by Guest » Fri Sep 07, 2007 09:20 am
Hi friends, I've heard that Equity indexed universal life insurance can be a very good investment option. I want to purchase a policy that will give me some investment benefits along with life coverage. Shall I consider buying EIUL or something else? Pls. suggest.
Jeremiah
Jeremiah
Posted: Sat Jul 24, 2010 06:35 pm Post Subject:
DIMG . . .
Obviously, my attitude toward the conduct of one's business is very different than yours. But I have to ask, are you even located in the US? Everything in your post above leads me to believe you are outside the country. You seem to ignore everything that is unlawful by making excuses for why it's OK not to conduct one's business ethically and according to state and federal laws. Much of what your responses include that agents do are clear violations of securities or insurance law.
Examples include:
plenty of RR's and some agents are in this process which have hardly any knowledge of insurance and haven't got proper training of insurance concepts/products.
there are plenty of guys who have partial knowledge (not even basic knowledge about product) about the insurance and they are selling
Licensing in these two areas is supposed to be evidence of knowledge. A licensed rep/agent who acts without proper training is still subject to civil and/or criminal prosecution for his/her misdeeds -- ignorance is not an excuse or justification.
Most of the time agent market that product where he is having good commission
If found to be true, the agent/rep will lose their licensing! This is NEVER supposed to be the reason a client obtains any product.
Agent disclose most of the points from the official agreement to the customer but not all the clauses.
It is an ethical responsibility and a legal imperative that an agent disclose the "material disadvantages" of any product to a customer prior to the customer's final acceptance of a product (and it is best done prior to even taking the application). Failure to disclose could be construed as (1) concealment or (2) material misrepresentation (in context with the disclosures that were made. Regardless, when discovered, such violations (normally ascribed to the applicant for insurance) give the "injured party" (the one to whom disclosure was due) the right to rescind the contract.
If client insist me to tell the product features,surely I will narrate the whole story about the product which is available in official application form but if he/she says that I have gone through your product information either through internet/friend I wont say there is any point describing the features again.
I'm sorry, but I regard this final statement as a TOTAL ABDICATION of the agent's responsibility! If this is true about the conduct of your business, then I would not be surprised to see you held responsible for the harm done to a client who "said" they got their information from a "friend" and you didn't think it was important enough to go over the information as an agent.
It's kind of like some TV commercials that state, "Friends don't let friends drive drunk." Agents are not supposed to let clients make decisions based on what their friends think they know.
You might some day be approached by a person who says something like, "My friend has a $1-million life insurance policy, and he said I should, too." And so you just take an application for a $1-million policy. A couple of years later, the customer dies, the company pays $1-million, and the wife sues you because he should have had a $10-million policy.
You respond, "Well, he told me he got all of his information from his friend. That's what he wanted." She asks, "Did you ever try to figure out how much coverage he really needed?" You answer, "No, I gave him what his friend told him to get."
Your position is indefensible. If this transaction happened unassisted on some Internet insurance website, it might be forgiven. But when done face to face with an agent, we're supposed to determine what the client's true need is. If the client says, "Well, I can see why you think I need $10-million, but I only want $1-million," that's an entirely different matter. We can't force a person to apply for any special amount of coverage.
Believe me, I am not trying to cast aspersions on you. However, you seem to be very cavalier in your attitude about what is important for a client to know. You rely heavily on the client's ability to obtain "information" from the Internet or their friends. I see it very differently. Although the Internet has the ability to inform, often the information is errant. We see examples of it right here in this forum.
But our client's are relying on OUR KNOWLEDGE to guide them. I never do anything for someone based on what I may have done for one of their friends, or what their friend tells them they should do. Each client is unique, each situation is unique, and we have to determine what product(s) are unique to meeting the needs of or providing a solution to the client for their situation.
Posted: Mon Oct 18, 2010 04:38 pm Post Subject: index universal life insurance
I met with a financial planner from david White assoc. who recommended a Index Universal Life policy as an investment for retirement. It has a minimum of 2% and caps at 12%. The policy is for 825k and he recommends contributing $ 700 per month, based on my financial situation. The Planner is selling the policy for Ameritas Investment Corp. Has anyone heard of them before and are they a strong company that I should go with?
Posted: Mon Oct 18, 2010 09:50 pm Post Subject:
I met with a financial planner . . . who recommended a Index Universal Life policy as an investment for retirement.
