1- Getting the life policy sale:
a. The insurance company has a slim chance to be selected as the winning carrier and if it is, has much upfront expenses to cover over many years before turning a profit, generating a very hard to calculate ROE (return on equity).
2- Managing the self insurance fund:
a. Holding these assets in a FSLM policy for many years with almost no upfront costs to recover provides an extremely high ROE as compared to the carrier’s other products.
3- How the carrier wants to get paid is the real question:
a. Does the carrier want to make it’s normal margin on $40,000 of premium (assuming it gets the case) or does it want to make a stated amount of $3M of assets under management. Like the advisor, the carrier will make as much or more in the beginning and much more over the long run.