Why do universal life and whole life policies fail?
March 10th, 2007
Universal Life, Whole life. Sounds like it ought to last forever. Almost without fail the life insurance agent who told you about universal life or whole life led you to believe that it would last forever. An unfortunately large percentage of those agents didn’t tell you the truth. Yes, they lied!!!!!!! A conservative guess would be that between half and three quarters of all whole life and universal life policies will fail even if you religiously pay your premium every year.
Universal life and whole insurance qre the most misrepresented products to hit the market since, well, since life insurance has been for sale. Misrepresentation of life insurance performance has been the source of more lawsuits and agent’s lost licenses than any reason.
So, is there something inherently wrong with the products……or is there something inherently wrong with the life insurance agents who just can’t bear to tell you the truth for fear they may not make the sale. Let me narrow it down for you. The products, sold correctly, are solid and dependable. It will do exactly what you want it to do. It is guaranteed to perform. The problem is not with the product!
So, all of this begs the question, “why would an agent sell you something that can fall apart without warning in the future”?
Life insurance is a tough business. Most agents don’t make it through their first year and a very small percentage could actually be considered successful by anyone’s standards. For most agents the difference between making a sale and not making a sale can be the end of their career.
The easiest way to make a universal life or whole life sale is to show the customer the non-guaranteed illustration at the lowest premium possible and hope you don’t ask about the other side of the page, the guaranteed side. Then if you buy, they hope you can’t remember their name, so that when the policy unravels, they won’t have to answer the question above.
Use a reputable independent life insurance agent and insist on guarantees. Get it in writing and insist that your agent review your policy with you annuallly.
Related Posts- I have good news and bad news about your life insurance
- Universal Life Exposed! You May Want To Look The Other Way!
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- The Universal Truth About Universal Life!
- Is your universal life guaranteed?
Entry Filed under: Independent agent, insurance, life insurance, universal life, whole life
2 Comments Add your own
1. Carl S | September 16th, 2008 at 3:51 am
Can you explain exactly what happens when the policy unravels? You mention a bunch of different things in this article. It is a tough business and most agents fail and those that last are not what you would consider successful.
OK. So it is tough because of the product confusion. Life insurance has such a bad reputation and going to this and all your related articles makes me think, OH, this is why Life insurance is evil?
You’re successful right? How come?
Thank you,
2. Hinerman | September 16th, 2008 at 12:47 pm
When a whole life or UL fail, the premium that has historically been paid is no longer adequate to pay the costs of insurance. The customer is asked to pay more and if they do, they will be asked to pay more again. Once a policy reaches the point where it isn’t meeting it’s own needs, the problem gets worse each year with higher mortality costs. Those go up every year period.
If the customer doesn’t pay the higher costs, the policy runs out of cash and lapses. This may take some years, say 5-10, but it will happen.
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