How Does Universal Life Insurance Work - Explained!

Life Insurance Work. Now this is a simplified sales method that will help assist in the conversation of how are you all policy works now to do this video what I want to do as I want to give you an example of a case that I was working on about two weeks to two weeks ago with a crack that came in to talk to me about their old universal life policy now this simplified cells were going to go over worked so I thought about making a video about exactly how I presented how Atul policy where to that particular client now that their client had a Holocene purchased from a different carrier.

And they purchased at about ten twelve years ago before they came in I asked them to bring in and enforce illustration and when I looked through the enforce illustration unfortunately that policy was going lots in about two to three years the client also brought to me another illustration that the carrier brought to them where they had to double their premium and that policy was only when the last for another 10 years so the problem at the client's having was one they were very confused on exactly should they pay with a curly tail which is what they all agent Holden or should they funded more and stay with their policy the problem was either out that they went it was just a glorified term policy so before I even went into any illustration on exactly why they should come over to us as a carrier what I wanted to do as I wanted to explain to her exactly the benefits of a policy and just start from the ground and work my way up so we used this example the same exact now in this matter what we're going to go over the benefits to the kind is it an understanding of the need of finding a policy problem we always talk about this flexibility in that aur policy has but your clients don't you understanding as to exactly how the flexibility can actually impact their policy a lot of clients what they do is they think that well all I need to do is pay a premium for so many years.

I can reduce the premium but the problem is after year to that kind is automatically wins to reduce the amount of premium that they're paying into the policy and we both understand that that's not how you find that you are policy properly so this is going to help them understand a little bit more as to exactly why they should find it for a longer period of time until there's enough cash value in policy is an explanation of the UN policy that simple fired that they can actually understand that makes sense to them and empowers them to make a better decision on protecting their family but also be able to have this policy in force that they can use the cash value for whatever they want to use it for gives them the confidence and purchasing a policy that have stay in force for the rest of their life right I always say what's the best policy that's available when it comes to life insurance policies in force when you pass away so the last thing we want to do is give them another glorified term policy as I talked about previously the agent or or the advisor so for you it's a strategy to transfer underfunded you all policies like the example that I gave earlier about that client that brought over that information about her existing policy what it was was it was an opportunity for me to say you know what obviously this isn't working out with what you have currently why don't we give you a better policy over here when you're paying enough premium so this policy stays in force for the rest of your life gave me that opportunity because I went over this simple cells and it is a proper explanation on how are you a policy where it says he and increased premium per kilo policy as well too so maybe you as an agent or an adviser have upside down planes before and you sold then you are policy now because of the interest rate market that rain today maybe like those policies are being underfunded so this is an opportunity for you to talk to those clients about the need to increase the amount of premium that they have so when the question then becomes will when should.

I use this idea when she uses for when discussing how are you a policy works never assuming your client already has an understanding of exactly the way you are policy start from the ground and work your way up like I like I did with the other kind when competing against you all policy that is being underfunded is also another time you should uses let's just say that you're up against a is another carrier and you're saying mister the cost me $300 per month but then other carrier that you're competing against is saying it's only $100 a month while you and I both know that the policy that the other carriers showing that is not going to last for the rest of their lot so again you want to show more client exactly why they should find a a universal life policy properly and this method does just that so let's jump into it let's let's show them exactly what we would do when it comes to how are you all policy works now when I'm showing you right now again is exactly what I showed up that other client of mine that I talk to you about aur policy with her underfunded so what I did is I had a blank sheet of paper and I said his client lives but before we going to exactly which policy would be best for you let's talk about exactly how are you a policy would that be fine with you she said absolutely that's that's what I did as I started drawing steps as you see a little steps here and there and when I say it is easy steps this client is the cost of insurance with aur policy costs in insurance will increase each and every year he's our one-year renewable turns an annual policy regardless of the carrier now our whole goal here is to pay a premium that's high enough at a level where when the cost of insurance is a low number of low dollar amounts are premium is at a higher dollar and there's a difference between the two the reason why we want that difference is because that helps to build cashed out now that cash value is going to be a fluctuating range it's it's dependent upon interest rates within the market but it can never be less than 2% regardless of the company that you will now have URLs which are variable universal life policies are a little bit different but in this interest in the gist of any your policy can never be less than 80% so what happens is each and every year you're paying the same amount of premium and the cost of insurance will keep increasing which also increases the cash value that your humility now what's going to happen eventually is the cost of insurance will exceed whatever premium payment that you have so what happens is when we say this level just two different options we have the first option is we can use the cash value that we've accumulated which is a benefit to you to pay for that additional premium we have that ability right to the cash value peace for the additional premium or what we can do and not many clients when they do this whatsoever is we can actually have a higher premium payment so we can pay additional premium if we would like to do so cash value will keep building passes but we're paying an additional premium the problem is though the additional premium will keep increasing each.

