policy before attempting to write a new policy... because it is extremely likely that modifying the existing policy would be the right thing to do based on the numbers you gave.

Yes, my client spoke with her mass mutual agent

My first dip into the business included a very short stint as a captive agent at Prudential. I spent almost all of my time running appointments with orphaned VUL clients who's policies were imploding. Seeing how these things were sold made me pretty sick. They were college funding devices. They were retirement savings accounts. They were this and that. Its like no one knew they were buying frigging insurance. I'm glad that I was able to pair up with an independent guy and get out of that mess, because seeing all of these people realize that their dreams were gone was like watching babies drown.

Yes it's a terrible shame. Great to hear that insurers were doing something.

I only brought this up because I've had 3 in my first year. All of them said they never received any communication. (But I know how that goes...)

 

[Aaron JM]

Yes but no one NEEDS more coverage just because they dies of an accident. If you need $50,000 then buy $50,000 of real insurance. Don’t buy $25,000 and $25,000 accidental. That just gives people a false sense of security.
Buying accidental coverage is not really protecting anyone. Because you are probably going to die of a heart attack, stroke or cancer. Or maybe COVID.
If people want accidental policy I’ll sell it to him. But I’m gonna make sure they think of it as lottery tickets not life insurance.

The moment I heard about accidental death rider, I thought it made no sense.

 

[rousemark]

Yes but no one NEEDS more coverage just because they dies of an accident. If you need $50,000 then buy $50,000 of real insurance. Don’t buy $25,000 and $25,000 accidental. That just gives people a false sense of security.
Buying accidental coverage is not really protecting anyone. Because you are probably going to die of a heart attack, stroke or cancer. Or maybe COVID.
If people want accidental policy I’ll sell it to him. But I’m gonna make sure they think of it as lottery tickets not life insurance.

The thought is that if you die from many of the other things you have time to make preparations. Not so in case of accident. It also may be that a person cannot afford the extra $25K "real" insurance but they can the AD. It is case of cover what you can even if you can't cover the entire need.

 

[Allen Trent]

$450 per year, for 40 years, to get a $125k DB and $11k in cash. Is actually a pretty damn good deal.

Exactly the point I make with agents servicing old ULs. Not all ULs were designed to last to age 100. 20 & 30 year term didn't exist in the marketplace back then. So, in some cases clients & agents designed the premium to make the policy last to age 65,70, 75.

So, from this example, I would say 18k paid minus 11k CV = 7k cost divided by say 32 yrs is only a cost of $220 per year for a 32 yr term policy that didn't exist at the time

So, while it isn't the great interest any more, it did serve a purpose, but what can we do now to help going forward. If insurable a 1035 to a new WL+PUAR or a no lapse UL (note, clients that feel like UL was a bad deal sometimes want WL over a GUL)

 

[Newby]

The thought is that if you die from many of the other things you have time to make preparations. Not so in case of accident. It also may be that a person cannot afford the extra $25K "real" insurance but they can the AD. It is case of cover what you can even if you can't cover the entire need.

It’s “feel good” insurance. You can feel like you tried. But it’s a false sense of security. If people can’t afford the coverage that they need they just need to accept that fact. If accidental makes them “feel better” then it did it’s job to make them feel better. But it’s an illusion. They are not protected for what they need.

Rouse, you are NOT going to die of an accident. I can say that with 999.9% accuracy. You are an older male with previous “stuff” going on. You might be able to cover the need or you can’t. But accidental would NEVER be something I would suggest to you.

 

[scagnt83]

well i should point out once the alert system is created, there are going to 1,000s of ULs that are struggling

ALL carriers have an "alert system" for policies set to lapse. Its required by state insurance regulations.

Every single policy holder with a crashing UL (or any type of policy set to lapse) received at least 1 letter every single year informing them of this. Once the policy reserve starts going negative and projected values are set to lapse, carriers are legally required to send letters informing the client.

The issue is clients reading the letters. 80% of people do not read insurance statements and letters when received.

 

[rousemark]

It’s “feel good” insurance. You can feel like you tried. But it’s a false sense of security. If people can’t afford the coverage that they need they just need to accept that fact. If accidental makes them “feel better” then it did it’s job to make them feel better. But it’s an illusion. They are not protected for what they need.

Rouse, you are NOT going to die of an accident. I can say that with 999.9% accuracy. You are an older male with previous “stuff” going on. You might be able to cover the need or you can’t. But accidental would NEVER be something I would suggest to you.

Well, I would hope you are correct but I would remind you that accidental death is the 7th most common cause of death of folks over 65. I have had several older clients die in various accidents, automobile, falls, etc. The most gruesome was an 87 year old man who fell off his tractor and the bush hog ran over him. As for me, you are probably right but I am getting to the point that sometimes I am not steady on my feet. My eyesight is failing. I still drive and my depth perception is not what it was. Nor is my attention span. My reaction time is slowing and I still have a habit of speeding, often 85-90 on the interstate. All these things make me more prone to accidents now than in the past. About the only thing working in my favor is I no longer have a tendency to say, "Hold my beer and watch this".

However, I actually think more of accidental death in terms of younger people. I seldom add it on FE (but maybe I should)

 

[scagnt83]

Not all ULs were designed to last to age 100. 20 & 30 year term didn't exist in the marketplace back then. So, in some cases clients & agents designed the premium to make the policy last to age 65,70, 75.

Exactly. Most clients do not remember the conversation and plans made from 40 years ago. And many ULs were sold as term because 20/30y did not exist. And they still are for older ages who cant qualify for a 20 or 30y policy.

Better chance of a client reading their lapse letter than them remembering the life insurance plan from 40 years ago.

 

[Allen Trent]

well i should point out once the alert system is created, there are going to 1,000s of ULs that are struggling

been happening for years. For instance, this client below has been receiving this warning letter for over 10 years now.




They have been receiving this anniversary statement showing it would lapse immediately for over15 years. System shows the agent has run-reprojections more than a half dozen times showing them options between dumping in the max allowed by law of $90k or the opposite of reducing the face to minimum & paying what they can. Lastly, letters from agent show him showing they can convert it to WL without any Underwriting as part of the extremely rare program of allowing UL clients to switch to WL for as little as $5k face or up to the current face of the policy even if completely uninsurable....................10 years later & some clients still call the CEO & say theyhave never heard from the agent & didnt receive any letters, etc, etc. cant help them all I guess