Insurance Pro Blog Podcast | Life Insurance and Annuity Insights

The 2017 Boomer Expectations for Retirement survey from the Insured Retirement Institute reveals that things are not really improving for Boomers as they move into and toward retirement. There are more than a few disturbing statistics to share. I recommend you follow along with the report as you listen to this week's episode, it ... Keep Reading

It seems there's no end to the bad news in our industry as it relates to increased COI/expense charges for universal life insurance policies that were sold by SOME companies. Lawsuits are popping up and embarrassing company practices are being revealed.

First, let's get a few things on the table…

Yes, within every universal life contract, the company has the right to increase charges within certain limits. There are contractually guaranteed caps set forth in the policy.

But…

Are the problems that are being created for these policyholders a result of the increased charges or are the problems caused by chronically underfunded policies?

And before I get tons of hate mail–I'm not absolving bad behavior from insurance companies.

In a recent court filing against Transamerica (relating to increased charges in UL contracts), there are allegations of subverting agents to talk directly with policyholders (not something insurance companies ever want to do normally), withholding in-force illustrations (and/or representing a truly terrible outlook for the policies in an effort to coerce policyholders to surrender their contracts), and setting up separate phone lines to “deal” with these policyholders.

All bad, no excuses (if it's true).

However, as we've discussed over and over…universal life insurance (especially older policies that were sold with current interest rates that were much higher than anything the policies are actually earning today) is a product that needs to be managed. It's not a set it and forget it sort of product.

In the many examples of collapsing universal life insurance policies we've seen, all could have been saved by slight increases in premiums paid over the years. Of course the problem is that many people have no competent resource to manage their policy and they don't know there's a problem until there's a big problem that's compounded over an extended period of time.

The industry needs to figure out a way to do better. Life insurance companies need to do better. When they (life insurance companies) removed themselves from the distribution, they seem to have thought they removed themselves from the management/service side of the equation.

That attitude is proving to be shortsighted and foolish.

It seems there's no end to the bad news in our industry as it relates to increased COI/expense charges for universal life insurance policies that were sold by SOME companies. Lawsuits are popping up and embarrassing company practices are being revealed.

First, let's get a few things on the table…

Yes, within every universal life contract, the company has the right to increase charges within certain limits. There are contractually guaranteed caps set forth in the policy.

But…

Are the problems that are being created for these policyholders a result of the increased charges or are the problems caused by chronically underfunded policies?

And before I get tons of hate mail–I'm not absolving bad behavior from insurance companies.

In a recent court filing against Transamerica (relating to increased charges in UL contracts), there are allegations of subverting agents to talk directly with policyholders (not something insurance companies ever want to do normally), withholding in-force illustrations (and/or representing a truly terrible outlook for the policies in an effort to coerce policyholders to surrender their contracts), and setting up separate phone lines to “deal” with these policyholders.

All bad, no excuses (if it's true).

However, as we've discussed over and over…universal life insurance (especially older policies that were sold with current interest rates that were much higher than anything the policies are actually earning today) is a product that needs to be managed. It's not a set it and forget it sort of product.

It seems there's no end to the bad news in our industry as it relates to increased COI/expense charges for universal life insurance policies that were sold by SOME companies. Lawsuits are popping up and embarrassing company practices are being revealed. First, let's get a few things on the table… Yes, within every universal life ... Keep Reading

 

Often times, understanding the power of cash value life insurance requires a paradigm shift.

It's not all that complicated really, just not entirely comparable to anything else.

A vast majority of folks that we talk with have some sort of vernacular when it comes to investing, saving or building their financial plan. They understand terms like “expense ratios” and the importance of identifying them.

But life insurance throws a curveball at most people because the terminology is different and to make it worse…the same function will have different names from one company to the next.

All but making comparison in any sort of apples-to-apples way, impossible.

How do we get around that…???

Listen carefully.

 

Often times, understanding the power of cash value life insurance requires a paradigm shift.

It's not all that complicated really, just not entirely comparable to anything else.

A vast majority of folks that we talk with have some sort of vernacular when it comes to investing, saving or building their financial plan. They understand terms like “expense ratios” and the importance of identifying them.

But life insurance throws a curveball at most people because the terminology is different and to make it worse…the same function will have different names from one company to the next.

All but making comparison in any sort of apples-to-apples way, impossible.

How do we get around that…???

Listen carefully.

Often times, understanding the power of cash value life insurance requires a paradigm shift. It's not all that complicated really, just not entirely comparable to anything else. A vast majority of folks that we talk with have some sort of vernacular when it comes to investing, saving or building their financial plan. They understand ... Keep Reading

 

Following up our episode from last week where we discussed how an indexed universal life (IUL) policy would have fared over the last 10 years, we thought it would be interesting to dig into THE most powerful aspect of IUL in our opinion–years when the market index has a negative return.

This is something we've talked about briefly in the past and we received some criticism. See, in every IUL contract there is some sort of floor for the years where the market index has a negative return. The floor can range from 0-2%–most contracts being offered today are at 0%.

So, in a year like 2008 where the market has a negative return, the worst you'd do is stay flat as it relates to the cash value of your IUL contract.

