Indexed Universal Life has hit the financial world in a big way over the past decade. It's been loved by many agents and clients, and loathed by stock brokers and insurance companies that didn't have a product. FINRA has attempted a power grab by making indexed products subject to securities regulation, and lost the fight somewhat badly a few years ago. Now, the 2nd largest life insurer in the United States Prudential Financial has joined the indexed UL world by introducing PruLife Index Advantage UL.
Why Prudential Indexed Universal Life Matters
It's not a big deal every day when just any insurance company jumps on the IUL band wagon, Prudential however is a little special. Pru spent a long time resisting the indexed world, at one point telling it's career agents that they were not allowed to sell indexed products. For years Pru was content with a somewhat strong variable annuity, a decent term insurance niche, and little else. Now, the Rock is apparently focusing on coming back to the world of cash value life insurance by introducing their version of a permanent product that can compete with whole life insurance (Pru exited the whole life arena nearly a decade ago when the demutialized).
John Hancock joined the IUL arena a little while ago, not to a huge amount of success or recognition as a huge contender, so when we learned Pru was planning to roll out a product we were anxious to know if the product was going to compete, or just be a away for Prudential's career force to say they too had an IUL product. We'll be drilling into this more in the future.
Sign of the Times? Perhaps a Rising Tide for Indexed Universal Life?
According to industry index expert Sheryl Moore every major life insurer in the U.S. has looked into offering an indexed universal life product. John Hancock and Prudential's decision to roll out their own versions of this product is proof that this sort of product has serious benefits and is certainly here to stay (as if there was ever really any doubt it would). What will be really interesting is the approach other major life insurers will take to this product. Met Life and the big 4 mutuals are all still rallying against it, but that may be more out of an interest to protect the sale of whole life.
The bigger and more important message to all agents is that IUL is a coveted cash value life insurance product with big benefits to clients. It's universal life insurance so it's good to keep in mind that his is a cash focused product best designed with a minimized death benefit, but when done correctly indexed universal life's benefits are substantial.