Case Study: Better Guaranteed Death Benefit with a VUL instead of a GUL or Whole Life
- LIR TEAM
- Jul 27, 2024
- 2 min read
Updated: Nov 28, 2024
Simple Case Objective brought by Certified Financial Planner (CFP)'s client: For estate planning purpose, to buy the highest guaranteed death benefit paying continuous $10,000 yearly premium for a second-to-die (survivorship) policy.
We had a case brought to us by a Certified Financial Planner (CFP) who manages investment accounts for his client. Although he is also licensed to sell life insurance, he lacks the expertise to independently verify the information provided by his Independent Marketing Organization (IMO). The IMO, with which he is contracted to provide life insurance products, supplies him with quotes and illustrations to review and present to his clients.
The CFP was surprised to discover that, despite assurances that "every option" had been considered, the IMO only offered options available within their network. Additionally, they did not disclose any potential conflicts of interest. Below are the two quotes they generated:
Non-Guaranteed (including IUL and whole life): Based on cash value performance.
2. Guaranteed (including IUL and whole life): As long as premiums are paid.
After an analysis of the case and review of the options provided, we identified a better solution for the client—an option that the IMO had not considered. In comparing the "best" options provided by the IMO, we identified two critical omissions:
Another Life Insurance Company (Remain Nameless): This company, known for its strong offerings (Comdex score of 93/100), was not included because it does not work through marketing agencies.
Variable Universal Life (VUL) Options: These were excluded because the CFP and the IMO were not registered with FINRA.
Due to these factors, the client was not presented with all possible options and, consequently, not the best option from a cost, benefit, and total coverage standpoint. Our analysis revealed a solution that better meets the client's needs.
Better Solution/Option: $10,000 for 39 years only (vs 60 years) and it's guarantee all the way through year age 124 & 121 (same as others) = less premium overall and guaranteed for more coverage of $799,230 vs $660,927 guaranteed:
Clients often don't realize what options are available to them, and this lack of awareness can lead to suboptimal choices and higher costs. This is one of the main reasons we launched LifeInsuranceReview.com (LIR)—to empower consumers and advocate on their behalf.
Even a CFP, who acts as a fiduciary, cannot fully serve their clients' best interests if they lack access to all the resources and the experience needed to verify the latest and all options. Additionally, they may not be able to provide certain options available only through brokers with FINRA registration.
