Attendees at the MDRT annual meeting were asked: Which of the following individual life product lines holds the most promise for industrywide sales growth this year: universal life, whole life, term life or variable universal life. Why?
“I think growth potential will be in this order. Whole life first, followed by index universal life, traditional universal life, term life and variable life. Whole life has been coming back in recent years because people have experienced imploding policies — in universal life and adjustable life, for example. This was from policies that were under-funded and where the return was over-promised. So people are going to whole life for the guarantees. Or they are going to guaranteed universal life or guaranteed index universal life, where the policies are guaranteed to stay in force. I’m not talking about the living benefit guarantees, although those are nice features to have if you need them. The most important thing is the death benefit. I like to say that the best life insurance policy is the one that’s in force on the day it’s needed the most. This is the one that was bought and funded properly for the life of the contract.”
- Greg Crane, president, BCG Benefit Compensation Group, Auburn, Ala.
“Two months ago I wouldn’t have said this, but my answer is whole life. In particular, I think 10-pay whole life offers the most promise for growth this year. As background, I started out selling whole life but stopped in 1994 when I shifted over to selling overfunded variable universal life. I’ve sold the variable product for many years, and then, four years ago, I started selling index universal life too. But I was recently shown a 10-pay whole life product that will give clients a highly predictable tax-advantaged income stream for retirement. That fills in the conservative part of the portfolio and can be sold alongside the variable insurance. A client who invests in the variable policy over many years will have so much growth that they can comfortably move a portion of those assets into one of these 10-pay products for tax-advantaged income later on as well as for the death benefit. Because it’s tax-advantaged, clients really like it. They also like being able to do something for 10 years, as opposed to, say, setting up a plan that requires payment over 30 years.”
- Sue M. Ellis, CFP, president, The Ellis Group, Palmer, Alaska
“The combo universal life policies with long-term care riders show the most promise. The policies are in the universal life category but they are a specialized form of the product. I do sell many other products, including traditional standalone long-term care insurance, term life, variable universal life, whole life and guaranteed universal life. However, I still see the combos as the most promising products for this year. One reason is that we’re in a low interest rate environment now and the universal life rates will likely rise in the short-term future. Also, the combo product answers the question that people have about standalone long-term care, which is, ‘What if I die without ever needing care?’ The combos provide monthly long-term care benefits of 2 percent to 4 percent of the policy face amount for care or they pay a death benefit, whichever need is most important. A downside in the U.S is that you can’t deduct the combo premium and there is no inflation rider. But people hesitate to buy the standalone long-term care policies because of their price, so the combo product is selling — because it provides coverage for both needs. I see it as a win-win. There is a real need for it, and this is a real sweet spot for the industry.”
- Louise Fallica, vice president, The Design Capital Planning Group, Smithtown, N.Y.