The most competitive GUL product on the market is........an Indexed UL?!

Strange doings on the Friday before a long weekend.  Believe it or not, the statement above is true.  Aviva's Equity Indexed product has secondary guarantees to age 121 available as a rider, and the resulting premiums are shockingly low.  By now you know that there is almost always more to the story if I am bring something like this to your attention, and this is no different. 

This product is but one of many insurance carrier efforts to manufacture a lower guaranteed premium while still complying with the very complex reserve requirements that govern these products.  What are some of the others? 

• Graded premium products that lower the cost of entry into a fully guaranteed product
• Limited duration guaranteed products with absolutely out of sight catch up provisions
• Building longer guarantee durations into traditional "Accumulation UL" products
• Building better cash values in to traditional Guaranteed UL products

Again, as usual, the question becomes what does this mean for our clients?  A few points to consider:

• See my previous emails about smarter case design, and the benefit of having cash value in permanent products.  Some of the solutions from the carriers are even more limiting than a straight GUL to 121 design.  See the point about catch up provisions above.  These are really term contracts folks.
• A discussion about designs to life expectancy, or even age 95, rather than all the way to 121 is a good one to have with your clients.  Their attitudes about this may be surprising to you, and may reduce costs.
• We all better pay close attention to the fine print in these illustrations.  Less scrupulous advisers will not always make apples to apples design comparisons.  Most clients, as great people as they are, tend to listen more to the answer they want to hear (lower premiums) rather than the voice of reason (that would be you!).

The real message today is one that I have repeated a couple times over the last few months - product design is changing rapidly, and the days of spread sheeting GUL products are over.  Being able to have a meaningful discussion about the pros and cons of each product solution is essential. 

Just this week one of my producers brought in a replacement case on some twenty five year old UL contracts that were max loaned and imploding.  Rather than simply move to the lowest cost, we looked at the entire contract - premiums, cash, guaranteed cash - and arrived at a recommendation that was still a huge savings over rescuing their current contracts, but was not the lowest premium by a long shot.  I know we provided far more value to the client this way.  Oh, and we are doing some estate planning work for them as well.  Total target premium in excess of $60K.

Enjoy your Fourth of July.