Selling indexed universal life over the phone is relatively easy if you have access to products that overcome the big objections to buying life insurance. The first objection to IUL that you’ll typically hear is that it is expensive. Here's why IUL isn't as expensive as your prospects think...
Impact of Cost of Insurance charges
Most people don’t have an internal meter providing a real-time cost-benefit analysis. As an insurance agent, you know that one of the biggest expenses in a life insurance contract is the Cost of Insurance charge. Cost of Insurance charges are monthly charges for mortality, administration, and other aspects of expenses on the part of the life insurance company. They are assessed against the policy based on the insured's attained age, the original rating class, and the current net amount at risk. In most cases, the cost of insurance is deducted from any premium payments made before crediting the account's accumulation value. Since underwriting classes from super-preferred to table z come into account, finding a way to reduce these charges leads to a more efficient policy design, and ultimately more cash value for the client.
Improve Cash Value Performance
AMZ Financial invented a new and unique death benefit option called the Cash Value AmplifierTM which positively enhances cash-value performance of a life insurance policy. The new patent-pending feature allows an insurance company to amplify a policyholder’s cash value without violating the product’s tax advantages, carrier profitability or producer compensation.
The Cash Value Amplifier significantly reduces the death benefit costs within the insurance contract. These lower costs directly lead to considerably higher cash values. Those higher cash values, and the available tax-advantaged income, will appeal to customers seeking both death benefit coverage and tax-advantaged distribution of income. When a client adds the Cash Value Amplifier to the product, it becomes the most efficient accumulation oriented product.
Game Changing Product Design
With the game-changing design of an IUL product with the Cash Value Amplifier, if you ever face a skeptical CPA, unrelenting attorney, or difficult prospect that says life insurance is just too expensive to use when accumulating wealth, you have a secret weapon to overcome that objection. Believe it or not, but there are some people out there who will claim “life insurance” is a bad investment. That it’s really expensive. First what I’d like you to realize is that “price” is an issue in the absence of value. In other words, what you are getting for the money you are spending is important. If you’re spending a lot of money and getting nothing in return that’s expensive, right? Conversely, if you’re spending a lot of money and getting a lot of value, then it’s not expensive because you value the benefits it provides. Beyond significantly reducing the cost of insurance charges, there are products available today that provide additional policy credits. One of the most common policy credits is a persistency credit which increases cash value to the client for being a long-term customer with the carrier. When evaluating carriers, or looking at illustrations for your clients, it’s important to understand how some carriers illustrate their persistency bonus — EVEN if they claim the bonus is guaranteed.
Guarantees
Think back to the movie “Tommy Boy” when the main character discusses guarantees. Just because the carrier says that it’s guaranteed or perhaps that carrier over-illustrates how that guarantee bonus actually works, that doesn’t make it better than one that’s not guaranteed. You see, in order to provide that guarantee, the carrier at some point in the future may have to make other trade-offs or pull different pricing levers if the guarantees ultimately get too expensive. The carrier can consider lowering caps or increasing charges to pay for those guaranteed bonuses in the future, which means the client may suffer more with a guaranteed bonus than one that isn’t guaranteed. More important than the guarantee of persistency bonus, is the fact that the carrier is actually setting aside and reserving the money to pay the bonuses in the future. That company would be more nimble and be able to not need to pull other pricing levers in order to provide the future bonus. If you had a choice of one carrier reserving and accounting for that reserve today — even without the guarantee — that’d be the company worth considering over the one with a guarantee, as that company is better positioned for long-term success versus short-term sales goals.
An IUL Product that Pays Dividends?
Now we all know that IUL products don’t pay dividends, only whole life policies are structured to pay policy dividends. In fact, whole life dividends are paid out based on the company’s experience. But some pioneering insurance companies are developing new products and features within an IUL policy that positively impact the client’s cash value based on how that client structures and funds the policy (not what the carrier does or experiences). These policy credits, when added to the cash value, can significantly impact the long-term performance of the product. They can be structured many different ways, but generally they provide significant long-term benefits that will appeal to clients.
