The world of No-Load Variable Universal Life (VUL) just changed. The meaning behind the old adage “buy term and invest the difference” has also changed.
How would you like to recommend that your client “buy term and invest the difference …in a tax-free environment”?
- No taxes on capital gains distributions
- No taxes on dividend distributions
- No taxes on portfolio rebalancing
The alpha you create for your clients by simply wrapping investment accounts in a tax-free environment and eliminating the tax expense drag to performance can be substantial. Add on top of that several additional tax benefits offered to life insurance under the Internal Revenue Code:
- the opportunity to withdraw basis first, tax free;
- the opportunity to borrow any capital gains, tax free;
- the opportunity to transfer wealth to heirs, tax free; and
- the opportunity to cover Long Term Care expenses, tax free (optional).
New No Load Variable Universal Life
A highly rated, mutual insurance company has just introduced a no-load variable life insurance solution that allows clients to buy level-term protection for a guaranteed level rate to age 60, 65 or 70, while at the same time, investing up the maximum allowable under the law without any sales loads.
As an SEC Registered Investment Advisor (RIA) or Investment Advisor Representative (IAR), you will be responsible for:
- portfolio construction and management;
- aggregation of values via automatic downloads; and
- reporting to your client using the technology that you are already using.
This allows you to charge your customary fee on the assets under management, in this case, the variable investment trust sub-accounts. Your fees can be paid by the insurance company on a quarterly basis via interest free loans from the policy, or you can charge the account holder from other assets.
Flexibility & No Load Variable Universal Life
When the client adopts this insurance solution, they commit to paying essentially the same term premium that you may have otherwise recommended. The difference, however, is that they will have the opportunity to contribute to the “excess premium account” anywhere from ZERO to the MAXIMUM allowed by law, without any loads and without impacting the viability of the term policy for the chosen guarantee period. There is no product like it on the market.
The Problem & the Solution Offered with No Load Variable Universal Life
As an SEC Registered Investment Advisor, unless you are dually registered with FINRA through a Broker Dealer, you cannot act as Registered Representative on a Variable Life Product. AgencyONE, through its Insurance Network for Fiduciary Advisors, offers you the ability to collaborate with an insurance licensed registered representative who does not manage assets or otherwise compete with you in any way. Their only job, together with AgencyONE, is to provide support to you and your client in the execution of the registered variable life transaction, in underwriting and in any insurance related service matters.
Please contact IN4FA at (301) 803-7500 for more information or to discuss a case.