I’ve often discussed with Rich Fuller at Special Risk Services those times when the life insurance industry or maybe just a particular company offers a product that was a little too good to be true and when they figure it out, they pull the product.
Some years ago now I had a retired businessman contact me. He had a $5 million Mass Mutual graded premium whole life policy. He had owned this policy for 15 years and “didn’t want to waste my time”, but wanted to know if there was a better way to protect his estate. He was pretty persistent about not wanting to do anything unless it made a substantial difference and encouraged me “not to waste my time if it was a dead end”.
His graded premium had finally reached the level premium period and was now at $89k per year. The whole life policy had $1.2 million in cash value in it. Even with the hefty premium and large cash value, the policy was only guaranteed to age 95.He recognized that because it was trust owned that there would never be any monkeying with cash value, so, while pretty, it didn’t mean anything in the whole scheme of things. Special Risk Services was able to compare virtually every possible way to make this a better value for the client and within just a day we had a home run put together.
It couldn’t have been done with any other company at the time, but Protective Life had a no lapse guarantee UL that was too good to be true, but it was real. We did a 1035 of the cash value and got a standard approval on the new policy which resulted in a fully guaranteed policy to age 121 with payments ending at 100. His new premium was $32,000 a year. Even if he lived to 100 his total premiums plus the 1035 would be $1.8 million.
After finding this gold mine Rich Fuller and I discussed how in the world we could reach as many of those who were in the same boat as this client. Saving $57k a year and improving the guarantee is no small deal. I blogged about it incessantly until Protective pulled the product a few weeks later. There are so many things like this that require a fire sale mentality with your clients. It’s not about you making sales. It’s about saving your clients thousands, tens of thousands and more in premium.
If you have any questions or would like to find out where the sweet spot (Banner’s GUL) is right now, call Rich or Tim Fuller at 800-933-5491 or email rfuller@srsinc.com and tjfuller@srsinc.com.
-By Ed Hinerman, manager of Risk Life Insurance and Hinerman Group.