Some people like to take risks.
Some don’t.
Then there’s the group of people who fall somewhere in-between.
The third group is the one that is perfectly positioned to take advantage of an Index Universal Life (IUL) policy.
This actually seems to be a fairly large group when you look at the numbers: Of all Universal Life product sales today, 35-50% are IUL policies.
Let’s take a closer look at what this type of policy is and why it’s a good choice for you to present to the “in-betweeners.”
A little history lesson
There was a saying that was popularized by EF Hutton television commercials in the 1970s and ‘80s:
“When EF Hutton talks, people listen.”
EF Hutton became one of the most respected financial firms in the U.S. and also the second-largest brokerage firm.
Why is he important to the story?
He is credited with creating Universal Life insurance.
For a century or so, Whole Life insurance was the only insurance option for people who wanted to protect their family in the event of their death.
Then EF Hutton came along and changed the picture – particularly for those people who like a little risk but not too much.
What Index Universal Life (IUL) is – and what it’s NOT
An IUL policy is a permanent life insurance policy that’s flexible and has an investment component along with the insurance component.
IUL allows the owner to assign funds to a fixed account or an equity index account.
What makes an IUL policy different from any other life insurance with cash accumulation is the cash value of the policy being based on the equity index account – usually the S&P 500 or the Nasdaq 100.
The risk is transferred to the consumer, though IUL policies are less risky than Variable Universal Life Policies.
What makes IUL a great product for you to present to your medium risk takers is that they are more volatile than fixed Universal Life policies.
The pros of an IUL policy
There are quite a few reasons that your prospects and clients should be made aware of Index Universal Life policies.
Here’s what you (and they!) need to know.
1. Low cost
The premiums are low because the risk lies with the policyholder.
2. Cash value accumulation
The cash value of the policy can grow tax-deferred.
That cash value can be used to pay the premiums so the policyholder doesn’t have any out-of-pocket expense.
3. Death benefit
The great things about the death benefit here is that it doesn’t have to go through probate, it’s permanent and no income or death taxes have to be paid.
4. Simple distribution
The cash value in an Index Universal Life policy can be accessed at any time and there’s no penalty – no matter the age of the person.
5. Flexibility
The policyholder is in charge of the amount of risk and the death benefits can be adjusted as needed.
There are also usually options for various riders like death benefit guarantees and no-lapse guarantees.
6. Less risky
Because the policy isn’t directly invested in the stock market, the risk is reduced.
7. Unlimited contributions
There’s no limit to how much a person can contribute in a year.
Give clients the full picture
As you’re working with your clients and trying to guide them to the most valuable life insurance information, don’t forget to tell them about Index Universal Life.
Remember, the pool of “in-between” risk-takers is big and the benefits of an IUL policy may be perfect for them.
You make a sale AND get to be the hero.
How do you present IUL to your clients?
