Happy Friday Everyone -

One more look at product today, and maybe one more week after this, as we still need to hit Whole Life.  This week, Variable Universal Life.

Rather than make this a discussion of subaccounts, money managers and product minutiae, we are going big picture - Why look at Variable Life again?  

First, remember what we talked about regarding EIUL, and that VUL requires some care and feeding.  Consider the following:

• Use realistic rate of return projections.  If it works at 8% gross, imagine if we do better!  Gravy!
• Annual reviews are essential.  They allow us to course correct rather than needing to take drastic measures later in the contract.
• Manage that portfolio.  Last week's example of a late in the policy market downturn can be mitigated by dialing back the aggressiveness late in the contract.
• Use the product as part of the client's overall portfolio.  Risk management and asset allocation in a vacuum does not work.
• Harvest gains - If the client has succeeded in accumulating a nice bucket of cash in their contract, consider taking steps to lock it in.  

That last point becomes more important when we start talking about the current product offerings in this space.  Early in our product discussion I made the point of GUL being a bit of a problem because there is often no cash, particularly if the client is on the younger side.  The issue with VUL historically has been having a client's insurance subject to market risk.  The new generation of VUL contracts gives us what might be the best of both worlds - Market upside with secondary guarantees to age 120.  No matter what happens in the market, your coverage will be there if you pay your premiums.  Nice little safety net.  There are even some products that take it a step further and help harvest gains as described in the last bullet above. 

So where might VUL make sense?

A couple places.  For example:

• Estate Planning for the younger client - Provides potential for a short pay or for an death benefit that will increase over time
• Income Protection for the younger client - Guaranteed coverage with a potential bucket of money to harvest at retirement
• Any GUL sale below age 65