Universal Life and Indexed Universal Life insurance can be designed as a flexible, low premium insurance policy that offers the option to provide permanent death benefits and cash value growth potential for the Mortgage Protection market.
These can be designed primarily for the mortgage protection market, UL/IUL can provide at least 20 years of coverage by paying the minimum premium, based on current illustration assumptions. It can also serve as an alternative to term products and has applications for the personal and business markets where there is a need for a fixed or indexed universal life product.
UL/IUL’s can be accompanied with a comprehensive rider portfolio including no additional cost accelerated benefits riders which provide money in the event of a terminal, chronic, or critical illness.
These riders are generally provided at no cost in the mortgage protection market and are perfect for clients concerned with unknown changing health down the road. (Payment of accelerated benefits will reduce cash value and death benefit. Benefits are not mutually exclusive. Using one benefit may reduce or eliminate another.)
“As an alternative to term life insurance in the mortgage protection market UL and IUL can be designed to provide high death benefit protection with a low out of pocket premium cost to your clients. With these two products comes flexibility.
Depending on the company and product premium and death benefit can be modified so as your clients’ needs change, their policy can too without having to apply for another policy in the future," says Patrick “The Skipper” Pegram, chief market strategist and senior partner at Legacy.
Additionally, Pegram states, “As one of the greatest unknows is our future health, UL and IUL can be a life saver when after 20 or 30 years our health may prevent us from qualifying for a life insurance policy. Having the flexibility to increase the death benefit and cash value is a perfect solution.”
Lastly, using UL/IUL for Mortgage Protection is an excellent solution for those clients looking for return-of-premium plans. In most cases, folks that are close to or over the age of 50, the cost for ROP term policy is cost prohibitive. The cash value accumulation in a universal life insurance policy while provide your client with available cash along the way that can be used as a partial ROP when the policy goal has been met.
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