Any Feedback On The Nationwide Insurance IUL?

[jtow11]

Excellent info, thank you.

 

[Lewis_FL]

Nationwide has a "free" built-in Chronic/Critical Illness rider (discounted benefits) and an optional true LTC rider (100% of the DB) for additional cost. Also have LTC on their joint IUL.

 

[PrivClientSG]

@DHK thanks for the mention, and thanks for posting that info from Sheryl.

Marketing material shows how it could have done 10%+ in certain time periods. IMOs & Agents describe it as a "performance index". They cherry pick years to show 15% single year returns.

By design, it is not a performance index. It is literally the exact opposite of that based on the algorithm used.

The "performance" is not the index. Its the 185% non-guaranteed multiplier that can be reduced at will by the carrier.

And that is the real danger of IUL. When the drop those rosy participation rates and bonus rates, what will it look like then after 30 years?

Many IUL illustrations will lapse if you reduce the illustrated rate by just 2% from the current max allowed. That is the first "stress test" you should run on an IUL before selling it. Second look at their historical renewal rates on the Caps/Spreads/Participation Rates/etc.

Thank you for the insight. I've bolded some of your post to stress the points you made. Do most "quality" carriers allow you reduce the illustrated rate in their illustration system? I actually do what you suggested, and I try to do it from the current and the max, depending on what the carrier shows and how they structure their illustrations.

That said, in your example, what exactly happens when you reduce the illustrated rate by 2% from the current maximum allowed? 2%? What happens? In your example are they simply showing a current or arbitrary rate -- or, like with UL, are they showing a guaranteed, current, and/or something else? Thank you very much again for your insight.

 

[scagnt83]

Thank you for the insight. I've bolded some of your post to stress the points you made. Do most "quality" carriers allow you reduce the illustrated rate in their illustration system? I actually do what you suggested, and I try to do it from the current and the max, depending on what the carrier shows and how they structure their illustrations.

That said, in your example, what exactly happens when you reduce the illustrated rate by 2% from the current maximum allowed? 2%? What happens? In your example are they simply showing a current or arbitrary rate -- or, like with UL, are they showing a guaranteed, current, and/or something else? Thank you very much again for your insight.

Most carriers allow the agent to reduce the illustrated Current Rate.

Most IULs right now have a max illustrated rate in the 5.5%-6% rage.

Take the illustrated rate down to 3% or 3.5% and see how it performs. Many will lapse after 20 years at that rate.

IULs are required to show Guaranteed, Mid-Point, & Current.
Current rates or "illustrated rate" are set by an algorithm developed in regulation AG49A.

They are currently working on AG49B which will further refine how multipliers affect illustrated rates.

 

[PrivClientSG]

Most carriers allow the agent to reduce the illustrated Current Rate.

Most IULs right now have a max illustrated rate in the 5.5%-6% rage.

Take the illustrated rate down to 3% or 3.5% and see how it performs. Many will lapse after 20 years at that rate.

IULs are required to show Guaranteed, Mid-Point, & Current.
Current rates or "illustrated rate" are set by an algorithm developed in regulation AG49A.

They are currently working on AG49B which will further refine how multipliers affect illustrated rates.

Thanks. I didn't realize the max was that low. I really thought I remember seeing ones with rates/indices quoted higher. I am familiar with the "current" or "illustrated" -- but aren't some of these showing the "hypothetical" or "back-tested" numbers based upon some index or formula-referenced index? I saw one crazy illustration, funded for 5 years, tied to a formula/index, and it showed wonderful, amazing results. I have to see if I kept that one, LOL. Thanks again.

 

[DaKine]

One of many companies that created their own "composite" indexes and claims that they could have a 15.3% back-tested rate of return on said index?

@Sheryl J Moore wrote this post for the Professional Life Agent Insurance Discussion group primarily based on the Nationwide literature.



The PDF file is below.

Also:


I'm not saying that the contract isn't good. I will say that it's up to the agent to promote them ethically and properly.

At least that video is not as bad as others where he uses deception and fear about taxes to sell his tax free retirement fantasy.

 

[DHK]

At least that video is not as bad as others where he uses deception and fear about taxes to sell his tax free retirement fantasy.

I guess we'll be in disagreement on that.

I think the economics of our nation's spending will require an increase in taxes.

How it will be played out will be a function of tax policy... that will trickle down into higher costs for doing business and higher costs of goods.

 

[DaKine]

I guess we'll be in disagreement on that.

I think the economics of our nation's spending will require an increase in taxes.

How it will be played out will be a function of tax policy... that will trickle down into higher costs for doing business and higher costs of goods.

It's just deceptive to use the highest marginal tax rates from the 1950s and deceptively imply that if they don't move all their money into tax exempt products the government will steal it all. Especially for people that are middle and lower income that will experience a significant decrease in their effective tax rate in retirement. It's wrong to incur costs by paying tax in cases where there is a high likelihood that they will have a lower effective tax rate after they retire. The only person that benefits is the insurance sales person.

This is why the whole power of zero marketing ploy is sleazy in my view.

 

[DHK]

It's just deceptive to use the highest marginal tax rates from the 1950s and deceptively imply that if they don't move all their money into tax exempt products the government will steal it all. Especially for people that are middle and lower income that will experience a significant decrease in their effective tax rate in retirement. It's wrong to incur costs by paying tax in cases where there is a high likelihood that they will have a lower effective tax rate after they retire. The only person that benefits is the insurance sales person.

This is why the whole power of zero marketing ploy is sleazy in my view.

And that's the reason why we will professionally disagree.

I've done the math on people who are in far lower tax brackets.

For my parents themselves, they'd have to earn 11.5% each and every year for 10 years AFTER FEES to equate the benefits of doing the planning I've done for them earning 0% for the same 10 years. Oh... and they're just in the measly 12% tax bracket.

The higher one's tax bracket, the better it works out.

It's not a scare tactic when you can customize the math for each individual and show them the equivalent results if they don't take your advice.

However, I have determined that if one doesn't have at least $500,000 in investable assets, then the math and the facts may not work out in their favor. They can choose to do it for their own reasons, but it'll probably be a net wash for them in terms of actual results.

 

[Tahoe Ray]

Nationwide has a "free" built-in Chronic/Critical Illness rider (discounted benefits) and an optional true LTC rider (100% of the DB) for additional cost. Also have LTC on their joint IUL.

Also on their GUL and will be very competitively priced even with the addition of the paid (true) LTC rider.