Simplify The VUL Sale

Help a prospect grasp certain connections and stimulate motivation to buy

By Thomas Borchert

Selling variable universal life doesnt need to be complex and confusing. Clients understand best when they see how the concepts apply most directly to their common experiences.

Helping a prospect grasp these connections will stimulate motivation to purchase the product. In most cases, this should be a single event. During the sales presentation, the advisor focuses on helping the client increase understanding by breaking down the discussion to cover the 5 common VUL elementscash flow, subaccount investing, expenses, death benefit and tax impact. Here are some suggestions.

Cash flow. Whenever contemplating a purchase, especially a large one with ongoing payments, most people have some worries about the transaction. They may wonder, “what if I cant make a payment or something else needs to be paid that Im not expecting?” Or, “what if I need money for an emergency?”

As relates to VUL, its not enough for the client just to know he or she has access to the policy cash values. The client needs to know the process for gaining that access and the ramifications of removing the money or skipping a payment. To respond to this need, the advisor should explain such things as the difference between withdrawals and policy loans, how the universal premium can be flexed, and how to set a billed premium level above the minimum scheduled premium.

Most importantly, be sure the client feels comfortable with the process and somewhat confident that he or she can accomplish the tasks required.

Subaccount investing. When investing, even when using subaccounts inside a VUL, I need to see a prospectus. Most clients are no different. They need to know what is in the subaccountsi.e., names of the companies whose stocks are in the subaccounts; the percentages of stocks, bonds, cash, etc. They also need to develop a feel for historic performance and risk and volatility levels. They need to understand the possible impact of asset allocation and dollar cost averaging programs, if elected.

Expenses. Tell the client how the insurance company gets paid and what other kinds of costs may be involved. It is important for clients to understand when these costs are deducted from their funds and how they may change over time. Show how they benefit by over-funding to possibly reduce the expenses relative to total accumulations. They also need to know the protections built in to the policy, capping these expenses.