Advantage No Load Life Insurance
Media Commentary
Wealth.Bloomberg.com April, 2002
By any measure, low-load life insurance sounds like a great deal. The cash-value versions of these policies offer the same provisions as commissioned products, but unlike their cousins, which are front-loaded with commissions and sales expenses, they have much higher cash values in the early years because sales costs are so much lower. Why, indeed, would anyone want most of their first -year premium to pay an agents commission when it could increase their cash value instead?
Consumer Reports, Aug, 1993: Low-Load Policies, The Best-Kept Secret in Insurance...
In the last few years, a new breed of universal-life policy has emerged. Called a low-load policy, it imposes significantly lower expense charges on policyholders. In a standard universal-life policy, those charges can easily approach 100 to 125 percent of the first-year premium. By contrast, sales commissions and marketing expenses for low-load products amount to no more than 15 to 20 percent of the first year premium.
John Chason III, Guest Columnist for Florida Business Insight, Life Insurance, Sept. 1999:
The reduction in costs for low-load policies is achieved by eliminating insurance-agent expenses such as commissions, renewals, bonuses, fringe benefits, sales contests, and advertising, most of which are not applicable to low-load life insurance companies. In effect, you're buying life insurance in the wholesale rather than the retail market, with an immediate savings of one third or more of the money you might otherwise have spent buying the policy from a commissioned agent. As time goes by, you will continue to save.
A traditional life insurance policy has little or no cash value in the early years. Traditional insurance commissions range from 75 percent to 150 percent of your first-year premium, 15 percent over the next four or five years, then perhaps five percent for the next five annual premiums, and so on. Even after 20 to 25 years, expenses such as commissions and renewals will continue to drain your insurance dollars.
With low-load insurance, the money you pay in premiums goes directly toward insurance coverage, not expenses. Thus you immediately begin to build cash value that, even in the first year, you can borrow against or walk away with if you cancel the policy..
Keith Maurer, Actuary and Pioneer of No Load Life Insurance: The Miami Herald, July 9th, 1990:
"A life insurance policy has basically three costs. These are the mortality costs, or death benefits; distribution costs like commissions and marketing: and cash value, or what a policy is worth as an investment." "What we have done is to take out by far the biggest element of the first 10 years, the distribution costs."
James Hunt, Director of the National Insurance Consumer Organization in Alexandria, Va, a Ralph Nader group: ASSETS, Nov/Dec, 1990:
"Ask the agent what the cash surrender value (the amount of money you will get back if you terminate the policy) will be at the end of the first year. You should refuse to accept a policy whose surrender value is zero or anything near zero. In fact he recommends that you insist on a first years surrender value of half the premium, although he also acknowledges that many agents will say goodby to you at that point."
Mary Rowland, columnist for The Sunday New York Times, Investment Vision, June/July 1991:
Un-load that Insurance. Of course you need to have life insurance. But you don't need to carry those heavy up-front costs. Most people don't realize how dramatically those cash values are reduced by the agent's commissions and other up-front expenses.
The high turnover rate of insurance policies makes the case for low-load products even more compelling. When you allow your policy to lapse (surrender or cancel), you can take out only what has built up in the cash value. In a traditional policy, that's not much in the early years. But in low-load policies, the bulk of what you have paid in premiums will be represented in the cash value.
The Miami Herald, Personal Business July 9, 1990: Until recently, virtually all policies were sold the typical way. They were marketed by insurances agents, who get a commission from the insurance company that underwrites the policy.
That's where No Load insurance policies differ. No Load insurance policies are like No Load mutual funds. They don't pay the selling agent a sales commission.
WORTH, Gretchen Morgenson, April 1994
Life Insurance Buyers are all too often in the dark when evaluating policies. Most consumers don't know that a tradition life policy carries commissions of 55 percent to 110 percent of the first year's premiums. Even though these are ultimately paid for by consumers, they rarely find out about them.
Kiplinger's Personal Finance Magazine, Kristin Davis, February 1994; Low-Load Insurance:
Cut loose from commissions: "But when you buy a low-load policy, what would have been the agent's commission goes into the policy instead, building cash value early on."
"Ordinarily, you'd lose big if you dropped a policy within the first 10 to 15 years (as more than half of all policy holders do) because it takes that long for the benefits of tax-deferred compounding to make up for all those up front expenses . But high early cash values in a low-load policy mean you won't take a bath if you need to drop a policy sooner because you no longer need the coverage, you run into financial difficulty or you are concerned about the insurer's financial health. Those early cash values also begin earning and compounding tax-deferred, giving the policy a head start in performance.
The Wall Street Journal, Money and Investing; Your Money Matters; Ellen E. Schultz March 3, 1994 Life Insurance Fee Expenses Can Be Cut:
Low-Load life insurance reduces not only the cost of buying insurance, but cuts the risk of losing your money if you cash out early.
The Savings can be significant. With agent-sold insurance, commissions and other fees paid to the agent by the insurer total an average of 165% of the first year's premium. If you can't afford to pay your premiums, your policy lapses and you lose your money. With low-load insurance, you get your money back. (No Load Life Insurance has no surrender charges, EVER).
