Our March focus topic is retirement planning, so it’s a perfect time to tell you about growing IUL sales. If you don’t usually sell IUL, now may be a good time to start.
A new LIMRA report notes that new premium for IUL sales rose 8% from 2016 to 2017. Here’s an even more surprising statistic: 24% of all individual life insurance policies sold in Q4 were IUL. When we look at all universal life premium, IUL accounted for 64% in Q4.
If you’ve seen discouraging headlines about sluggish individual life sales, IUL is the exception. Here’s how to get up to speed on IUL so you can take advantage of this sales trend.
What’s So Special about IUL?
IUL is appealing because it achieves two separate goals: death benefit protection, and the potential for a unique type of cash value accumulation. Instead of set percentage of interest accumulation, IUL offers policy owners the chance to tie their interest accumulation to a particular index. When the index grows, they earn a certain percentage of interest. When the index drops, they earn less interest but they’re not going to lose any of the cash value they’ve already accumulated. Best of all, policy owners can subdivide their account into segments, selecting multiple indexes or markets if they want.
Ideal IUL clients:
- Need death benefit protection for their loved ones
- Want to take advantage of market gains (upside potential)
- Don't want the risk involved in a market crash (downside protection)
- Can afford higher premiums, as opposed to a term policy
- See the benefits in cash value for supplemental retirement income
- Want to be able to access cash value or death benefit for chronic illness or long-term care
Carriers with new or recently updated IUL offerings and sales tips include American National, Pacific Life, Lincoln Financial, and Prudential. We’ll take a quick look at what each has to offer below.
In a recent article, they explained how IUL can be a good fit when a divorce settlement requires life insurance to safeguard court-ordered alimony or child support payments. Why does IUL work in this case? Because it doesn’t expire like a term police, it can meet the changing needs of the policy owner.
If the policy’s purpose is to provide a backup source of funding for alimony, for example, what happens when the spouse getting those payments remarries? The policy owner can still use that policy as an asset, generating supplemental retirement income or accessing the death benefit to pay for long-term care.
The Pacific Discovery Protector IUL is the latest from Pacific Life. After a previous IUL product hit it big in 2017, the company released this product, designed to offer competitive lifetime level premiums and no-lapse guarantees.
This policy is focused on protection and wealth transfer, with similar accumulation structure to the 2017 product (Pacific Discovery Xelerator IUL). Policy holders can choose between fixed or index-based interest crediting rates, with guaranteed minimums to protect against downside loss. Click here to request info about this product.
In 2017, Lincoln unveiled its newest IUL product, the Lincoln WealthPreserve IUL policy. It offers the downside protection IUL buyers want, with a 1% guaranteed minimum interest rate no matter what the S&P 500 does. It also offers a growth cap of 8.75%, guaranteed for the first 10 years. If that cap drops to 6% or lower in years 11-14, there are no surrender charges if your client wants to give up the policy.
There’s also a survivorship version that covers two people, available up to age 80. Policy owners can choose among accounts that offer yearly point-to-point indexing: a high participation account (for when the index isn’t gaining much), a capped account (for when the index is making moderate gains), and an uncapped account (when the index is making big gains).
In late February, Prudential updated their PruLife Index Advantage UL product. Qualifying policy owners can now get bonus interest to accelerate their cash value accumulation. That bonus interest kicks in if you keep the policy for at least 10 years and pay moderate-to-high premiums. The index segments created in years 11-40 get a bonus 20% of the index interest earned. Other product updates include lower charges and return of premium available up to age 75. Clients can also tap into accelerated death benefits for chronic illness even if they're expected to recover.
That’s our look at the recent trend of growing IUL sales!
Not sure how to sell IUL…or need to brush up on your IUL basics? Check out our 5-part IUL webinar here. Once you have the basics down, don't miss part 5, how to sell IUL.