A viewer asked what to avoid when buying life insurance from certain companies. The short list I gave him is in a video on what to avoid when buying life insurance. It comes down to salespeople, designs, and fees.
Start with the person. Maybe your closest friend just became an insurance agent. In my experience, a new agent often gets training in how to sell, and not much in how to design a policy for cash value. Some designs pay a big commission, and that can pull a new agent toward them. Your friend may believe they're doing right by you. You'd still be the one living with the policy for decades.
Then the design. A badly designed policy raises the commission and the charges you pay, and it leaves you little cash early on. There's also the fee issue. An IUL is tied to an index, and most companies don't charge anything extra just for taking part in it. A few do. Fees for index participation are one of the first things to look for on a policy you're comparing.
Four questions get you most of the way. The first is what the target premium is. Target premium is the number a company uses to set the agent's commission and its early charges, and target premium, the carrier's number and not yours explains it. A lower target premium for the same death benefit usually means a lower commission and less taken early.
The second is how much of the death benefit is supplemental term. A blended design keeps the base death benefit small and adds the rest as term insurance, which pays little or no commission, as why a high cash value policy often has term insurance inside it shows. Third, ask for the cash value at the end of year one and year five. The policies I design show cash value in the first year. Fourth, ask whether any fee applies to the index options, on top of the charges listed in the charges that come out before your index credit lands.
Keep in mind that a good answer on all four still isn't a guarantee. Policy loans also reduce the cash value and death benefit while they're outstanding. An illustration is a projection, and the real results depend on the index and on what the company charges. But a person who can't answer them, or gets defensive, has shown you something.
You don't have to buy from me for these to be useful. Even if you buy from someone else, you should leave knowing how to ask for a better design. Email the agent these four questions and wait for the numbers in writing before you meet.