When my son first started playing baseball, he was so nervous that he wouldn’t even swing. This went on for several games. Then came the day when he actually connected with the ball. He finally understood what to do, and after that, there was no stopping him from swinging and knocking balls out of the park.
Agents selling traditional universal life or even variable universal life seem to go through a similar process when getting acclimated with indexed universal life.
Initially, they ask, “Why should I even look at this new type of product? I don’t understand how it works.” This can be frustrating for insurance carriers offering IUL; not only do they see agents failing to “latch on” to the product, but they are also aware that customers are being denied the opportunity to select, or even learn about, the unique benefits IUL has to offer.
However, with a little education, agents can and do move from holding back to “swing,” even to hitting IUL “home runs.” How? It happens when carriers and distributors address agents’ product needs.
Consider the products the agents are currently selling. If it’s UL, then talk about the likenesses between the two products. Both UL and IUL have similar insurance charges (surrender charges, cost of insurance, premium loads, and per thousand charges). Both also have minimum guarantees and flexibility in death benefits and premium payments.
A big roadblock for many agents selling traditional UL is that they would rather sell the no-lapse guarantee (NLG) version. When that is the case, it’s a great opportunity to explain that many IULs offer extended NLGs–i.e., for a specified term, to age 100, or even for the client’s lifetime if living beyond age 100.
And, by the way, the IUL market also has several single premium products available, as well as survivorship plans, so there is something for everyone.
IUL’s big value proposition compared to traditional UL is the opportunity IUL offers for greater upside potential interest crediting. Whereas traditional ULs may credit 4% to 6%, an IUL has the ability to receive indexed-linked gains as high as 18% or more today. Of course, the minimum guarantee on some IULs may be 1% or 2% lower, but the IUL has the potential of more than twice the upside crediting, compared to traditional UL.
Seeing the IUL’s upside potential can easily move an agent to “first base.”
What if an agent is currently selling VUL? This requires a different comparison.