Last month I talked about the evolving guaranteed permanent product and the impact of lower interest rates on those products. That generated some feedback and we received one particularly thoughtful response that I wanted to share. I am not sharing it because I agree with all the points made (I don't), and I am not sharing it because you will agree with all the points (and you and I might disagree on that), I am sharing it because it made those points very well and I really appreciate the time and effort that went into it producing it. I just couldn't accept that I would be the only person to consider those views, so here it is:

Hi Bob,

Just read your take on life insurance and I actually sold all my GPUL as "term to 100" (or term to 120, or term to 90) and YES you don't have to apologize for guarantees.

I have been at this game since January 1975. Policies were listed in three ring notebooks (non-par). I actually had a Computone computer in a Samsonite briefcase that hooked up to the phone by inserting the handset into a cradle, dial a number and the proposal would print out on thermal paper right in front of your eyes... loved the “minimum deposit illustrations.

I remember going to Atlanta to a Computone school led by Ray Philibert just as UL was coming out and he showed a 35 year old, maybe $500,000 policy, endow at age 100 at the then current interest rate (say 8%) and the premium was something like $358 per year. He then reduced the premium BY ONE DOLLAR to $357 and the policy lapsed in the insured age 60s. I looked at the guy next to me and said, "I see the undoing of the life insurance business as we know it, and a lot of lawsuits"...!!!

Universal Life was designed by E F Hutton (gone) and the old ads went , "When EF Hutton speaks, people listen". Apparently, they did not listen well enough. They designed a product generally sold in a riskless transfer risk environment (life insurance) and transferred all the risk to the buyer-expenses, interest and mortality, for the "opportunity" to earn a little bit more on your cash values. Leave it to a brokerage firm to find a way to transfer the risk to someone else but reap the benefits on the upside (much like 2008 when the brokerage firms wanted the government to cover their losses, while they kept the upside).

And par policies cost more, paid a dividend, and every year there was a study (AM Best, maybe) done on dividends projected vs dividends paid. Always the PAID dividends exceeded the PROJECTED dividends, and the leading companies were Northwestern, Mass, Guardian, NY life, Confederation (gone), Mutual Benefit (gone), and others...

All my insurance was/is permanent however, any polices that were WL term blends have blown up and I have 1035 exchanged them into other permanent policies...

My mantra the last few years is that I don't trust any insurance company... every company comes up with hot new products, stock market up, stock market down, stock market sideways, VUL, VUL with guarantees (love the guarantees), GPUL (love those guarantees), IUL (some downside guarantees), IUL with multipliers etc.

At the end of my career (age 71), still active but not doing a lot and have sold a lot of insurance and the only policies I am proud to have sold are ones that have paid off because someone died and someone else needed the money, 10-15-20 or 30 year term with guarantees, (and invariably when the policy hit the end of its guaranteed period I would/do get calls about why and what to do now?), WL-par and non par... especially the Hancock non par with a 5% reserve and cash on cash return in the 3.75-4% range, (they took it off the market!).

Love paying my personal premiums (maybe $20,000 per year) because the cash surrender values are bringing in a 2%-4% rate of return cash on cash (excluding the life insurance). Makes me look brilliant!!!

And I try and keep up with each policy individually to track dividends and here are the last three years dividends on just one policy, dated in January

2019- $2020.70
2020- $1723.74
2021- $1054.57

And the usual annual cover letter "we are proud to pay a dividend, have been paying them since 1898, and we are keeping our dividend rate at 5% even in this volatile low interest rate market..."

I could go on...

Anyway, your article caused me to reflect on all these issues. Thanks !! Keep up the good work!

Allan S. Oxman, CLU ChFC AEP AIF
aoxman@ffrcharlotte.com

Once again, NOT all subscribers will agree with the points made by Allan, I don't. But he makes them well and I had to share them with you.

This represents why I have always liked the business of selling life insurance, and being an independent agent selling for multiple companies. You could develop your own views of the best solutions for your client and sell according to those strategies. Often those strategies would modify over time. Sometimes you changed your views because of product opportunities; experience is a big teacher.

From the time I started in the business, to today, life insurance companies have become much more competitive and are far more responsive to competition. When I first started offering quoting software in the U.S. in 1987, the longest level term plan was 10 year, most products sold were ART of 5 year.

In those days everyone wanted to quote "re-entry" premiums and show them as if they were renewal premiums. Compulife quotes showed "renewal" premiums, with the view that consumers needed to see the big downside after the level period. Slowly agents realized that a client stuck in a product were in bad shape with those YURT renewals. As a result level periods began to get longer, to address that, and companies first out with 20 year term and eventually 30 year term cleaned up quickly.

In the early days companies who pioneered competitive prices and products could really clean up, there was such a huge difference in prices. Today we are seeing term premiums that are determined by rates in fractions of a penny, and companies responding within weeks to changes in the market. This has all been GREAT for consumers and for independent agents who sell based upon getting the consumer great products at great prices.

When you work for someone else as an employee, and I worked for many when I was a young, you are always boxed in to represent the views and standards of your employer, and sometimes those views were contrary to your own. Your option in a situation that compromised your principles was to move on.

Often, as you got more experience and became more valuable to an employer, they would respond and pay you more but I found many times that someone else was willing to pay more. Changing jobs, and starting with a new employer seemed the only way to move up in pay.

All of those problems disappeared when I began selling life insurance in 1979. I went to work for a GA who let me sell for whoever I wanted. I could research products and develop my own opinions about what was good and what wasn't. I put myself into a position where the only person I was responsible to was my client, and I advised clients as though they were in my position. I personally bought the products they were buying from me, because I believed them to be best. My skills from school and previous jobs all lent themselves very well to the work I found myself in.

As my skills improved I made more money. I didn't have to go to the boss and ask for a raise, it come automatically. If I worked harder, I made more. If I needed time off, I could take it. But most important, I treated my customers the way I wanted to be treated myself.

I will close remembering the man who first introduced me to the business who said "Take care of your client first, and your pocket book will take care of itself". It was great advice and since 1979, whether it was selling insurance or developing and selling Compulife's quoting software, I have let tried to live by that advice.