New IUL Sub-Account Options
The indexed and variable UL world continue to merge. VUL products have begun to offer various types of IUL sub-account options, in all their forms; non-leveraged and leveraged (multipliers). As most of you are aware, Lincoln Financial has been a leader in both the VUL and IUL market. Their revamped AssetEdge VUL allows clients the flexibility to access 4 indexed accounts along with their standard investment offering. Lincoln’s Elite Series of Funds is a fantastic lineup on its own, with 72 options at the lowest average sub-account cost in the industry (51 basis points). Now, on top of those great options, the customer has 4 indexed options with various forms of exposure (and cost). The conservative index option is a great potential solution for when a client begins to take income to protect the downside along with systematic withdrawal risk. The other indexed options give the client more growth exposure and they can choose to allocate some or all their investment into these accounts at their discretion.
I had the opportunity to speak with Scott Harmening who is a Senior Internal Wholesaler for Lincoln and extremely knowledgeable on all things VUL. What I really like about Lincoln’s AssetEdge VUL is that it gives the client flexibility, pure and simple. Flexibility when their objective or situation changes, or if the carrier starts to get cute with the indexed accounts. With standard IUL products, there is no exit strategy. With this type of product, when the carrier pulls any number of the profitability levers inside the indexed accounts, a client can shift out of them and into over 70 different alternatives. Scott used the analogy of going to a beach. With IUL you are on a small island surrounded by water. It is nice, but you are trapped on that island with nowhere to go; whereas, with this type of product, it is more like being on a beach in Florida. You can stay on the beach, but you can also leave and go someplace else if the weather changes.
I’ve always been vocal about my concern regarding the IUL market and its effort to sidestep AG-49, fuel a reckless illustration war, create more and more unlikely client outcomes at ever-increasing cost, and what have we seen as a result? Wave after wave of cap decreases and cost increases as the carriers continue to struggle with historically low interest rates and a costly equity options market, combined with an awaking regulatory environment. These complex, leveraged indexed strategies belong in a registered product sold by securities registered individuals. Obviously, that is my opinion, but I think we will continue to see IUL merge with VUL in the coming years especially as these IUL policies begin to dramatically underperform customer expectations. Lincoln’s AssetEdge is my #1 choice for a standard accumulation VUL in general, but these IUL sub-account options make it a leader in flexibility.
One of the most important aspects of an accumulation VUL sale is the ongoing management. Lincoln has invested a lot of time and money in their back-end support platform to help customers and agents manage the policy. If you own a policy yourself, you know how important this is to have.
Contact Charles Arnold for more information:
Sales & Business Development Team Manager