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Mike’s Musings: Show Your Clients a Valuable Alternative


How many of you remember when Guaranteed Universal Life (GUL) first arrived into the marketplace? When it first came out, it was just a regular universal life contract which built up cash values based on an assumed interest rate and if the client added the guarantee rider and agreed to pay the higher, stipulated premium to keep the contract in-force, it was fully guaranteed. And because it was a rider, it could be dropped at any time if the customer paid less than the required premium to keep the guarantees.

But the real point is that the contract also provided cash value accumulation. It provided some consumer value. It also still required an insurance producer to ‘sell’ this permanent contract over term. That was the early to mid 1990’s.

And then there was a race to the bottom by the carriers. Specific GUL contracts were introduced that had (and still have) the full guarantees built into the contract with a focus on depressing or eliminating cash values. No cash value accumulation means no contract flexibility, such as loan availability. That is what allows the guaranteed premiums to be lower and more competitive.

Not only did we lose cash values within a GUL, but I believe we lost a lot more. Many insurance producers lost the art of selling. The sale became about being able to find the lowest, guaranteed GUL premium for a client.  Many producers just told the client that they can find the cheapest GUL around.

If you’re a producer that is looking to separate yourself from the pack, start showing your clients some of the GUL options offering valuable consumer enhancements. One great example is Guaranteed Universal Life with a Return of Premium (ROP).  The ROP can be a percentage of premium (up to 100%) available if surrendered at certain point in time (15, 20, or 25 years). Other carriers go a bit further by also adding the possibility of an LTC/Chronic Illness/Critical Illness rider to this type of contract.

Now of course, these types of policies cost more than the lowest cost GUL; but consider the value it can provide to a client.

Try incorporating one of these value-add contracts into a hedge strategy for your clients. Maybe 50% of the death benefit covered by a straight GUL and the other 50% using a GUL with ROP. This would provide a bit more flexibility to the client than straight GUL without having to pay the full premium amount for GUL with ROP.

Ever have a client of yours go through a divorce? And they had to provide death benefit coverage for a period of time to an ex-spouse? GUL with an ROP rider may be a strong fit.

For your next few cases, ask your clients a few additional questions about the possibility of needing a bit more flexibility in a guaranteed for life (GUL) contract. Ask how important to them it would be to accelerate the death benefits for living benefits covering LTC, chronic illness or critical illness protection. And then show a couple of alternatives. I believe you’ll be pleasantly surprised at the results.

Michael S. Pinkans, CFA, is Executive Vice President & Chief Marketing Officer for Zenith Marketing Group with headquarters in Freehold, N.J.

Investment adviser representative and registered representative of, and securities and investment advisory services offered through Voya Financial Advisors, Inc. (member SIPC).  Zenith Marketing Group, LLC is not a subsidiary of nor controlled by Voya Financial Advisors, Inc.


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