C4-L2-P12

Full Disclosure Continued

When presenting recommendations, many producers prefer to start with a general overview of how a particular product meets identified needs, followed by a detailed explanation of specific features and benefits.

This presentation may include the use of policy illustrations, company-approved product brochures and other support materials.

(The use of pre-printed materials is recommended because they generally have been reviewed for compliance so they meet requirements of full disclosure and market conduct).

Full disclosure also means discussing a policy’s limitations openly.

Most consumers welcome being given the complete picture as candidly as possible.

A simple way to help explain today’s more complex products is to describe their features and benefits. The producer can identify the feature clearly and then explain it in terms of its benefits. The producer should also be sure to note possible limitations of a particular feature.

Here is an example of how one might present features of a variable universal life policy, along with a summary of the product’s benefits and limitations:

1. One of this policy’s features is that it offers twelve separate account options, as well as a fixed account. This gives you flexibility and control over how your policy’s cash values are allocated. It also gives you the opportunity to adjust the level of risk. Now, keep in mind that these cash values are not guaranteed. A level of risk is involved.
   
   
2. You also can switch accounts as often as you want without fees or charges. I can do this for you, or you can do it yourself by telephone. The idea is to keep transfers as convenient as possible.
   
   
3. Plus, like every cash value life insurance policy, this policy offers tax-deferred accumulation. This allows your policy’s cash values to enjoy maximum growth without being subject to current income taxes. Of course, if you terminate the policy or make withdrawals, it is possible that all or a portion of the cash value may become taxable.
   
   
4. This policy also includes loan provisions, which provide liquidity and access to funds. Policy loans are provided at a floating rate but cannot exceed a given percentage. Keep in mind that when cash value is borrowed from the policy, it may affect the policy’s performance.
   
   
5. These separate accounts also provide professional fund management. Each mutual fund is managed by the fund’s professional investors. This means that while you are in control of how your cash values are allocated, you need not make daily investment decisions.