Although indexed universal life insurance sales seem to be losing some momentum, the fact that they are still the highest sold life insurance product on the market today is a testament to both the greed of Americans and, more importantly, the disingenuous direction the life insurance industry has taken over the last 35 years. Once an honorable profession the life insurance business has been struck by dollar signs and all of those dollars are going to agents and companies and very little and often none of it to policy owners.
Four years ago, a few years after I started railing on the obvious down side reality of indexed universal life, someone named Dan commented on a post where I had once again been challenged on my views. My answer to the challenge was to show me one, not a boat load, but one IUL policy that had met the high expectations that were the crux of the sale. Was there one out there that had really returned 8% to 10% in cash value accumulation and proved me wrong? Was there on indexed universal life insurance policy that had shot straight up to cash values that could be considered “retirement” quantity?
I have asked so many times when IUL agents slam me as uneducated, to be shown just one in force illustration of a policy that is five years old and performing the illusory 8% ROI that is used to get people to part with a minimum of $1000 a month, mostly more, and have yet to see one. What is even more telling is that we, collectively all of us in the country, have yet to hear a firestorm building about how wonderful IUL is. Where is the IUL good news other than in the pitch of the agent. At least back in the 80’s when traditional universal life had real interest rates to back it up, it was news. People were talking about their cash values seemingly headed for the moon. There was no shortage of people willing to show their in force illustration because they looked awesome.
Back then agents that sold universal life didn’t need to look for clients because everyone who had a policy told their friends and they sought agents to replicate those results. As we all whined about inflation, we all wanted it to help us get filthy rich so we could quit our jobs. Those policies were gold in the 80’s, silver in the 90’s and lead poisoning in the new century when suddenly interest had left us all. Now we could buy a home at 2% or 3% interest and universal life policies that had been cash rich imploded and gobbled up not only the cash value, but more importantly the life insurance. The low interest environment of the last 16 years has made cash value policies truly risk laden.
Dan, who I referred to above has never engaged in the conversation since. Not thinking much of me at that point (maybe still) he ended his comments with, “A mature person is one who is does not think only in absolutes, who is able to be objective even when deeply stirred emotionally, who has learned that there is both good and bad in all people and all things, and who walks humbly and deals charitably”
Bottom line. I responded to Dan saying that I do actually walk humbly and deal charitably unless I am faced with evil that is wreaking havoc on the frail finances of so many families who put their hopes and money into indexed universal life. I disagree with Eleanor, respectfully of course, that there is both good and bad….in all things. Indexed universal life insurance isn’t pure evil but I, having been around the block through all of these universal life debacles, can’t find anything but risk in what they have to offer. If you have any questions or are considering purchasing indexed universal life, call or email me directly. My name is Ed Hinerman. Let’s talk.