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WHERE IS UNIVERSAL LIFE?
Let's turn the clock back about
15+ years. Certificates of deposit were paying 12 to 15% interest, the stock
market was getting ready for a bull run, and just about every financial guru was
telling us how stupid we were to own Whole Life insurance since the rate of
return on our cash values was so low.
"Buy term and invest the rest" or "Borrow your cash value and invest it in a CD
or mutual fund" and such catch phrases were everywhere you turned. If you
followed this advice, you did not have a long-term gain.
My friends in the insurance industry, who should have, did not argue the merits
of Whole Life loudly enough. Instead we came up with this plan called Universal
Life that would meet the real insurance needs for premature death and allow the
policyholder to participate on the investment gains. The best of both worlds! It
works great as long as interest rates remained in the double-digit arena.
Variations of the Universal Life plan such as interest sensitive Whole Life, or
indeterminate premium Whole Life abounded.
PRCUA had the foresight to stick to its belief that Whole Life was a good buy
for its members and statistically they were right. I compared the performance of
a $50,000 PRCUA Whole Life plan against a $50,000 Universal Life plan from one
of the largest life insurers in the country and a $50,000 interest sensitive
whole life plan from another larger insurer who has very competitive rates. All
three plans were purchased 15 years ago and guess who had the highest amount of
actual cash values? PRCUA.
Many policyholders forgot that those large cash values shown 15 years ago on
those Universal Life policy proposals were projections. Saying the Chicago Cubs
will win the World Series this year is a projection. It is not a guarantee.
People were disappointed and many class action law suits against insurance
companies followed. Universal Life is still being sold but it is a far cry from
the huge amounts sold in the 1980's and early 1990's. Today people are pouring
money into various mutual funds under very similar circumstances and when the
market makes a long overdue correction the lawyers will have a new target.
For those of you who purchased and kept their Whole Life policies,
congratulations on your wise decision. For those of you who would like to buy a
PRCUA Whole Life plan, Contact your local agent
or our office. It may not be fancy, but it works. |
