Why Whole Life?

Today I wanted to talk about our website, Why Whole Life. The reason for the website and our belief in the product, whole life insurance, is really based upon the experience I’ve had over approximately 30 years in the life insurance world.

Whole life insurance products are rooted in guarantees, which have worked for consumers over many, many years. When I got into the business in the early 1980s there was a lot of change. Because interest rates were very high, new products such as Universal Life were coming out.

In my experience, many of these products have failed to provide the results that people were looking for:

• Universal Life came out in the late 70s, early 80s. It was in response to the high interest rate environment. As time progressed, interest rates eventually started to go down and these products did not perform as they were illustrated. 
• Variable Life came onto the scene in the mid to late 80s and was developed in response to the market becoming a popular place for individuals to invest. Variable Life illustrations at the time were using projected rates of 8%, 10%, and even 12% every single year. Even though it is possible that the market might average that, the volatility and variability of these market rates again caused a lot of these products to not perform as they were illustrated.
• Variable Universal Life, a combination of Variable and Universal Life, also in many ways didn’t perform, due to the combination of the reasons stated above.
• In the early 90s many companies stopped selling whole life insurance and started selling a product called Guaranteed Universal Life. This product, in my opinion, was an outgrowth of all of the dissatisfaction with underperforming Variable and Universal Life products. In response, insurance companies developed a product where the premium would guarantee (if planned payments were made in accordance with the rules of the contract to keep the guarantee in force) the death benefit to be there for the period of the guarantee.
• With Guaranteed Universal Life, the death benefit was guaranteed, however there wouldn’t be any significant cash value available or accessible. When interest rates continued to stay low through the latter part of the 90s and into the 2000s, these products were priced very aggressively (with low premiums). As interest rates continued at a low level, the insurance companies’ capitalization became at risk. Repricing over the last several years has created less attractive premiums for this product.
• Recently they have introduced another type of Universal Life, called Indexed Universal Life. The performance of this product and the consumer’s satisfaction with this product will only be determined as time progresses.

All of these new products and how they’ve evolved has kind of created a strong conviction in me as to why whole life insurance works.

• It is a product that has been around for decades and has performed consistently, especially with some of the large mutual companies that are committed to having a premier whole life product.
• It has a guaranteed premium, a guaranteed cash value and a guaranteed death benefit.

All of this history has created for us a belief that people want guarantees with their insurance, which is why they are buying insurance. We just recently posted some charts that talk about “How Whole Life Insurance Works” which you can view by clicking here.

If you have any questions about whole life insurance, or you would like to get a quote for your family, yourself, or your client, give us a call.

Registered Representative offering Securities through American Portfolios Financial Services, Inc. (APFS) Member FINRA/SIPC. Investment Advisory Services are offered through G&G Planning Concepts, Inc. which is not affiliated with APFS.

Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc. (APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors.

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