Question: Will indexed universal life insurance sales continue to climb, level off or decline in the coming year? Why?
“We’ll definitely see indexed universal life sales continue to climb — not just for the next year, but for the next couple of decades. That is, sales will keep rising provided that regulators don’t change the rules. For example, the broker/dealers might start requesting that indexed universal life be regulated as a security. They aren’t doing that now, but I think it’s only a matter of time, as the broker/dealers try to get more and more business from advisors. I think Generation X will continue to want this product because they are afraid to be in the stock market. They will be attracted to the indexed policy’s upside potential, with no downside when the market is down.”
–Michael Smith, The Horizon Financial Group, Hales Corners, Wis.
“I think indexed universal life insurance will continue to increase in sales. My reason is, the products offer protection against volatility without the policyowner having to give up something. By comparison, with variable universal life, you have to give up your downside protection in the accumulation years, and with whole life, you give up the potential for a higher upside (than in more conservative fixed products). Also, the whole life policies that pay dividends won’t reflect the impact of a sustained upward market until a few years later. I’m not opposed to variable universal life or whole life. However, after the sustained market growth we’ve seen in recent years, concern is rising that we many have a modest market correction. Indexed universal life works because you don’t participate in market corrections.”
–Michael C. Staeb, Staeb Brokerage, Seattle, Wash.
“In the coming year, indexed universal life insurance sales will increase. That is for two reasons. First, in the fixed product market, this insurance is the only life insurance where the consumer can get a good return — unless the consumer wants to take on risk, which indexed universal life doesn’t entail. Second, more and more advisors are seeing the legitimacy of the product today. In earlier years, they gave the products a skeptical eye because they weren’t sure. Now they are seeing that more traditional life insurance companies are selling the products and that the policies have gained wider acceptance in the industry. Consumers are open to the indexed universal life story too. But advisors do need to keep telling the story.”
–David Cranfield, Producers Financial Network, Colorado Springs, Colo.