Whole Life vs. Universal Life

[myinsurebiz]

Re: Whole Life -versus- Universal Life

1) If he likes UL because it's cheaper make sure he knows why it's cheaper so he will never call you in future and say "WTF's going on with my policy?"

2) No Lapse Guaranteed ULs guarantee the policy will never lapse as long as premium's paid. Typical ULs do NOT guarantee that.

3) If he still insists on regular UL have him sign a paper that says he understands what he's getting. JMO

1) Why is it cheaper. What's the catch?

2) Is this a choice?

3) I guess once I understand it - he should too.

Besides rates - what would be the difference in a $25k WL versus UL. What are the pros and cons?

I want to sell him what makes the most sense - and then translate that to him.

I see why I like FE - lol . . .

Tom

 

[Franz Kafka]

Re: Whole Life -versus- Universal Life

1) Why is it cheaper. What's the catch?

2) Is this a choice?

3) I guess once I understand it - he should too.

Besides rates - what would be the difference in a $25k WL versus UL. What are the pros and cons?

I want to sell him what makes the most sense - and then translate that to him.

I see why I like FE - lol . . .

Tom

First of all I'm no expert so anyone please correct me if I'm wrong.

1) It's cheaper because it's not guaranteed to last lifetime. You mentioned the illustration showed policy lapsing in 20 years. I think you were looking at the guaranteed column. That's what the carrier's willing to guarantee under that particular design (premium, CSV, target etc).

2) Ask him if he wants a guarantee that his policy will never lapse or if he's willing to take some risk for lower premium/higher DB. If former > WL or No Lapse Guarantee UL, if latter UL.

In short you pay for the guarantees. You may get a better deal without them or you may not.

 

[InsuranceDevil]

Re: Whole Life -versus- Universal Life

Guaranteed UL = Permanent term insurance. It's cheaper than WL because it is designed to build then lose its cash value over time and have a level death benefit. Just make sure there is a guarantee on it so that it is not essentially expensive term insurance.
WL builds cash value over time and the death benefit can actually grow over time due to dividends the company pays out. WL also has the potential of paying for itself after 15-20 years of premium payments.
Both have their uses, you should still bone up on it before presenting to your client.

 

[LGilmore]

Re: Whole Life -versus- Universal Life

Maybe you should just tell the guy you can't help him, rather than potentially screw him over for a couple hundred bucks...

Maybe you should take the time since you only "work" 4 days a week, use that 5th day and study a bit.

You're dealing with a senior market and a hard to insure market.. you f up a few times and you're a poster boy for a insurance commissioner who wants to get re-elected.

You are playing with fire, you should learn your stuff. You may not find this industry as easy to walk away from as you had some of the others in the past where you've messed up. Educate yourself for your clients sakes.

 

[Winter_123]

Re: Whole Life -versus- Universal Life

Please explain your thoughts in 2 or 3 sentences.

I only focus on FE - but i have a lead that is determined to get UL. He is 60 and in perfect health - excellent actually.

Keep in mind that ul products are mostly underwritten products. You say that his health is perfect and excellent. How do you know that? Does he have a physical and bloodwork every year and you asked some basic questions, including things such as whether he had a DUI or not? How about his parents. How old were they when they died and what was the cause?

When you quote him it has to be based on a rating and some basic logic and inquiry to go with it. If you are doing FE you are probably just used to pass/fail type simplified applications. That is fine but dont assume that this guy is super preferred just because he is feeling well and looking good. You would be low-balling the quote which will get his attention but will blow up on you later if you have to go back and give him the real premium cost unless you set his expectations properly.

 

[Newby]

Re: Whole Life -versus- Universal Life

It sounds like what the client is asking about is the UL that is guaranteed not to lapse. Most companies have a policy that is guaranteed to age 100 or 120.

Think of it this way:

Whole life is designed to build cash value throughout the life of the policy and that cash value will be equal to the death benefit by age 95 or 100. They are self insured at that point.

In reality, if someone buys a $10,000 whole life policy at age 20; if you look at the policy around age 60, they are not really insured for $10,000 anymore. They have cash value of say $5,500 and they are insured for $4,500. At age 100 they have $10,000 cash value and zero insurance.

That is how straight whole life works. Every year the cash value (self-insured amount) goes up and their actual insured amount goes down and both always equal $10,000 when combined.

Guaranteed UL works very different. It is like term life insurance that is guaranteed to age 100 (or better 120.) You are not building steady cash value (self-insuring) you are always covered by the term-type insurance for the entire time. It only builds enough cash value to keep the policy in force. It also has more flexability of the premiums because you can pay more in the early years to reduce your premium in the later years.

That is the simplified version.

 

[GreenSky]

Re: Whole Life -versus- Universal Life

Maybe you should just tell the guy you can't help him, rather than potentially screw him over for a couple hundred bucks...

Maybe you should take the time since you only "work" 4 days a week, use that 5th day and study a bit.

You're dealing with a senior market and a hard to insure market.. you f up a few times and you're a poster boy for a insurance commissioner who wants to get re-elected.

You are playing with fire, you should learn your stuff. You may not find this industry as easy to walk away from as you had some of the others in the past where you've messed up. Educate yourself for your clients sakes.

You are correct but that's not how Tom operates. Find a product - any product - that will produce a commission. That's the goal. Never walk away from a cash cow even if you haven't a clue how to do something.

This is exactly why I'm always on Tom's ass for how he operates. Most of us paid our dues and actually learned about the products we sell. I can sell LTC but I choose to refer it to an expert. I can write DI but I choose to refer it to an expert. To be a good agent, you need some expertise in your chosen field. Tom is an "expert" at trying to make a buck without doing the work.

This business is not like selling someone a hammer. You can seriously screw someone even if you have good intentions. If your first intention is how easily you can earn a commission, then you'd be Tom.

Rick

 

[Mark]

Re: Whole Life -versus- Universal Life

Permanent life insurance originally was offered as a fixed premium fixed return product known as whole life insurance also known as cash surrender life insurance. This offered consumers guaranteed cash value accumulation and a consistent premium. Consumers later wanted more flexibility which was offered in the form of Universal life insurance allows consumers flexibility in when premiums are to be paid and the amount that they would be. Universal life policies also allowed consumers to permanently withdraw cash from the policy without the interest associated with the loan provisions in whole life policies. Universal life policies retained the fixed investment performance of whole life policies.

Whole Life
Whole Life Insurance, or Whole of Life Assurance (in the Commonwealth), is a life insurance policy that remains in force for the insured's whole life and requires (in most cases) premiums to be paid every year into the policy.
Universal Life
Universal Life offers a flexible premium policy to meet your changing needs. It is designed to provide cash accumulation, and provide guaranteed coverage during the various No-Lapse periods provided No-Lapse requirements are met. Universal Life can be customized with many options and riders.


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[theinuranceguy]

Re: Whole Life -versus- Universal Life

You also have to realize that the premiums go up every year. And if they cannot pay the premium, it will begin eating away at their cash value.

I have seen way too many UL policy impload. Make sure to do it right.

 

[LGilmore]

Re: Whole Life -versus- Universal Life

For those attempting to explain whole life... please understand there is a real difference between "whole lifes" sold by mutual companies and stock companies.

There different versions of whole life some credit an interest rate others pay the guaranteed rate AND dividends.

Dividends are the silly putty of insurance as they are not taxable income but can be received as cash, or used to reduce the cost of insurance (term in reverse), held at interest(those gains might be taxable...it's been awhile) or used to buy paid up insurance increasing the face amount of the policy and increasing the dividends paid in the future.