I watched a Bear Bryll show recently. Yes, I’m a fan because I truly don’t know where my wife might choose to get rid of me and I might have some Bear nugget that will prevent my life insurance being used before it’s time. Anyway, many of you may have seen the episode where Julianne Hough talked Bear into passing up a dinner of a very sizeable snake because she just couldn’t stand to see the snake killed and later couldn’t gag down a meal of buffalo dung juice and caterpillars.
So is this lesson about snakes and buffalo dung? From a life insurance standpoint it is because there are those of you trying to survive the decision right now to chop the head off and take what you can from your current universal life policy (tastes like chicken right?) or hang on to the elephant dung and hope that somehow at the end of the day it will have turned into something other than dung.
Before I stray too far let me state that the condition of most traditional universal life insurance polices today , if not already in deep trouble financially, are headed there because of years of a low interest environment that simply can’t support the assumptions made (the snake in the hand). This leads to life insurance policies that are dependent on guarantees that were never meant to sustain the policies and assumptions that simply can’t. So, do you take the snake meat now or wait to see if the dung tastes better later? For many there is cash value now and it is absolutely a must to find an agent that can get you an in force illustration that will honestly, all BS aside, tell you the condition of your assumptions and guarantees. This could drive the decision on whether to eat snake now or gag on dung later.
So how can a guarantee change when it is, however, a guarantee, right? Today you can buy what is called a no lapse guarantee universal life that has a life time guarantee based on the assumption that all payments are made on time. Back in the day, let’s say mid 80’s to mid 2005, the guarantees were base on assumptions of interest rates remaining the same. If interest rates fell or if you didn’t make a timely payment, either way, it could shorten or be the demise or your guarantee. In the case of the older universal life insurance policies it could result in you losing all of the cash you put into a policy and losing the policy as well. With a review of your current life insurance situation it may well be a good time to consider taking what cash is there and going in a different direction rather being forced with the choice of going hungry or eating dung at the end of the day.
Bottom line. There is not reason not to review any life insurance policy that has moving parts to it (UL, IUL, VUL) annually with a professional who can interpret what the numbers really mean. Avoiding making a change for even a year can send the policy into a downward spiral that may not be something that can be recovered. If you have questions or need your current policy reviewed, call or email me directly. My name is Ed Hinerman. Let’s talk.