Policy Reviews After the GUL Downturn

Life insurance is not for your clients, it is for their next generation. This might have been a true statement three years ago, before the introduction of actuarial guideline 38 (AG38) and when guaranteed universal life products were cheap, provided “guaranteed” protection for life, and carried

little to no cash value inside of the policy. Arguably, the only value of a GUL contract to the insured was the amount that it could bring in the secondary market, and even then, this is a market tainted with hidden fees, and a bad reputation for taking advantage of their prospective clients. Whit that said, it did not change the fact that most advisors and brokerage agencies were all about guaranteed universal life. It was easy, required little skill to sell and when used in a life insurance policy review process, could provide longer guarantees and lower premium payments to the client making it an easy decision to replace that policy purchased in the 80’s, 90’s or early 2000’s that was under-performing and requiring additional premium. Yes, over the first decade of the new century and for a few years following 2010 permanent life insurance for the first time could be sold on a spreadsheet and the cheapest cost with the highest commission was the way to go. The art of storytelling and the value behind the products we sell became obsolete. The focus was solely on price and for most, life was good. Brokerage agencies and their advisors sold more life insurance then in years past and replacements, 1035 exchanges and policy reviews became a larger source of annual revenue for both the advisor and BGA.

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