In a blog post I did in April of last year I talked about how missing payments can have disastrous effects on the guarantees in some Guaranteed UL (GUL) products. The good news is that some carriers’ GUL products are not impacted as much as others. There are other differences in GUL that I believe many of us overlook. Typically the product is sold on price alone. Heck, we are selling protection to a ripe old age of 100 or perhaps 120. What else does the client need to know!?
What about the benefits of owning one particular GUL over the other. Let me go right to an example:
Say you are working with Mark, a 55 year old male. You have determined that he needs a $500,000 life benefit plan for the rest of his life. You have also talked with Mark about retirement planning, which he has done a bit of, and the possibility of needing long term care benefits. Mark knows he needs to make proper plans for every one of these but only has so much he is able to spend at this time. You decide to show him three GUL plans offering him some alternatives that will help in his planning. They look like this:
Number of years guaranteed
These three life benefit plans all are very similar in premium and guaranteed period. All have Terminal Illness riders as most of today’s GUL products do, although they may vary in time period to expected death. What you don’t see in the chart is this:
- Company A – although the least costly, offers only an assurance that if your client skips a premium payment it will not affect the guarantees as much as some of the others.
- Company B – at only $82.00 more than Company A, offers both a critical and chronic illness rider at no additional cost up front. When the chronic illness rider (2 out of 6 ADLs and chronic) is triggered if needed, Mark can take up to 24% of the benefit amount each year, less a small fee, until the benefit is used up or if death occurs, paid to his beneficiaries.
- Company C – this plan offers a return of premium option in the 20th and 25th years. As we know, life can change over time and if Mark has more need for cash for his retirement rather than for the life insurance, he can receive 100% of his premium in the 25th year income tax free and dissolve the policy.
As you can see, not all GUL is alike and you are able to give Mark options that will better fit his planning than just a pure protection GUL based on premium alone.
Give us a call to discuss your next case and see how you can get the right GUL for your clients.