"The more there is a definitive need at the death for a specific death benefit, the more caution you need to exercise utilizing that kind of product."
Rybka believes many of the criticisms against VUL are unjustified. He says the newer variable universal products address many of the concerns advisors and investors have about costs and risk in VUL. He points out that in the newer products, "your premium and death benefit are guaranteed, so it doesn't matter if the cash value fluctuates."
Further, he maintains: "The advantage of an equity-based cash value creates a compelling case for many clients. All insurance companies are financial intermediaries. They buy financial instruments like mortgages, bonds and equities and repackage them to provide benefits for the consumer like death benefits. With universal variable life, the consumer can have the compounding power of equities working for him."
Not all these policies are created equal, of course. As you would investigate any product, you have to be a good shopper and look under the hood. Determine how the products have performed over time. Make sure you look at the underlying subaccounts, and ascertain whether there are a good number of choices across the style box. Your clients' needs may change as they get closer to their retirement goals, and they may want to reallocate their investment choices.
Says Feldman: "It really comes back to what the client needs, and then the advisor should recommend the product most appropriate for that situation. The advisor, whether insurance or financial, needs to keep the needs of the client in the forefront."
Bruce W. Fraser, a financial writer in New York, writes for many prominent business publications. He is currently writing a book on millionaires. Visit him at www.bwfraser.com/home. Contact him at [email protected].