And every year so you have those two options hopefully what we want to do is you want to use the former option which is using the cash value to pay for the additional premium red dead the problem is a lot of carriers or in my particular case illustration that was shown to my particular client is that their premium was so low that when the cost of insurance for as low as well to that there wasn't enough cash value being built up into the policy which now this was tender about 12 years out now what was happening was the cash value was paying for the additional premium but one of which is this year or in this year or this year here whatever happens if there's no cash value if there's no cash value there's not enough cash value to sustain the policy so what will happen is the policy will lapse that's the problem because we don't have any more cash that the only other option we have and what that illustration was showing my client was that they were actually going to pay double the premiums so the policy stay for a longer period of time but again in that illustration it was only for an additional ten years so eight or you're not choose going go through the same problem that she was going through what we want to do so I show them this is I say our goal here is to pay a higher premium so when the cost of insurance is low back cash values being built up and each year going for it cash I have enough time to build so when we get to this year or we get to this year the cash value he's really additional premium or in the cache is to get the additional premium so that's exactly what I wanted to do and to explain exactly how universal life policy we're now when i sat down with my plan to talk about this they were a little upset with with the policy that they that they purchased 10 or 12 years ago and the reason why is because they now understood that this policy was not going to last for the rest of their life so I wanted to do is empower her to make a better decision on her particular situation which in this case was purchasing different policy completely separate of a universal life policy so we ended up closing a whole life policy because she liked it she liked the guarantees associated with that so when I first wanted to do was explained to her exactly how are you you all policy worked so now the benefits of going over this explanation for the kind again is an understanding of the need of funding a policy properly now because it was an old case what I wanted to do was not try to sell her another URL because she thought she could have that same problem again strategically what I thought about doing was focusing on you all because of the guarantees associated with a whole life policy because it is because of the guarantees that are associated with a whole life policy what they said was it gave her a better explanation of how are you all policy worked as well and gave her the confidence and purchasing a policy that will stay in force for the rest of her life which in this case was a whole life policy now for the heat generated by their server you it's a strategy to transfer underfunded you all policies I can't tell you how often.

I have conversation conversations with clients that have all previously purchased you are policies that are coming due or sees me that will last three four maybe five years so what I want to do is gonna take as much time as I can to explain how are you a policy works to clients that are out there that purchase these policies so gives me the opportunity to show them something better or help them find a better policy now again this is a proper others helps to properly explain how annual policy works and it gives you the opportunity to increase the premium on low policies that you may have sold before these two pieces you have if you sold underfunded your policies in the past one you can just forget it and not tell your clients about it but there will be someone else that'll come in there and take that business from so take that opportunity to meet with your clients first before someone else does or you can proactively talk to your clients about why he should over a season fun aur policy properly by increasing the amount of premium you have that shows now again this is called universal app explanation hopefully this will help you with your conversations with your client's my name again as Tristan Thomas Academy your life insurance sales experts