Why are many life insurance policies quietly failing?

The answer may shock you!...

Life insurance chassis

• Term Life
• Whole Life
• Universal Life
• Index Life
• Variable Life

I will concentrate on Variable Universal Life in this article.
The fallacy of variable life insurance policy designs
Life insurance proposals are actually sales illustrations designed to show the best possible scenario allowed by law. In a perfect, lineal world that can never happen. Therefore, the policy you choose to put tens of thousands of dollars in, can be designed to fail. Illustrations are designed to give you best, worst and mid-range of what can happen. Many licensed agents sell you on the best case and tell you not to worry about the worst case. By the way, there is a very good reason why, these illustrations are 20-30 pages. They will tell you not to rely on them, that they are just what if’s and all the risks of this policy. While most people including lawyers don’t read them, you all sign them stating that you read and understand all the risks associated with this type of policy.
 
The fallacy of “guaranteed” statements.
Know exactly what is and is not guaranteed.
Know exactly what you are required to do in order to qualify for guarantees.
Know what your floors are, if any. Most variable life policies have a guaranteed interest rate account, but you must choose this as an investment option.
 
The fallacy of cash surrender value and cash value
Cash value is the accumulation of value after all expenses and costs are subtracted.
Cash surrender value is the cash value minus any surrender charges. Surrender charges are real and are a cost of doing business. Surrender charges can exist for 15 to 20 years.
 
The fallacy of assumed rate of returns
The value of your portfolio can change daily, therefore it is impossible to use a specific rate of return to project a future value.
 
The fallacy of the risk profile questionnaire
Most consumers don’t understand the importance of this form and how it is used against you by your insurance company if your policy failed.
 
The fallacy of not over funding your premium
The main purpose of a variable life policy is to overfund the target premium at least twice
 
The fallacy of the sales pitch
Not meant to educate you. Not meant to make you aware of any buyer beware concerns. Best possible light, a perfect result in an imperfect reality. Prospectus, illustrations and risk profile questionnaires are designed to protect “them from you”.