Is Indexed Universal Life the Most Over-Hyped Policy Ever Created?

A good friend of mine is a wholesaler with Met-Life.

The other day he called to tell me about this hot-new insurance policy his Advisors were selling, called “Indexed Universal Life.”

He went on and on about how great the benefits were. Tax-free withdrawals. No downside risk. Stock market gains. Etc… 

When he was done hyping it up I asked him a couple questions.

1. Did you see an illustration? Yes.

2. What rate of return did the illustration assume? 8.3%/year, for 25 years.

3. Do you think 8.3% per year for 25 straight years is realistic?  Ummm… well….it could…the market in the past has averaged…blah, blah, blah.

And therein lies the problem…

On the surface this product sure does look good. There is a lot to like.

But the stars really have to align in order for that 8.3% gain to actually happen in one year – let alone for 25 consecutive years!

No doubt that the number 8.3% was a huge reason why clients buy the policy. And because of that, they are going to look for that number on every statement.

When they don’t see it, they turn their wrath to the Advisors who sold the Indexed Universal Life policy to them.

What initially seemed like an easy sell for the Advisor is now an ongoing public relations battle.

Sorry if I’m picking on Indexed Universal Life. I don’t mean to imply that it’s being sold illegally or unethically.

My point is that it’s overhyped and oversold.

And when you grossly oversell prospects and clients, they end up hating you and bad-mouthing you to their friends and family.

And that’s the problem with Indexed Universal Life. It’s not necessarily a bad product. But it is absolutely oversold. And oversold clients don’t stick around long.

That’s one more reason to offer dividend-paying mutually owned whole life as a financial solution to your clients.

On paper, it’s decidedly unsexy. No bones about it. It’s not going to get anyone jumping out of their chairs with excitement.

Your job isn’t to get them excited about it, but rather to get them to understand that cash-rich whole life plans are dependable. And these plans will be there when your families need it.

If you can get them to understand that, they will then know: That life will be easier as they get older, and that they won’t be in a financial hole if something unexpectedly happens.

Selling something that isn’t hyped and sexy only seems difficult if your technique of selling relies on providing prospects with instant gratification and unrealistic guarantees.

Newsflash: People don’t buy life insurance for instant gratification. It’s meant to last for decades, not an instant.

And in today’s crazy world, people want: Safety. Guarantees. Liquidity. Tax-advantages. With no-hype. And no B.S.

Be valuable.

John McCarthy

Managing Editor,

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Brian J. Kay, Executive Director, Leads4Insurance
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