Objections faced with VUL ?
The objections that many still face or express with regards to VUL usually are tied to how the product was sold in the past , and the pain it may have caused consumers , especially during the late 1990s into the early 2000s . Other issues circled around the misconception of the cost of the product and the distribution challenges the industry faces . The great message of VUL isn ’ t getting to the consumer as much as it should . It is also an issue that many agents let their variable licenses or FINRA registrations lapse to focus on fixed product sales , and now that need to be licensed has come back to the forefront , which is a process . Cohen : I think there ’ s a misconception about the cost associated with variable life .
Thomas : On the BGA side , quite frankly , it ’ s the complexity of the distribution model and the uncertainty of who they can work with and who they can ’ t work with … I know your firm ( The Leaders Group ) does a great job in simplifying the process . And of course , our BGA partners as well want to make sure that they are working with their agents and leading them in the right direction . I think a lot of agents think negatively about variable life because of what it did in the ‘ 90s . You know , it ’ s not your grandfather ’ s VUL anymore .
Winkler : With VUL we now have new technologies that manage policies like that we never had before , just three or four years ago . That helps with the perceived complexities of the product , with the various sub-accounts and the management around those .
Time to incorporate IUL with VUL ?
We transitioned the discussion to touch on the new addition of indexed sub-accounts or IUL sub-accounts within the VUL products that offer downside protection and client flexibility . The regulatory shift with actuarial guideline 49 and 49-A helped to drive some of these options into the VUL chassis . Additionally , the changes to IRS tax code 7702 should help enhance the appeal of the accumulation VUL design . Lastly , the persistent low interest rate environment has put pressure on insurance carriers and their general account products , making VUL more attractive yet profitable .
Anderson : Having these new IUL type sub-accounts , it really opens the doors to use them more broadly across their practice ( for financial professionals ).
Cohen : It is about having integrity at the point of design , making sure that you ’ re using these products the right way . It ’ s not a replacement for IUL , but it gives the client flexibility , especially in the distribution phase .
Winkler : I also think with 7702 and the likely tax code change ( increase ) with capital gains and ordinary income tax , the best is yet to come without question for these types of products ( due to their tax-advantaged nature ).
Thomas : I think low interest rates have helped change the scope of products in our industry . You know , particularly with whole life insurance . I think the dividends have gone down and those products are getting harder and harder to sell . This forces advisors to look for alternatives .
Of the many market or regulatory factors , which ones are having the most impact on VUL sales ? Is there any insight into the dual sale of VUL paired with an LTC or chronic illness rider ?
VUL continued on page 50
If you ’ re not currently wholesaling variable life insurance products , get on board because I truly believe that ’ s where the future is .
Cohen
www . nailba . org 49