Ed Hinerman On Life Insurance

The Problem With Variable Universal Life!!

I’m sure that will get the attention of VUL agents, and VUL policy owners. And it should. The variable universal life policy, for my money, is nothing better than a legal misrepresentation.

How many times have I talked about the problem with agents selling and customers buying universal life policies based on the projected side of the illustration rather than the guaranteed side. All of the emphasis is put on something other than making sure there is life insurance in force when it is needed. People start out to buy life insurance because they know it’s needed for their family, and they either end up focusing on cash value accrual or a lower price at the expense of a guarantee.

Variable universal life takes all of the guess work out of the process. There simply are no guarantees. The life insurance aspect is not guaranteed. It is all about cash value accrual which is also not guaranteed.

Separation of needs is the answer. If your need is life insurance, buy life insurance and buy it as guaranteed as you can possibly get it. If you buy tires for your family car, do you buy tires that have been known to remain safe for 60,000 miles, but have a fairly substantial record of failing while still relatively new? Or do you buy tires that have the best record of long term safety, or even some of those new tires that won’t go flat even if they are punctured? Do you opt for your family’s safety?

If your need is investment for cash value accrual, find the best possible investment advisor and invest away. There is absolutely nothing wrong with investing, but tying the viability of your life insurance to the performance of your investment is absurd if you need the life insurance.

Bottom line. A wise guy once said something like “Never use investments for life insurance and never use your life insurance as an investment”! If you need the life insurance that you intend to purchase, avoid variable universal life.

Add comment September 9th, 2007

The Fine Print In Life Insurance Policies!

Look out for the fine print! Make sure you check the fine print in your contract! There is probably nothing about a contract, whether it is a lease, a financing contract, or a life insurance policy, that worries people more than the fine print.

Thanks to insurance regulatory agencies and pressure from consumer advocacy groups, the truth is that life insurance policies are about as devoid of fine print as any kind of contract. This is really one of the bright lights of the life insurance industry. Of all the contracts out there that can have a huge impact on a family’s future, there are probably none more than a life insurance contract.

A family might survive things like a bad lease or financing experience, but if a life insurance policy doesn’t come through as expected, disaster.

Over the next week or so I will be picking a term life insurance policy apart, addressing all of the aspects, the language, where to find things and how to understand exactly what you have. My hope is that by walking through an in force policy you will understand more and be armed to evaluate your own policy.

Bottom line. Fine print suggests sneaky ways to get out of living up to the promise of a contract. Life insurance policies excel in the area of avoiding that type bad news.

Add comment September 9th, 2007