What’s For Sale in 2023 & Product Success Stories
It is hard to believe that we are more than 8 weeks into 2023 and that March starts this week! January and February flew by and were extremely busy for everyone at AgencyONE, which means that our AgencyONE 100 Advisors are busy, and that is GOOD for all of us! Historically, the first two months of the year were a time to finish up the business that did not place at the previous year-end, but this year we have received a higher number of new case opportunities than in years past!
I thought that a great way to begin my ONE Ideas for 2023 would be a refresher on current product availability, the carrier partners that AgencyONE works with, and new opportunities that have brought recent success for our advisors.
Term Insurance Options
The full range of typical Term options are 10, 15, 20, 25, and 30 years. However, there are a few outliers such as:
- ART or One Year Term (not many carriers have this option)
- Return of Premium Term
- A few options for 35-40 yr. Term (depending on client age)
When considering Term, it is extremely important to look at the carrier’s current conversion period or whether a conversion option is available. In some cases, you can lock in more favorable conversion terms for only a small increase in premium. We have had terrific success with our Accelerated Underwriting options. The turnaround times and ease of issue have really helped with smaller transactional cases. While not everyone will qualify through one of these programs, when it works, it works very well.
Success Story: One of our carrier partners had an Accelerated Underwriting case applied for, issued, and approved all in less than an hour!
Whole Life Options
Whole Life (WL) is still a popular quote option for AgencyONE. Whole Life comes in Single Pay, 10, 15, 20, Age 65, A100 and A121 varieties. There are also a few non-par WL options that look like a guaranteed cash value GUL. A popular design we see often is using 10-pay WL. Many advisors are selling a Life Insurance Retirement Plan design which is a shorter pay strategy designed to grow cash value and provide future income. This is run in comparison with an Accumulation IUL.
Success Story: AgencyONE was in competition with an IUL income design. The client felt they already had too much equity exposure and liked the Whole Life accumulation strategy as an alternative. The client ended up purchasing a 15-pay Whole Life policy to guarantee the pay period, then showed competitive distributions from ages 70-85. This product also had an available LTC option, which the client declined adding.
Universal Life Options
Universal Life (UL) is still hanging in there and shows in a couple different versions. There is Current Assumption UL and a Guaranteed UL. When you think of Current Assumption UL there is a flagship option which is still the low-cost leader. It is extremely competitive in cost and flexible in design and even offers a true Long Term Care rider. Did I mention that this product has actually RAISED their crediting rate 2 times over the last year? On the Guaranteed UL side we still have 10 products available. (That number drops to 4 in NY). GUL products can be:
- designed with specific guarantee periods
- paired with refund of premium options and/or LTC – Chronic riders
- funded on a level pay basis
Success Story: We had a client who wanted to guarantee coverage only to age 80 but wanted options to extend coverage down the road, if needed. We showed him a Guaranteed UL product that offered the option to continue the coverage with future stepped premiums FULLY GUARANTEED. We provided level premiums to age 80, and then stepped the premiums to age 85,90, and finally to age 100.
Indexed Universal Life Options
This is the product line most of you have probably been waiting to hear about. Indexed UL has been one of the top product lines for the last few years. Carriers have carved out their niches with both Protection and Accumulation products to best meet your clients’ needs. Doing a quick product count – there are over 22 Accumulation IUL options and over 16 Protection IUL products! While the majority of available IUL is on the protection side, we have seen a large uptick in the accumulation side of this business.
Protection Indexed Universal Life
AgencyONE has access to Protection IUL that can be fully guaranteed, guaranteed to a specific age and others that have life expectancy based guarantees. It is important to have some amount of built-in guarantee in these products. These are also the products most likely designed with either a LTC or Chronic Illness rider as an added benefit. When running these scenarios, always consider a crediting rate lower than the current AG49A rate.
Accumulation Index Universal Life
In order to design the most efficient Accumulation IUL policy, you need to use a minimum non-mec death benefit. Using the lowest death benefit possible helps keep policy charges down while accumulating cash values. Many offer the option to add LTC/Chronic Riders but be aware that this will cause extra drag on the cash accumulation. Also, remember that you cannot take Income and LTC benefit from a contract at the same time. Finally, when choosing a product, it is advisable to review the available index fund list so you are aware of the options you can pivot to down the road. When choosing a specific fund, spend time learning about the index credits (participation rate and cap rate) and the current and guaranteed rates. Always consider a crediting rate lower than the current AG49A rate to compare projections. AgencyONE can help you sort through the options and find one that will best address your client’s needs.
Success Story: We had a case with a client who wanted to purchase a large, overfunded accumulation policy and add in a large 1035 from a prior contract. The advisor did a great job explaining the product, index options, and added riders that were available. The client asked about adding a LTC coverage rider. Because the client would not be able to take income and a LTC benefit at the same time with this particular design, we pivoted to another carrier that would allow the 1035 to be split into two available product solutions – Accumulation IUL for the cash accumulation and a hybrid LTC product to cover the LTC requirement.
There are still plenty of good options for survivorship coverage with products built on a UL, IUL and VUL chassis. Most of these are still sold with full guarantees but some of the indexed options have the possibility of cash value growth in exchange for guarantees. One specific carrier partner offers LTC on both clients if they qualify through underwriting and each client can obtain ½ of the death benefit for LTC, if needed.
Success Story: We started a large survivorship case with full guarantees to age 121. Upon review of the IRR’s, the advisor asked if we could improve them. We came back with a lower premium solving to the client’s life expectancy and then added in “catch ups”. The original IRR in yr. 20 was 11.45%. The new projected IRR increased to 17.71% with a guarantee to age 93 on this particular case!
Variable Life Options
VUL business has picked up at AgencyONE in a big way. VUL products can be designed for income or death benefit guarantees, depending on the need. They tend to be more competitive in short pay or large dump in scenarios. There are also Survivorship VUL options that are competitive for either Guarantees or Cash Accumulation. Some of the available riders on VUL contracts are:
1. LTC or Chronic riders
2. Critical Illness riders
3. Return of Premium Death Benefit options
4. Indexed Accounts
Success Story: (an illustration success story): An advisor and client wanted a Guaranteed Survivorship option funded on a single pay basis. Using a $1,000,000 single premium, they were able to buy $2,010,000 of guaranteed coverage to age 110. While the client and advisor liked the guarantees, they were concerned about the lack of cash values. AgencyONE alternatively ran an Accumulation SVUL at a 5% ROR. We solved for DB to age 110 and received $2,525,000 of DB! While this had the projected cash values, they wanted the guarantee dropped to age 84 assuming 0%. The decision on this case is still pending.
Hybrid LTC Products
The AgencyONE team has definitely increased our hybrid case quoting. These products can be challenging to illustrate and compare since age-of-client may impact pay or benefit periods. These are great options to show your clients if they are afraid of a “use it or lose it” scenario. They also provide a fully guaranteed solution. Our most popular designs are single-pay and 10-pay currently.
Success Story: We placed a policy on a 56-year-old client through an Accelerated UW Process which was applied for electronically and approved in 4 days!
AgencyONE is happy to schedule a call with you to discuss sales ideas or product options in more detail. Please reach out to the Case Design Department at 301-803-7500 for more information or to discuss a case.