You can certainly use the accumulated cash value in a life insurance policy to supplement your income in retirement, but life insurance itself is not an "investment", and should not be marketed as such. It was the conduct of life agents representing indexed annuities as investments that caused the SEC to adopt its ill-fated Rule 151a. IULs and IAs are both insurance products first. That their interest crediting mechanism is related to a specific "index" (usually associated with stocks/equities), is just a way to limit the insurance company's discretion in setting the rate. A limit of 12% on the up side is not bad, but there are other companies that are beginning to advertise no interest rate caps. You also fail to indicate what the "participation rate" is.
You state the monthly premium is $700. Without knowing your age, there is no way to begin to determine whether that amount is low or not. It is based on an illustration that depends on both your age and a "straight line" rate of interest crediting, which is usually not a realistic number, but without knowing what that rate is, no one can tell you if $700 is a reasonable monthly payment or not.
Are you participating in an employer-sponsored retirement plan, such as a 401(k) or 403(b)? Are you maximizing your contribution to that plan? Will paying $700 for life insurance interfere with your ability to continue making any contribution to your employer's plan?
Finally, if your agent is a Registered Representative with Ameritas, why is he not offering you a Variable Universal Life policy? You would give up the downside protection when it comes to market risk, but you would not be subject to participation rate or rate cap limitations either. Has he talked with you about fully funding a Roth IRA?
Too many unanswered questions. [/quote]
Posted: Wed Oct 20, 2010 06:20 pm Post Subject:
It was the conduct of life agents representing indexed annuities as investments that caused the SEC to adopt its ill-fated Rule 151a. IULs and IAs are both insurance products first.
They aren't insurance products first. They are insurance products 1st, 2nd, and 3rd. They are only insurance products which is why the SEC completely overstepped their bounds. I think more than unscrupulous life agents, there were probably broker/dealers who were behind the push for 151a since they were losing revenue to these products.
Finally, if your agent is a Registered Representative with Ameritas, why is he not offering you a Variable Universal Life policy? You would give up the downside protection when it comes to market risk, but you would not be subject to participation rate or rate cap limitations either.
Why would an agent want someone to take investment risk in their life insurance? The alternative to IUL is UL. It is not VUL. IUL is not an investment product and it should not be compared to a product that is considered an investment product.
I don't like IUL, but I do like correct information.
Posted: Thu Oct 21, 2010 08:45 am Post Subject:
They aren't insurance products first. They are insurance products 1st, 2nd, and 3rd.
THANK YOU!! No argument from me at all on that statement. Unfortunately, when I've made similar statements in the past, it's like drawing flies to honey, and all the "life insurance is an investment" proponents flock to the fray. Not wanting to start another "thread war", I was sort of "hedging" my bets, so to speak, and you called me out on it -- appropriately enough -- and I accept the chastisement.
there were probably broker/dealers who were behind the push for 151a since they were losing revenue to these products.
And I think that's a reasonable assessment, too (the B/Ds mildly protested the requirement to "supervise" the sale of those products, and some of them forbade their RRs from marketing them as a result). But I am completely baffled as to why the SEC, when drafting Rule 151A, completely overlooked IUL, and instead focused only on EIAs. It made absolutely no sense.
I don't much like IUL either, although I understand its appeal in a turbulent stock market environment as we've seen over the past 10 years (hence the rise in popularity of the Indexed products). But if a person is looking for "stock market returns" connected with the cash accumulation in a life insurance product, why not consider the "benefits" of a VUL compared to IUL? Why settle for 70%-80% of the upside, or a 12% rate cap? It sometimes doesn't come up for discussion because the agent is not securities licensed (taking a broad shot at the "WFG" folks).
Why would an agent want someone to take investment risk in their life insurance? The alternative to IUL is UL.
UL or VUL are both alternatives to IUL, but that aside, your question is the same question I ask clients who have poorly performing VUL policies when I run across them. Life insurance is supposed to provide a death benefit to those who are left behind. If a person wants to seek market-based returns, it can be achieved at less cost outside a life insurance policy (although it does expose the client to the possibility of current taxation [unless inside a retirement vehicle], compared to the tax-deferred status of cash value life insurance products . . . which tends to be the "selling point" behind IUL and VUL, not to mention UL, although all are commonly misrepresented as "tax-free" this and that).
Obviously, in a VUL policy, the client truly needs to understand the disadvantage of the downside risk (and all the internal expenses) far more than the upside appeal. That's really the only point I was trying to make (and, looking back, I didn't really do a decent job of it at all) -- personally, I'm not much of a fan of UL or VUL unless it's heavily funded from Day 1 -- which is not something the average Joe is willing to do (let alone is financially capable of doing).
