Update on the Market: Premium Financing, Private Placement, Life Settlements, Term Life Insurance, Long Term Care
This is a follow up I sent to the overflow crowd at my Heckerling presentation in January. I thought it would be worthwhile to share with everyone as a short update on the market and my practice. Enjoy.
Premium Financing & Private Placement Life Insurance (PPLI)
I was good to see all of you and I appreciated the opportunity to speak and answer questions regarding premium financing and what I see going on, as well as about private placement life insurance (PPLI) and other trends and practices in the life insurance market. Most of my time continues to be spent on helping those in premium financed arrangements get out of the trouble they find themselves in. The misrepresentation and fraud are prevalent and litigation is booming. I encourage you to pick up the phone if you have any clients even remotely considering premium financing or who are in a plan, whether or not they think they’re in trouble.
Most premium financed polices are indexed universal life (IUL) and this is a significant contributing factor in the problems. (There are also plenty of financed whole life policies.) I won’t say IUL isn’t a potentially reasonable life insurance product, but it’s incredibly complicated, especially in relation to how simply it’s often portrayed. It’s also more commonly misrepresented than I believe most people understand, including by many of the agents selling it. By that I mean many don’t realize how they’re misrepresenting IUL. Of course, some do and seem to delight in doing so, but others just don’t know better. This is driving its own litigation, even when not financed.
I related that most of my work has traditionally been in the “death benefit world” and relates to estate tax liquidity and business succession planning, but there is a continued push for cash value insurance sales in accumulation and income tax planning. While I’m not on board with some of what I see, there is a way to do it right, given certain objectives and understanding. This knowledge comes over a career in helping disappointed policy owners salvage what they have in their misunderstood policies. It can be done right if you recall my “5 Birds with One Stone” story (recently published as “6 Birds”).
PPLI will always we a niche product for very wealthy, but when it fits, it can sing. Remember, there’s what I call “Shelf PPLI” for the down market, from middle class to the merely rich, that is built on the same insurance and tax code and can look even better financially than the fancy stuff. Depending on what’s important to you and your clients, plain old variable life insurance, built right and well managed, can be more attractive for some than true PPLI.
Life Settlements
Life Settlements, while rare compared to years ago, continue to offer huge rewards for a slim slice of the market. There are recent developments that may allow some policies to garner offers that weren’t available not long ago. The rule of thumb here is to simply pick up the phone or shoot me an e-mail and start asking questions.
Term Life Insurance
I’m still adamant that there are only a few term policies I’d recommend, though the market continues to insist on spreadsheeting and selling the cheapest. The changes in contractual language I’ve seen with many carriers and products seem to be unknown or ignored by many. This is something that’s not going to affect people today, but at some point down the road too many people are going to be bit by what they don’t understand now.
Long Term Care
Long term care riders and products continue to evolve, and there is a portion of the consumer market that can solve some of their planning needs with well researched and designed products. There are a multitude of options, and this market is unrecognizable from not that long ago.
Your Resource
The most important thing I want to repeat and impress on you is the line I tell every advisor; view me as your back room. If anything regarding life insurance comes across your desk, pick up the phone or shoot me an email or text. I’m not going to charge anything for that. This is all under the umbrella of sales and marketing. The goal is to bring value that results in an engagement.
OC Consulting Group is not about life insurance sales; it’s life insurance consulting. Wouldn’t it be refreshing to have a resource to ask questions and talk through things without the discomfort of being sold? Objective, independent information from a professional who understands the industry and the market who will work with you and your client the way you decide. What’s not to like?
Thanks again and enjoy your day.
Bill Boersma is a CLU, AEP and LIC and the founder and owner of OC Consulting Group. More information can be found at www.OC-LIC.com, www.BillBoersmaOnLifeInsurance.info or email at bill@oc-lic.com or call at 616-456-1000.
Securities offered through Valmark Securities, Inc. Member FINRA, SIPC. Investment Advisory Services offered through Valmark Advisers, Inc. a SEC Registered Investment Advisor.
OC Consulting Group and its affiliates are separate entities from Valmark Securities, Inc. and Valmark Advisers, Inc.
