My point is that VUL will underperform BTID. 

Very good, Anonymous.  But that is an overgeneralization, and untrue.  I've ran BTID vs. VUL many times, and it is often included in an insurance company's VUL illustration printout.

I like BTID, and usually suggest it to clients.  Sometimes, though, VUL makes sense, or GUL, or WL, or a combo.  We'll have to agree to disagree on this one, I think.

Big Taco,

Please show me that I'm wrong.   I'd really like to see one example that's not way out of the ordinary that shows me being wrong.  I have an open mind.  Can you do this?

I'd be happy to agree with you, but I do need to see numbers that show VUL being a better alternative than BTID.  I've just never seen it.

For anyone reading this thread, I must point out that I like term insurance.  I like whole life insurance.  I like GUL at older ages.  And, although I keep talking about BTID, I think that it can't be used to compare term insurance to WL insurance.

Hi anonymous,

Forgive my naive question (I don't know much about life insurance) but if somebody wants to do a one time single premium with a sole objective of maximizing a guaranteed death benefit, wouldn't a G-UL policy have a greater death benefit than say a WL policy?

The answer is "yes" and this would be true even if it wasn't a single premium.  GUL would have a greater GUARANTEED death benefit than whole life. 

However, when we are talking about guarantees, we are ignoring dividends.  Does it make sense to ignore something that has always been paid?

[quote=anonymous]

The answer is "yes" and this would be true even if it wasn't a single premium.  GUL would have a greater GUARANTEED death benefit than whole life. 

However, when we are talking about guarantees, we are ignoring dividends.  Does it make sense to ignore something that has always been paid?

[/quote]

Thank you for the response.  The very few experiences I've had where we used permanent insurance I used G-UL for maximum death benefit.  Cash value / dividends were not important to the clients.

If dividends aren't important to a client, it is only because they don't understand dividends.  It would be like a client saying "I want an S&P 500 index fund, but I don't care about it paying dividends."

Do you understand the importance of dividends in a permanent insurance policy?

[quote=anonymous]

If dividends aren't important to a client, it is only because they don't understand dividends.  It would be like a client saying "I want an S&P 500 index fund, but I don't care about it paying dividends."

Do you understand the importance of dividends in a permanent insurance policy?

[/quote]

I won't lie.  No, I don't.

Mike, let me give you an example.  What you will learn is that WL (or a WL/term blend) tends to be better for youner ages and GUL for older ages.

In this example, WL is much better than GUL. 

Healthy 35 year old male purchasing $1,000,000 of life insurance:

GUL: Premium $5100; virtually no cash in any year and the death benefit will always be $1,000,000.  GUL is basically lifetime level term insurance.  If the premium ever stops, so does the life insurance.

WL: Premium $10,700; initial death benefit $1,000,000

Age       Cash Value       Death Benefit
60          $515,000         1.3 million
75          1.5 mil         &nb sp;  2.2 million
90          3.7 mil         &nb sp;  4.2 million

WL: same as above, but using the dividends to pay the premium.  This way, we'll compare the same death benefit

Age   Premium       Cash Value      Death Benefit
60    -2100         & nbsp;   373,000        &nbsp ; 1 million
75   -21000              676,000         1 million
90  -47,000        &nbsp ;    902,000         1 million

The premiums above are negative numbers because the insured paid their insurance premium by receiving a check from the insurance company.  By age 75, the insured has received more money from the insurance company than they have paid.

This last one shows WL using the GUL premium of $5100

Age    Cash Value      Death Benefit
60      240,000        &nbsp ;    $615,000
75      725,000        &nbsp ;    $1,000,000
90      1.7 million        &nbsp ;  $2,000,000

If this was a real case, and the client needed $1,000,000 of life insurance, but could only afford $5100, I would have had them purchase a combination of WL and term. 

Anon,

Very well illustrated.

Understood.  Thank you for taking the time and explaining that to me.  That makes perfect sense.  Would you mind explaining what the average compensation / gdc difference would be G-UL vs WL.