Free Life Insurance!

From www.ncdoi.com:

Attention Agents and Producers!
Recently, promotional material surfaced in North Carolina recruiting the agent community to participate in sales of a zero premium life insurance policy. The promotion indicates the product is approved for use in North Carolina but fails to identify the insurance company or the specific product. The insurance company and the product of this promotion have yet to be identified by the Department. You are advised to use caution in considering this program until detailed information is obtained about the product and the product can be thoroughly reviewed. If you have information that specifically identifies this product, please contact the Life and Health Division by phone at (919) 733-5060 or by email at: landhdivision@ncdoi.net

This zero premium life insurance stuff is really making the rounds in the agent community. Lots of buzz...anyone on this side hearing anything about this?

[JMO]

I haven't specifically heard about this. But my momma always told me, "If it sounds too good to be true, it probably is." There has to be a catch, or maybe several.

Back in my product development days we used to joke about how the sales force wanted a policy with no premiums. They told us, "just deduct the premiums from the death benefits." They sort of lost interest in the idea when we pointed out that commissions would also be deferred until death occurred.

[Take 2]

More discussion here: http://www.actuary.com/actuarial-dis...6476#post16476

Comments?

[RichieGB]

Originally Posted by Take 2

Comments?

I wonder if the IRS is having an easier and easier time putting together a case for taxing inside buildup.

[JMO]

Crack down on COLI/BOLI first, before going after the inside build-up. Just sayin'

[Brad Gile]

Originally Posted by JMO

I haven't specifically heard about this. But my momma always told me, "If it sounds too good to be true, it probably is." There has to be a catch, or maybe several.

Back in my product development days we used to joke about how the sales force wanted a policy with no premiums. They told us, "just deduct the premiums from the death benefits." They sort of lost interest in the idea when we pointed out that commissions would also be deferred until death occurred.

No joke. About 25 years ago, at least one company had a high cash value product with the first year cash surrender value equal to the gross premium AND allowed the policyholder to borrow that cash surrender value to pay said first year premium! We (Wisconsin OCI) quickly put the clampers on that nonsense.

[Brad Gile]

There was another company that had a Single Premium Universal Whole Life product with an interest rate guarantee of 4% for life and zero mortality charges. They unconvincingly asserted that the mortality costs would be adequately covered by interest spreads. Um, no.


Brad

Originally Posted by Brad Gile

There was another company that had a Single Premium Universal Whole Life product with an interest rate guarantee of 4% for life and zero mortality charges. They unconvincingly asserted that the mortality costs would be adequately covered by interest spreads. Um, no.


Brad

lol. That's called 'a savings account' not life insurance .

[MountainHawk]

Someone lock this thread before it gives the Florida DOI ideas for homeowners insurance please.

[Chuck]

Who loses?

I have seen lots of similar schemes presented over the years and that is the key question to ask. Somebody always loses. Maybe it is a bad guy like the IRS, but somebody always loses (and the IRS has a way of changing the rules later so that they no longer are the loser).

If the scheme presenter says nobody loses, then run like the wind in the western sky, because the intended loser is you.

Chuck