Introduction Of Life Insurance And Business Process – Can We Hire A Insurance Lawyer
The Best Life Insurance And Business Process Can We Hire A Insurance Lawyer? We talk about all things life insurance and business process marketing ideas. And today we’ve got something very specific I’ve got a problem that I asked Steve to help me out with and Steve is prepped for the call.
Benefits of a well-designed IUL policy
This is something we’ve talked about a little bit before but just over the last couple of weeks. Well Steve first of all good morning how are you? Oh fantastic my friend thank you. How about you? Good, So Steve over the last couple of weeks.
You know this goes on all the time but I’ve had a couple of different financial advisors come to me with either IUL illustrations that they’re looking for me to compete with or just in general kind of allotting the benefits of a well-designed IUL policy.
I’ve got very strong feelings about this for a variety of reasons I feel like my responses in these situations start to sound adversarial I think that there’s a lot of problems with IUL we can get into that but I definitely have an agenda .
Promote insurance solutions
Where I’m looking for folks to sell whole life and I promote insurance solutions but I am leading with MassMutual every single day so I mean I’m a MassMutual wholesaler so you know my conversations with these financial advisors.
Sometimes start to sound a little adversarial they start to sound like I’m trying to win an argument and a lot of times I feel like I do win the argument and I lose the business so I didn’t really win the argument. So just kind of generally if you start working with a new broker who wants to work with your agency. You Can Also Read How To Become A CEO Of A Software Company And Earn $1 Million With Insurance How Is Possible.
If you’re working with a client who’s already been shown some numbers how do you talk through the IUL versus whole life conversation in general? Good question because it does come up quite a bit. So the first thing.
I’ll do is often ask the question hey from your research thus far and looking at IUL, whole life have you just looked at IUL or have you compared both kind of what are your thoughts? So I’ll start just with that question to get a sense of exactly where they’re at in their research.
MassMutual illustration
Typically newer brokers or even some experienced brokers and agents will say when I look at the numbers let me rephrase when I look at the illustrations the IULs just produce so much more value over time like I feel like I’m doing what’s in the client’s best interest because they’ve got so much more money and they want to use this for retirement.
Is that similar to what you’ll run into there? Yeah definitely I mean we use illustrations to highlight the product and to explain how the product works and to sell so I find myself in a position where I’m like if you’re just looking at the illustration.
These illustrations are a story this isn’t like factual or guaranteed what’s going to happen but so is the MassMutual illustration. Correct all illustrations when you look at it. Thank you for that. So I’ll always start with that question to get a feel for where they are at how knowledgeable they are.
Biggest item of buyer’s remorse
And if they’re just looking at the illustration or if they go a bit deeper because you never know until you ask someone the question then I’m not going to go through every question I’ll ask but what I’ll get into and this is true with IUL it’s also true with whole life is the biggest item of buyer’s remorse.
Where people have regret with cash value life insurance products whether it’s whole life or IUL is often when they are sold a policy they’re looking at the illustration their advisor or agent is saying hey look at this 30-year cash value this 20-year cash value.
Whenever here’s the value that you’ll have and it might differ a little bit if dividends go up and down if it’s an IUL if the performance varies in S&P 500 or whatever index it’s linked to but you should have something close to that.
Cash value life insurance
When those words are spoken which I would say about 90% of agents I shouldn’t say that but 90% of agents I’ve encountered when I’ve seen them engage with potential clients will typically state that I came up on that side of the business leading a client to believe hey this is what you should have because the agent is told that by their superiors and such.
When that happens the client the consumer feels hey this looks good I mean this illustration is projecting the greatest amount of value yeah I’ll go with it and then this is the problem with cash value life insurance.
Where advisors who are anti-cash value life insurance have a field day when that product under-delivers because it often does sometimes drastically and I think I’m going to have $1,000,000 and then I have $400,000 or less than I paid in that’s an issue or if I’ve done 1% or 2% and then I say hey cash value life insurance stinks I post articles online and that’s where this battle comes up.
Hypothetical illustrations
So that was a lot I just gave you there but it’s really just over-promising and under-delivering but the thing is it’s not the agent’s fault because they don’t often know they’re encouraged to push it, sell it but when you look at actual data.
We can get to this point as well and we can go deep if you want when you look at actual data with IULs I have never seen a policy I’ve seen hypothetical illustrations but never seen an actual policy that has delivered an internal rate of return north of 4% not the annual IRR what it’s earning year over year but the average over a long duration of time.
And we’ve got studies and there’s a million of not a million of them but several we’ve got them of policies issued from 2008 issued in 2008 through 2020 the end of it the study period that should deliver strong results and I haven’t seen it.
low commission high cash value
Where did you get that information? It came from those respective carriers? So where I got that information actually the 2 case studies we have one was from a client who provided his annual statements so we were able to go back and track year over year what the policy actually did and then looked at the illustration what it projected and then what it actually did.
The other one was from an agent who had sold IUL for a long time and he kept on seeing the policies under deliver clients will come back to him all ticked off saying like hey what’s going on here with my money?
I thought I was going to have everything you told me I was going to have and that he just like the illustration I was told would and you’re in that position that no one wants to be in. But just to answer your question.
The agent sent me the original illustration and the annual statements and said hey I designed this thing for low commission high cash value for the consumer and it didn’t deliver like I don’t know what I should do now.
4 mutual companies
It was 12 or 13 years old the policy that is but it was a net IRR of 2% were projected at that point in time about 5.5% and annually 9% and change but it was under-delivering his thing and without getting too deep into that expectations were set you’ll have a lot of money the reality was you don’t have a lot of money it’s too late now that’s where people get upset.
I talked a lot there there’s more I can add but any questions or comments on that? I almost know the complete answer to this question but not fully so I know that you go back to when you talk about the big 4 mutual companies MassMutual New York Life Guardian Northwestern .
You’ve spent a lot of time and the folks in your office have spent a lot of time finding real policy performance and I think you’ve been able to quantify that for all 4 of those companies. So meaning that all 4 of those companies have either disclosed to you or you’ve been able to find real policies.