The second quarter 2013 sales and market report from Wink a life insurance and annuities research firm, shows that in 1998 the IUL market stood at $64.7 million, growing to $1.3 billion in 2012 and $668 million for the second quarter of 2013.
“We are up 15 percent for the year again,” said Grissom. ”Clearly we’re seeing tremendous growth with this. It’s a good story.”
But what’s the best crediting strategy for IUL? The most popular are:
- Annual point to point;
- Term end point;
- Montly averaging.
These are three very different approaches to crediting. But do they yield very different results? According to Grissom, over the long term, they do not.
“Over a long period of time, they’re going to perform about the same,” he said.
As for IUL mechanics, Grissom pointed out five important provisions:
- Participation rate: Typically in the IUL role about 100 percent;
- Cap: Typically 10-14 percent (100 percent PR rate);
- Term: Higher cap rate comes with higher expenses;
- Crediting formula: Best long-term performance tied to highest cap rates.
As for the difficulty in selling the product, Weber suggests lessening the confusion that not only consumers feel, but agents, too.
The more education we can provide around IUL, the better we can do with the products,” he said.
Weber also noted that prices is often an issue for clients, but that too can be resolved in some cases.
“Price is only an issue in the absence of value,” he notes. “
Here’s what I recommend to a broker stuggling with ‘why would I recommend paying anything more than necessary for life insurance?’
Add value — like riders — to get away from number-driven sales.”