VUL information

[DHK]

I was expecting to see you with death benefit option A Level based on your earlier definition of Net Amount at Risk which was definitely based on Option A.

I don't touch IUL anymore, but was going from memory on past illustrations I've done.

The equation still works, but it would need additional descriptors.

DB Option A: Net death benefit = cash values + decreasing net amount at risk - any outstanding loans

DB Option B: Net death benefit = cash values + fixed net amount at risk or 'pure insurance' - any outstanding loans

With increasing, it's a set amount of coverage that increases as the cash values grow. (I know you know this.)

I had always seen or shown Option B on Max funded IUL/UL. But in recent months, especially with 7702 change, I am seeing illustrations when Option A with a higher initial face to fit the premium ends up looking as good or better long term. I had thought the agents were doing it as a commission play because Target commissionable premium is based on intial face amount & Option A needs higher face to fit sane premium that a lower initial face would on Option B. Downside is surrender schedule is also based on face amount, so that will be higher too.

Not just that, but I would prefer DB option A when possible because it takes out the client and/or policy management risk out of the equation to ensure that what you want to have happen... does happen.

How do I know that *I* or the client will remember in year 25 to change from DB option B to A? I think that risk is huge. Of course, the policy can always be replaced or adapted to something else, but if I can remove a part of the human equation, that much the better.

 

[scagnt83]

How do I know that *I* or the client will remember in year 25 to change from DB option B to A? I think that risk is huge. Of course, the policy can always be replaced or adapted to something else, but if I can remove a part of the human equation, that much the better.

Some IULs have that option built in and its not a manual thing they have to remember in 20 years.

 

[DHK]

Some IULs have that option built in and its not a manual thing they have to remember in 20 years.

THAT'S AWESOME!!! I think a list of those companies would be helpful for others.

 

[Allen Trent]

Some IULs have that option built in and its not a manual thing they have to remember in 20 years.

Still merely a reminder to the agent isnt it? I dont believe it causes the carrier to take action on a planned activity, correct?

the ones I saw "allowed" the agent after issue to put policy reminders into the inforce system, but not necessarily put anything on the application or a policy rider that would make it happen automatically.

Would be great if that truly is a more robust system in place to make changes, I just dont see it being part of an application as that would put the carrier in a potential lawsuit position if the change wasnt made

 

[DHK]

Well, clients may not necessarily make all the required premiums to fund the policy as well. Lots can happen, but at least having that DB B to A automatic trigger can help negate one aspect of policy management.

 

[Allen Trent]

Well, clients may not necessarily make all the required premiums to fund the policy as well. Lots can happen, but at least having that DB B to A automatic trigger can help negate one aspect of policy management.

the one IUL "policy reminder" I am familiar with is merely you as the agent going into an active policy on the system to create a personal reminder for yourself. The system will then generate an email to the agent for the reminder. If client has also registered to have online access, the agent could also grant access to also receive this email reminder

I like the concept, but I think it leaves too much to be manual. how many agents will go into the system after they have sold the policies to give themselves a reminder?

For the bulk of the big changes, many will be a decade or several decades from now, will there even be an agent of record on the policy to receive?( the email or more than likely the email will go to junk)

Unless other carriers have a more formal "for sure thing", I believe this is a nice option & mostly done so that the carrier can point to it being out there if a client has issues in the future to point back to the agent and or agent/E&O as all the application signed illustrations will have the disclaimers.

Still a good thing, dont get me wrong. But I meet a ton of agents in our industry that believe the proposed items in the illustration will happen in the future. Have even seen agents not deliver policies because they believe the carrier issued a policy differently than applied for because the policy doesnt show the client receiving monthly checks of X amount like the client applied for & bought..................................Crazy.

 

[Lloyds of Lubbock]

"Some IULs have that option built in and its not a manual thing they have to remember in 20 years."
How does someone sign off today on something that may happen 20 years down the road?
I understand this fixes some problems but may create others, what if you become uninsurable and want that death benefit to grow and it is changed.
I would think a letter going out to the client to re-endorse this change would be better than an automatic switch.
I was at a meeting last week and Bobby Samuelson spoke.
He feels that more VUL products will offer an index option this way if the client is not happy with the index return he can switch to a mutual fund within the same policy.
On Youtube there is a producer Larry Rybka who goes in depth on the workings of VUL

 

[Allen Trent]

How does someone sign off today on something that may happen 20 years down the road?

Pretty sure this isn't what it really is. I think it is just an option after active for agent to create a reminder message for themselves to get a reminder of a planned changed. It still has to be done & signed for. I believe it will be rare that agents pro actively create this reminder & then will the agent that created the email still be an agent or have the same email address to received the automated reminder the agent originally created.