Let’s face it: when it comes to life insurance, some clients want it all — security, flexibility and the opportunity to build cash values. One do-it-all solution is adjustable universal life insurance with fixed index interest, flexible premium, and secondary guarantee provisions. That’s a mouthful, but then, this is a lot of product.
This type of product offers policy holders long-term guarantees along with the ability to allocate premium to index accounts, providing the potential to accumulate significant cash value. Strong death benefit protection, options to customize coverage guarantees, and policy features that provide the potential to build cash value help make fixed interest index, adjustable GUL one of the most flexible products available.
That’s important because many clients seek solutions that help achieve higher returns, but they are also concerned about the volatility of today’s equity markets. Indexed GUL products can capture some of the upside of the equity markets while providing a minimum guarantee to help decrease market volatility. These products can be especially appropriate for clients who need permanent, guaranteed protection at an affordable price and want the opportunity to build tax-advantaged, supplemental future retirement income.
One of the newer types of indexed GUL products allows clients to select from three premium allocation choices to best meet their needs — a declared interest account, a one-year index account and a five-year index account. In addition to guaranteed death benefit protection, these interest-crediting accounts feature the opportunity to realize growth in cash value accumulation based in part on the performance of one or more global indices, with the ability to change the allocation instruction at any time.
Some of the key benefits of today’s more attractive indexed GUL products include:
- Guaranteed death benefit coverage up to age 121, with issue ages from 0-90 (in most states)
- A flexible continuation guarantee that allows policy owners to select their guarantee period and premium-funding period
- One-year index interest crediting based in part on the one-year, point-to-point growth of a domestic index with cap rate and guaranteed interest rate of 1% (index does not reflect dividends)
- Five-year index interest-crediting based in part on three global indices with automatic overweighting of the two best-performing indices
- Minimum death benefit protection of $100,000, with a choice of two death benefit options (level or increasing)
- A unique combination of death benefit guarantees, with the ability to accumulate significant cash value
- Two loan options that provide policy holders with choices on how to access their cash accumulation, which provides more flexibility than most competing products
- Monthly index accounts that allow flexible scheduling of premium payments
- 24-month rolling targets (may not be available in all states)
It’s possible today to find indexed GUL products structured with a multitude of other customer-friendly features. One such feature is flexibility regarding premium payments. Many families face financial challenges, so in many cases, premium payments received within 28 days following the date of issue, and each subsequent premium due date, are treated as being received on time for purposes of maintaining the death benefit guarantee.
Another customer-friendly feature lies in the way 1035 premium exchanges are applied to certain policies. For purposes of maintaining the death benefit guarantee, 1035 exchange premiums received during the first 12 months after the date of issue of selected indexed GUL products can be treated as if received on the date of issue.
Additionally, depending on the particular indexed GUL product, policy withdrawals can be allowed (subject to certain restrictions and conditions) anytime after the first policy year, and clients have a variety of loan options to access cash values. Optional riders can ensure that policies won’t lapse with large outstanding loan balances, and many other riders are available to meet individual needs.
With a unique combination of flexibility, security and opportunity to build cash value, indexed GUL products can provide clients with peace of mind as well as profit potential. If these products are not part of your portfolio, now might just be the time to add them.
Tim Heslin is vice president, life product manager, for American General Life Companies. He can be reached at firstname.lastname@example.org. American General Life Companies, www.americangeneral.com, is the marketing name for a group of affiliated domestic life insurers. For producer use only. Not for dissemination to the public.