What is the controversy over universal plans? What do agents get if they push benefits.

 

  • mbrcatz 9:02 am on March 28, 2010

    Ya know, you can’t carte blanche say that a product is absolutely not the best for anyone – just to qualify. There may be a few cases where universal life is the proper tool for the job.

    Me, I’m not a fan. Most of the time, customers don’t understand what they’re buying – increasing your E&O exposure as an agent. Plus, the upside in good markets, doesn’t compensate enough for the downside in bad markets. There aren’t many examples, ok, none that come immediately to mind – where whole life isn’t a safer product, if your need will go forever or business situations, or where term and investing the difference doesn’t make more sense.

  • God answers all questions 9:02 am on March 28, 2010

    "For God so loved the world that he gave his one and only Son,
    that whoever believes in him shall not perish but have eternal life.

  • David L 9:02 am on March 28, 2010

    UL can be a good fit if the life insurance need is very long. i.e. 30 year plus or for the rest of your life.

    The reason they have gotten a bad rap is that many brokers sold them back in the 80s when interest rates were really high. The brokers did not explain to the client (or the client did not want to hear) that if interest rates went down or if insurance charges went up, then they would have to pay more to keep it going. Since UL policies are flexible premium policies, many people simply just did not fund them properly from the onset. The agent then dropped the ball and did not ever review the policy with the client years down the road to let them know that there could be a problem.

    The bottom line is that they can be good if they are written with a solid company, funded properly, and reviewed every 2-3 years.

  • Tom 9:02 am on March 28, 2010

    I’m not a big fan of universal life either. Universal life was introduced when interest rates where high and the cash value in the policy would grow based on that rate. However, once interest rates dropped, the cash value wouldn’t grow so policies became more expensive.

    Different products suit different people but I’m personally not a big fan of universal life and prefer variable universal life over it since it’s tied to the stock market rather than interest rates.

    When an agent sells a life insurance product, the insurance company will pay them a certain commission and trails for every year after the first.