A Look At No to Low-Load Life Insurance Products
When you are considering monumental life insurance policy and service, another kind of life insurance coverage you can look is the product called no-load life insurance. These products are created for advisors who receive compensation based on fee basis. Be sure to check your State’s Insurance Department to learn what criteria you must meet. There are some states that have no kind of regulation for the fee-based life insurance consultations.
There are three ideas behind the introduction of no-load life insurance products:
• Lessen the costs of the policy
• Allow additional premium amounts to be credited to policies
• Allow for cash values to rapidly increase
Some products include no policy charges, no surrender charges and no percent-of-premium charges. However, you will have to ensure that many insurance companies will yield a credit interest and cost-of-insurance charge.
A Look At The Conventional “Load” Policies
When it comes to conventional “load policies”, the commission of the premium for the first year has a range of 25 percent to 90 percent (sometimes more). Any renewal commissions – commissions on future payments – have a range of around two percent to five percent. For the majority of term policies, there is no paid renewal commission.
When it comes to the conventional “load” policies, the surrender charges are exorbitantly high (usually 100 percent) for the first five years. After the first year passes, these charges drop at a phenomenal rate until they are no longer existent. The surrender charge is the amount a company will take away from a policy holder’s accumulation/cash value.
Since there are no first-year commissions on no-load policies, the cash values are generally higher. And, there is little to no surrender charges. And, dependent upon the situation, the first year cash value could surpass the premium.
There are not many companies that offer no-load life insurance policies as monumental life insurance does. That’s because the demand for them has not been high. In essence, it’s a catch-22. The companies won’t introduce the products that advisors aren’t attracted in. This is also true because the majority of advisors are not licensed in this and because the agents don’t want to give up the first-year commission.
If the life insurance companies were to introduce a wide array of products and work with agents, advisors could get properly licensed to sell the products.
The only other issue is that although the no-load/low-load policy’s cash value is high in the beginning, as time passes, the cash values start to look similar to the conventional product. While the idea behind the products is good, there is still room for improvement.
