Life Insurance

It’s the beginning of a new year and just as the weather is changing, so are the questions and concerns I am seeing come across my desk. There might not be any rhyme or reason, but sometimes a certain “topic” just seems to more prevalent than anything else for a period of time. It might be a new carrier or product. It might be a submission process, like how to submit drop ticket business through Vive. It might be something big that is happening in our world, like COVID-19. I would say right now, the “hot topic” this young new year has been cash value life insurance. I have had numerous phone calls and emails asking for illustrations on products that have the potential to build cash. Personally, I think this is great! For quite a few years now, a very popular product for our agency and our agents has been Guaranteed Universal Life. If you have ever talked to me, you know I am a believer in the GUL product and it is not hard to understand why it has been such a great option for so many clients. While I don’t waiver from that feeling, I do believe there is huge potential for taking that same “GUL client” and turning them into a cash value sale.

I will share one quick example, using a Guaranteed UL and an IUL, from two respectable carriers. This example is a 45-year-old male, preferred non-smoker, with a face amount of $250,000. The GUL costs $2,230 a year and provides a death benefit guaranteed to age 100 with zero cash value. Running the same client on an Indexed Universal Life, the annual premium is $2,610. Let’s look just a little deeper into the IUL and see what the client gets for paying that extra $380 per year.  The IUL has an underlying guarantee of the face amount to age 90 using the guaranteed assumptions. Those guaranteed assumptions are calculating 0% interest and maximum policy charges all years. Using the non-guaranteed assumptions, the death benefit goes all the way to age 121. If we pick a random year, say the client’s age 90 (year 45), the non-guaranteed cash value is over $289,000. Even using the midpoint assumptions, which is a very conservative interest rate, the cash value at that same age is still over $113,000. There isn’t a right or wrong answer on which product is better. It will depend on your client and their needs. The cash value product might take a little more explaining, but you can see there is value in illustrating both products. The slightly higher priced product has more cash value potential, might just be the best option for your client. The product that isn’t presented, is never sold.


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Reach out to Scott Gilpin.