Isn’t it true of everything in our lives if we’re over 50, change is happening and with life insurance the companies are making sure it is “Advantage Company” in their tennis match with customers. Having lost count of the number of life insurance claims I have helped facilitate and checks I have delivered to families, I can tell you that the people receiving those checks could care less if it came from a whole life insurance policy, a no lapse guarantee UL, a 20 year or 30 year term life policy or an indexed universal life policy. The death benefit is what they are glad their lost loved one had the presence of mind to purchase. The death benefit is what will make a difference in their life moving forward. The thing they will likely never know is how much money you spent to ensure that you left them a future.
And that’s where change comes in. If a person believes in evolution then change is always for the better, but when a sabre tooth tiger evolves to be able to run faster and have longer sabre teeth that means that some other critter may not see that as a change for the better. As we look at life insurance it has, in the last 30 years or so become a quickly evolving industry, to the point that as new products are created (evolved) they are replacing perfectly good products. Those who follow this forum have moaned and groaned through these changes with me for years, changes that keep tipping the balance further and further away from their original intent, being good, cost effective protection for the consumer.
OK, down to my beef. Life insurance companies came out with a no lapse guarantee universal life policy several years ago. For all intents and purposes it was a term to age 100 or even guaranteed for life should you live longer. Like term life insurance they loved it and pushed it and it was and is good for the consumer when there was a need for permanent coverage. It didn’t take long, 3 or 4 years, before some actuary woke up and said it was under priced and at the very least, companies should pull the product from their term conversion portfolio.
You know, a funny thing happened through this period that insurance companies will go to the grave denying, but it’s fact. Most of the history of life insurance is gold leaf embossed due to the fact that companies considered paying death claims to be the right and honorable thing to do. Life insurance claims were a priority for most companies and if there was any doubt concerning the claim, the tie always went to the insured. The funny thing that happened is that life insurance companies decided it was really better for their bottom line if they could figure out a way to pay less death benefits. Duh! So, most companies have changed their conversion options to make them a decidedly bad option unless you’re terminally ill.
Now, beginning with Voya (formerly ING Reliastar) and now Genworth Life and Annuity, they are phasing out their no lapse guarantee universal life insurance and replacing it in their portfolio with a much higher priced and much more volatile and much more likely to lapse indexed universal life. That way they make more money while it’s in force but it’s far more likely to lapse than to pay a death benefit. People have grumbled for years that term life insurance pricing is so low due to the lapse rate, either outliving the term or just getting tired of paying for it. Now we can all collectively grumble as we get charged more for less.
Bottom line. I know there are those who will disagree with my take on IUL, but they can be wrong if they want to. If you have questions or need some help comparing the options that are best for your family life insurance, call or email me directly. My name is Ed Hinerman. Let’s talk