Whole Life vs. Index Universal Life

[leolu0930]

compare between those two products, which one is better?

 

[Newby]

Re: Whole Life VS Index Universal Life

compare between those two products, which one is better?

Depends what you want. Whole Life builds cash value where you are more self insured each year. UL has many different types of options. Most are considered temporary insurance similar to term. Even the guaranteed UL has a MUCH higher rate of collapsing than whole-life.

BUT if ALL someone wants is death benefit AND they want it longer than term can offer AND they are able to pay every month on time or early (never late) then guaranteed UL can be the perfect solution for them.

The best insurance is the one that matches their needs and everyone has different needs.

 

[djs]

Re: Whole Life VS Index Universal Life

compare between those two products, which one is better?

Why do you ask? The context of the question helps define the answer. There isn't a one size fits all solution in this business.

 

[Ami]

Re: Whole Life VS Index Universal Life

Depends what you want. Whole Life builds cash value where you are more self insured each year. UL has many different types of options. Most are considered temporary insurance similar to term. Even the guaranteed UL has a MUCH higher rate of collapsing than whole-life.

BUT if ALL someone wants is death benefit AND they want it longer than term can offer AND they are able to pay every month on time or early (never late) then guaranteed UL can be the perfect solution for them.

The best insurance is the one that matches their needs and everyone has different needs.

"BUT if ALL someone wants is death benefit AND they want it longer than term can offer AND they are able to pay every month on time or early (never late)" Very well put!

The reality is that premature death often follows a critical illness where the attention of the policyholder and family is distracted by the illness, the cost of care, and attendance to various matters related to the critical illness and suffering by the victim. The potential for missing a premium payment therefore rises, leading to an increased potential for a lapse of coverage, just when it's most needed.

No pilot in his right mind would take off with just enough fuel to make it to the destination and no SCUBA diver in his right mind would stay down to the point where there's just enough air in the tanks to surface. IMO, any life insurance policy which is in danger of lapse if a premium payment is missed should carry a prominent warning of the danger.

As to "minimum premium no lapse UL", IMO, agents should not be selling that product unless they are thoroughly acquainted with the policy wordings in their entirety AND have secured a written confirmation from the policyholder to note that the danger of lapse has been fully explained by the agent.

 

[Newby]

Re: Whole Life VS Index Universal Life

I have learned things through the years working with funeral homes and clients who are at the end of their life that I'm sure most life agents rarely if ever see.

With most families, before a child or even a spouse takes over the finances for an aging adult who has always been in charge of everything, things have to be going real wrong.

I've seen lawyers and school teachers as well as factory workers that won't turn the finances over to someone else once they become too aged or have signs of Alzheimers or memory loss. Kids and spouses won't force it until it is too late and some damage has happened. It's VERY VERY common.

If an agent sells guaranteed UL and makes the family think it is comparable to whole-life, they are misrepresenting the product in my opinion. It's a good product and has it's place but whole-life is a MUCH safer product.

 

[xrac]

Re: Whole Life VS Index Universal Life

"BUT if ALL someone wants is death benefit AND they want it longer than term can offer AND they are able to pay every month on time or early (never late)" Very well put!

The reality is that premature death often follows a critical illness where the attention of the policyholder and family is distracted by the illness, the cost of care, and attendance to various matters related to the critical illness and suffering by the victim. The potential for missing a premium payment therefore rises, leading to an increased potential for a lapse of coverage, just when it's most needed.

No pilot in his right mind would take off with just enough fuel to make it to the destination and no SCUBA diver in his right mind would stay down to the point where there's just enough air in the tanks to surface. IMO, any life insurance policy which is in danger of lapse if a premium payment is missed should carry a prominent warning of the danger.

As to "minimum premium no lapse UL", IMO, agents should not be selling that product unless they are thoroughly acquainted with the policy wordings in their entirety AND have secured a written confirmation from the policyholder to note that the danger of lapse has been fully explained by the agent.

Great post and right on the money. Whole life is not in danger of lapsing like a UL is.
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I have learned things through the years working with funeral homes and clients who are at the end of their life that I'm sure most life agents rarely if ever see.

With most families, before a child or even a spouse takes over the finances for an aging adult who has always been in charge of everything, things have to be going real wrong.

I've seen lawyers and school teachers as well as factory workers that won't turn the finances over to someone else once they become too aged or have signs of Alzheimers or memory loss. Kids and spouses won't force it until it is too late and some damage has happened. It's VERY VERY common.

If an agent sells guaranteed UL and makes the family think it is comparable to whole-life, they are misrepresenting the product in my opinion. It's a good product and has it's place but whole-life is a MUCH safer product.

Newby, you are right on. Everyone seems to want to find a reason not to sell WL but the truth is it is always the best product to have if you want it to be there and pay a death benefit under all circumstances. It will not be the cheapest but it will be the coverage with the lest risk.

The general public has been so brainwashed on BTID that everybody thinks it is the way to go. Like the 70 year old that wanted term until I explained to him that although he could get term he also faced the possibility of out living the coverage. He didn't want term then once he understood. Most people would not want UL if they really understand it.

 

[dgoldenz]

Re: Whole Life VS Index Universal Life

Great post and right on the money. Whole life is not in danger of lapsing like a UL is.
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Newby, you are right on. Everyone seems to want to find a reason not to sell WL but the truth is it is always the best product to have if you want it to be there and pay a death benefit under all circumstances. It will not be the cheapest but it will be the coverage with the lest risk.

The general public has been so brainwashed on BTID that everybody thinks it is the way to go. Like the 70 year old that wanted term until I explained to him that although he could get term he also faced the possibility of out living the coverage. He didn't want term then once he understood. Most people would not want UL if they really understand it.

I will disagree. Most people do not want to spend the kind of money it costs for a whole life product for $500k, $1M, etc etc. When they look at a $9,000/year premium versus a $3,500/year premium for the same death benefit, most people will not write the larger check (or for someone in a more extreme example, let's say a $25k premium versus a $10k premium). If they spent a few minutes trying to understand what is being explained to them, it would go a long way. Most people's problem is they just don't want to take the time to understand what they are buying.

 

[xrac]

Re: Whole Life VS Index Universal Life

I am not saying that there is not a place for UL but the majority of clients and agents don't understanding UL. Therefore a lot of UL polcies have imploded, are imploding, or will implode. UL has it's place for older clients who need a large face amount but cannot afford WL. However, it must be stressed that if premiums aren't paid coverage can lapse. UL versus WL boils down to face amount, time horizon, and guarantees?????????

I am a believer in WL and MY MONEY is where my mouth is. I have a large amount of WL in personal coverage on myself and my wife.

 

[Newby]

Re: Whole Life VS Index Universal Life

I will disagree. Most people do not want to spend the kind of money it costs for a whole life product for $500k, $1M, etc etc. When they look at a $9,000/year premium versus a $3,500/year premium for the same death benefit, most people will not write the larger check (or for someone in a more extreme example, let's say a $25k premium versus a $10k premium). If they spent a few minutes trying to understand what is being explained to them, it would go a long way. Most people's problem is they just don't want to take the time to understand what they are buying.

Those clients are best served if they do maximum payments (just under what would turn it into an MEC) rather than minimum payments to keep the policy in force. A lot of agents fail to explain that.

 

[dgoldenz]

Re: Whole Life VS Index Universal Life

Those clients are best served if they do maximum payments (just under what would turn it into an MEC) rather than minimum payments to keep the policy in force. A lot of agents fail to explain that.

That would defeat the purpose....as long as they understand they need to make their payments in full and on time, there are no issues. We have yet to have a single case of a no-lapse UL actually lapse for a missed premium.