To achieve maximum success when selling VUL, producers will want to keep in mind eight aspects when evaluating the suitability of VUL for prospects (of all ages), the quality of the VUL product, and the support behind it that helps producers build and maintain a clientele.
1) A demonstrable and agreed-upon need for life insurance death benefits should accompany the prospects desire for accelerated wealth accumulation. Whether the death benefit need is for income replacement, estate liquidity, to fund an executive benefit plan, or for some other purpose, a need for life insurance must be a dominant motivation. Otherwise, investors would be better off investing in the funds directly–its less expensive.
2) Prospects should be future-oriented. Long-term performance should outweigh their short-term liquidity needs. VUL insurance is not for those people who desire to access their funds in a short time horizon.
3) Contract design flexibility, features and benefits are of utmost importance to reassure clients, to meet future contingency needs and to provide value (for example, no-lapse guarantees, the ability to rebalance assets in subaccounts, dollar cost averaging, or low net cost loans). Producers would do well to explain features and sell benefits, emphasizing the contracts benefits over its illustrated performance.
4) Choices among several quality and well-known equity funds with strong management and performance histories–while no guarantee–provide prospects the best chance to meet their financial security and accumulation objectives. When policyholders can choose among 30 or more investment subaccount funds, producers gain a competitive edge, particularly in a period of equities market volatility.
5) Contract and sub-account expenses determine competitiveness. If producers are comparing VUL plans, they should carefully examine all policy loads, expenses, and investment subaccount fund management fees.
6) The financial strength and stability of the insurance company underwriting the product reassures discriminating buyers of variable universal life insurance. High ratings by independent analysts–A.M. Best, S&P, Fitch, Moodys, etc.–for financial performance, investment quality and claims-paying ability are important indicators of how a company operates.
7) Its important that producers have easy access to knowledgeable VUL marketing, advanced marketing, underwriting and policyowner service specialists. On the front end, producers may gain valuable support in technical aspects of a complicated sale. Quality service at the back end, or post-sale, comforts their clients, thus enhancing sales persistency.
8) Quality, informative, clear and understandable product marketing materials are critical. They can assist producers in providing full and proper disclosure, assist their prospects in sound decision-making, and they reinforce the sales presentation.
Reproduced from National Underwriter Life & Health/Financial Services Edition, August 27, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.