Life Insurance products are designed to protect risks from being transferred to an undeserving party by having a group of individuals pay premiums to reduce the overall cost of mitigating these risks.
This is seemingly the base definition of the purpose of insurance, but there are additional caveats based on the specific design of the products.
The market has been repositioned in recent years to be geared toward guarantees with traditional no-lapse features built into policies.
During this market shift there was a product line that was forgotten, Cash Value Life Insurance.
The initial advent of Universal Life Insurance promulgated the concept of access to cash value and maximum future product flexibility.
The current interest rate environment is at a 40-year all time low and individuals are looking for creative ways to achieve the highest return on their money. The cash value products provide an alternative savings account and provide great flexibility to prospects when looking to supplement retirement benefits from a pension, 401(k), IRA or any other existing retirement vehicle within their portfolio.
The cash value is also another source of capital for an emergency fund for an uncertain future medical expense, or these values could be used if a unique business opportunity that would not have been available to the policy owner otherwise.
If the policy owner’s experience financial hardship they are able to adjust the policy to keep their coverage intact
One of the most prevalent features is that the policy owners reserve the right to skip premiums if the cash value is great enough to cover their obligation. This reduces the possibility of lapse or reinstatement, which can be a cumbersome task for the client to complete.
This is a concept that should be discussed, because the traditional guarantees might not be flexible enough to meet client objectives in a financial environment that is new to even highly sophisticated advisors.
We want to help you provide the most comprehensive insurance planning to your clients and put you in a position to grow your business. For more information on the cash value products please contact your Life Sales Marketing Manager today and ask about our Policy Review Program!