CLU® Designation

The Chartered Life Underwriter® (CLU®) designation is a professional designation in life insurance and its uses in financial and estate planning, granted by The American College of Financial Services. The College describes it as "a specialized certification for life insurance underwriting and planning." A candidate earns it by completing the College's required CLU® courses, covering insurance planning, life insurance policies and annuities, estate planning, and planning for business owners, then meeting the College's experience and ethics requirements. Holders use the letters CLU® after their name.

What the courses cover. The full program is four required courses: Fundamentals of Insurance Planning (HS 311), The Tools and Techniques of Life Insurance Planning (HS 323), Fundamentals of Estate Planning (HS 330), and Planning for Business Owners and Professionals (HS 331). For holders of CFP® certification or the ChFC® designation the program is two courses, HS 323 and HS 331. Each course has its own exams, quizzes and knowledge checks, a final course grade of 70% or higher passes, and there is no cumulative final exam. The College says a course can be finished in as few as four weeks and the designation in as few as four months.

What it takes to use the letters. There are no prerequisite courses and no admissions requirement beyond a high school diploma or its equivalent. To use the designation, the College requires three years of experience in financial planning or a related profession and agreement to its Code of Ethics and Procedures, and the designation is kept through the College's annual Professional Recertification Program.

What it does not tell you. The CLU® shows training in life insurance and its business and estate planning uses. It is not a license: the NAIC's Producer Licensing Model Act, the template for state licensing laws, provides that a person "shall not sell, solicit or negotiate insurance" in a state without a license for that line, and no designation substitutes for it. And it says nothing about compensation. An agent can be paid by the insurer whose policy is sold rather than by the customer, and the payment can differ from one product to another, so who is presenting a policy illustration, and how they are paid for the sale, matters as much as the letters after their name.

A candidate enrolls with The American College, completes the required online courses at their own pace, and passes each course's exams. After completing the courses, documenting the required experience and agreeing to the Code of Ethics, the candidate may use the CLU® designation, and keeps it by participating in the annual Professional Recertification Program.

For example: Yusuf, an insurance agent, has five years in the business and no other designation, so he needs all four courses. If each takes him the College's minimum of four weeks, the program takes 4 × 4 = 16 weeks, about four months. His colleague Grace already holds CFP® certification, so she needs only the two required life insurance and business-owner courses, about eight weeks at the same pace. Both meet the three-year experience requirement already. A client meeting either of them learns from the letters that they studied life insurance planning in depth, and still has to ask each how they are paid on the policy being recommended.

Pros

• Shows structured study of life insurance, its tax and estate uses, and planning for business owners.
• Requires professional experience, an ethics commitment and annual recertification, not only coursework.

Cons

• It is narrower than a comprehensive financial planning credential and is not a substitute for one.
• No cumulative final exam; each course is tested on its own.
• It says nothing about how the holder is paid on a recommended policy.