Depending on his age, the OPs $700 per month would likely only be about 1/3 - 1/2 of the actual funding he would need to make a VUL policy of the stated amount reasonably viable over the long haul. That and constant monitoring of cash value (at least monthly) with an understanding of the possibility of having to dump more cash into the product at any moment (but most likely at some point in the future rather than in the near term).
And that's more than most persons looking at life insurance are prepared to do. Which is what makes VUL unsuitable for many persons.
Posted: Thu Oct 21, 2010 09:43 am Post Subject:
Great post, Max. I find VUL almost always unsuitable. This is true even if it is funded properly and the client completely understands it. Conceptually, it's fine. It just isn't in practice. The reason is that the insurance costs are high and the investment costs are high. Would we ever have a client make a straight investment with a 5% load and no break points? If a product has a 1% M&E, it is the equivalent of adding 1% to the expense ratios of the funds. Why would one pay M&E when they are already paying high insurance costs?
Posted: Thu Oct 21, 2010 08:37 pm Post Subject:
And now we have all those Ser 7 brokers lining up behind their Ser 65s to stop earning commissions and start charging 1% AUM fees. If I buy $100,000 of A shares in a mutual fund, I might pay a 4.5% load, and I'm done. But if I give my $100,000 to the "fee only" adviser, it costs me $1,000 per year, if the invested money earns a just a 1.1% ROR to stay even. But if the account value declines, I still pay a 1% fee every year, albeit on a declining value, but I'm still losing a real 1% on top of my unrealized losses.
I have never seen any real economy for the "small" investor in a fee-based system (Merrill Lynch once used to define them as having less than $1,000,000 in investable assets). But now some insurance companies are beginning to belly up to the bar with fee-based, no commission life and annuity products . . . ever looking for the cash flow.
Posted: Mon Oct 25, 2010 02:24 pm Post Subject: nesbitt insurance scam
If he is good like he keep blogging here?
Google nesbitt insurance scam for the guy that preach of being so smart.He is just another insurance agent who push toward himself.
"California licensed Fire & Casualty Broker-Agent and Life & Health Agent. CA Insurance License #0596197"
Check this link and you will find on your own.
American Income Life - Concord, CA
Posted: Wed Dec 08, 2010 11:52 am Post Subject: EIUL the way to go!!!
look if anyone is looking for answers as far as EIUL products are good or not please give me a call and I can set up an appt. with you and explain to you how it works or you are welcomed to come to a seminar, beleive me EIUL is the best way to go to gurantee your money (principle) if you invest most of your money in your 401k; your money is very likely not to be their. Why not invest into something were you can get a 2.5 - 12 rate of return........and never loose on your money even when the market goes down!!!! 240-593-6332..I live in the Rockville area.kent
Posted: Wed Dec 08, 2010 12:20 pm Post Subject:
beleive me EIUL is the best way to go to gurantee your money (principle) if you invest most of your money in your 401k; your money is very likely not to be their. Why not invest into something were you can get a 2.5 - 12 rate of return........and never loose on your money even when the market goes down!!!!
Sounds EXACTLY like a World Financial Group script. Give up your 401(k) plan for EIUL. Sure, that's the ticket.
(And never trust anyone who does not know the difference between principal and principle, and makes as many spelling errors as this poster does.)
Hope your E&O policy remains paid up, KentD, and that you have a limit of liability of about $20,000,000. to cover the losses your EIUL clients suffers in their 401(k) plans based on your shoddy advice.
A word to the wise, unwise, or unsure:
LIFE INSURANCE IS NOT A RETIREMENT PLAN!! Do not listen to anyone who tells you differently. Do not stop contributing to an employer-sponsored QUALIFIED PLAN in favor of a NON-QUALIFIED LIFE INSURANCE POLICY.
Just because someone tells you, "You can put any amount of money in our EIUL (or VUL) policy, but you are limited in the amount of money you can put in a retirement plan," doesn't mean you should do that. If you are not contributing the MAXIMUM permitted by law or your plan, what difference does it make how much you can pay to an insurance company for something that IS NOT A RETIREMENT PLAN? Only when you have maximized your retirement plan contributions might you want to look for another tax-advantaged savings vehicle.
Why not invest into something were you can get a 2.5 - 12 rate of return
LIFE INSURANCE IS NOT AN INVESTMENT!! If you want to "invest" money, talk to someone with a FINRA registration, not to someone like KentD who is only a life insurance agent and cannot help you INVEST one dime.
Stay away from people like KentD. They are more concerned about a commission today than your future.
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