However, some have come along to point out that while this is true, you could still have a decline in your cash value due to policy expenses and cost of insurance. And technically that is true.

Yes, there is a cost for any type of insurance and I mean that in every possible context.

Our point in today's episode is that if you focus too much on that cost–you're missing the boat. You're focused on the wrong thing.

 

 

 

Following up our episode from last week where we discussed how an indexed universal life (IUL) policy would have fared over the last 10 years, we thought it would be interesting to dig into THE most powerful aspect of IUL in our opinion–years when the market index has a negative return.

This is something we've talked about briefly in the past and we received some criticism. See, in every IUL contract there is some sort of floor for the years where the market index has a negative return. The floor can range from 0-2%–most contracts being offered today are at 0%.

So, in a year like 2008 where the market has a negative return, the worst you'd do is stay flat as it relates to the cash value of your IUL contract.

However, some have come along to point out that while this is true, you could still have a decline in your cash value due to policy expenses and cost of insurance. And technically that is true.

Yes, there is a cost for any type of insurance and I mean that in every possible context.

Our point in today's episode is that if you focus too much on that cost–you're missing the boat. You're focused on the wrong thing.

 

 

Following up our episode from last week where we discussed how an indexed universal life (IUL) policy would have fared over the last 10 years, we thought it would be interesting to dig into THE most powerful aspect of IUL in our opinion–years when the market index has a negative return. This is something we've ... Keep Reading

If you'd invested at the very top of the last market cycle–October 9, 2007, you'd now have slightly more than doubled that investment (according to the Wall Street Journal) despite the vomit-inducing period of the next few years where you watched your money cut in half.

That's all fine but when I saw that mentioned as a sort of passing statement in the WSJ article, I immediately thought…

I wonder how an indexed universal life insurance policy (given the same parameters of a lump sum dump in) would have fared during the same time frame?

So…we punched up the numbers to find out.

If you're curious…listen to the full episode to hear the result.

 

If you'd invested at the very top of the last market cycle–October 9, 2007, you'd now have slightly more than doubled that investment (according to the Wall Street Journal) despite the vomit-inducing period of the next few years where you watched your money cut in half.

That's all fine but when I saw that mentioned as a sort of passing statement in the WSJ article, I immediately thought…

I wonder how an indexed universal life insurance policy (given the same parameters of a lump sum dump in) would have fared during the same time frame?

So…we punched up the numbers to find out.

If you're curious…listen to the full episode to hear the result.

 

If you'd invested at the very top of the last market cycle–October 9, 2007, you'd now have slightly more than doubled that investment (according to the Wall Street Journal) despite the vomit-inducing period of the next few years where you watched your money cut in half. That's all fine but when I saw that mentioned ... Keep Reading

 

It's not uncommon for people to refer to whole life insurance as a “forced savings plan” or at least it was common back when we started out in the industry. Sounds like a bad thing but is it really?

Sounds like a bad thing but is it really?

We've seen some data that indicates something north of 95% of Americans are weeks away from financial ruin. If they were to miss a paycheck or two, the fit hits the shan…know what I mean?

Now, “north of 95%” isn't any sort of hard data. But who cares? I think we all know it's way more than 50% and that's tragic.

We all need a plan, an accountability buddy or whatever you wanna call it that isn't influenced by human emotion. We all need a mechanical way of putting money away that isn't gonna cut you any slack because you're having a bad day.

We gotta save regularly and most of us (pointing at myself) should be pushing the limits of what we think is possible. 10% is a joke, we should be thinking more in the 50% range if we're really serious.

Do you have at least a year's of monthly expenses put away?

I'm not talking about your 401k.

The 4% (or whatever that number is) that are crushing it financially have a system, do you really believe your superior?  Can you afford to argue with the results?

If you put away too much…what's the downside?

I'm sure you're all wondering, what's any of this have to do with life insurance?

Well, I suggest you listen to this episode to find out.

 

It's not uncommon for people to refer to whole life insurance as a “forced savings plan” or at least it was common back when we started out in the industry. Sounds like a bad thing but is it really?

Sounds like a bad thing but is it really?

We've seen some data that indicates something north of 95% of Americans are weeks away from financial ruin. If they were to miss a paycheck or two, the fit hits the shan…know what I mean?

Now, “north of 95%” isn't any sort of hard data. But who cares? I think we all know it's way more than 50% and that's tragic.

We all need a plan, an accountability buddy or whatever you wanna call it that isn't influenced by human emotion. We all need a mechanical way of putting money away that isn't gonna cut you any slack because you're having a bad day.

We gotta save regularly and most of us (pointing at myself) should be pushing the limits of what we think is possible. 10% is a joke, we should be thinking more in the 50% range if we're really serious.

Do you have at least a year's of monthly expenses put away?

I'm not talking about your 401k.

The 4% (or whatever that number is) that are crushing it financially have a system, do you really believe your superior?  Can you afford to argue with the results?

If you put away too much…what's the downside?

I'm sure you're all wondering, what's any of this have to do with life insurance?

Well, I suggest you listen to this episode to find out.