"Cash Value Amplifier"

[pfg1]

So last week I got an email from this site (sponsored) about addressing the #1 objection in selling IUL's. I bit and clicked through to watch the video. Anyhow it was from Brett Kitchen, and obviously a sales pitch to join their Elite Advisors group (and buy leads).

I'm have a decent grasp on IUL, but still learning all the ins/outs of design, etc. One thing that was interesting, in the video they showed a snippet of an illustration that had a ZERO cost of insurance in the later years. They claimed to have a special product or way of making this happen, and called it the "cash value amplifier"-- whatever that is.


I would agree, that is one of the concerns/considerations.... the ever increasing COI of UL products, especially as the years roll on. The whole head eating the tail thing, especially if its underfunded. I know overfunding negates that issue.... but if there is a way to actually reduce the COI down to ZERO (or very low) I would love to know how its done.


Anyone know what company/product those guys write? And/or how you can get the COI down to ZERO in the latter years? This goes against everything I understand about UL/IUL.


SC ?

 

[DHK]

It's Minnesota Life.

http://www.insurance-forums.net/for...um/minnesota-life-iuls-t73255.html#post970474

In short... it's an illusion on the illustration.

 

[pfg1]

It's Minnesota Life.

http://www.insurance-forums.net/for...um/minnesota-life-iuls-t73255.html#post970474

In short... it's an illusion on the illustration.

Thanks David.

I just read through the info. If I got it right, on ML's Omega, they reduce the COI because the actual net amount at risk is reduced, due to extented payout of DB?

So in a hypothetical, what does the DB payout look like under this product if it would normally be a lump sum of $500k?

 

[DHK]

I can't answer your question.

Once I saw that the company isn't bound to reduce costs of insurance, I decided to skip the product.

 

[scagnt83]

Im not familiar with the product, but it seems that more and more IMOs are pushing it... so that makes me wonder on multiple levels.

You are not going to get anything for free from the carrier. If they reduce the COI to zero on the back end, then they are taking their money on the front end.

Take NA for example. They have a Builder IUL, and a Rapid Builder IUL. The Rapid Builder has lower front end cost, but higher back end cost. The regular Builder has higher front end but lower back end.

So think about the front end if they take nothing on the back end...

Also, there are costs other than just the COI. So that could possibly be a very deceiving statement.... idk.

Maybe someone can run an illustration and post the expense report for us to compare to the competition.

 

[YourFamilyBank]

Thanks David.

I just read through the info. If I got it right, on ML's Omega, they reduce the COI because the actual net amount at risk is reduced, due to extented payout of DB?

So in a hypothetical, what does the DB payout look like under this product if it would normally be a lump sum of $500k?

The death benefit at most under this plan is 50% upfront and the rest over the next 10 years - if you choose the product with normal payout and for example it's $500k - if you choose the new product option you would get $250k now and more than $250k over the next 10 years...

It's for income plays, you will get more income if you choose this option (projected) than the other. I personally have found that the income difference isn't great enough to warrant the spread out death benefit.

 

[scottstreet]

Assuming decent health, why does anybody not use NA/Midland exclusively? I don't get it. If your IMO doesn't have it get another IMO....easy fix.

 

[scagnt83]

Assuming decent health, why does anybody not use NA/Midland exclusively? I don't get it. If your IMO doesn't have it get another IMO....easy fix.

No need for an IMO with Midland... unless you just enjoy a haircut on comp. And I agree completely.

 

[BNTRS]

Three reservations I have about Minnesota when it comes to their illustrations and this product:

1. As DHK already noted electing the settlement option death benefit that triggers this suggested benefit does not automatically guarantee lower COI. Minnesota doesn't guarantee it, it's their current practice to reduce it.

2. If their is no cost of insurance there could be a serious problem for GPT or CVAT violation and/or MEC violation. Technically you can't violate MEC unless you make a change or a premium payment and GPT would further afford the flexibility to peg MEC premium to GPT premium after year one. If there is no cost and no premium you are potentially okay, but specifically speaking to GPT, it raises a question about adequacy of the corridor itself. I've asked Minnesota's customer service department about this, and mum's the word.

3. Minnesota has an interest bonus that is dependent on the rolling 10 year average of the index performance. It can be as high as 1% and as low as 0. They default their illustrations to assume this enhancement at the maximum 1% in all years once available (starting year 11). While I have no problem with carriers illustrating interest enhancements that are guaranteed, this one seems a tad far reaching to just assume the best possible scenario. This is especially ripe for misleading if using their default assumed loan interest rate and indexed loans for income.



Their products do have a fair degree of cool upside potential, but you have to be very aware of the fact that it's very tentative.

 

[scagnt83]

Three reservations I have about Minnesota when it comes to their illustrations and this product:

1. As DHK already noted electing the settlement option death benefit that triggers this suggested benefit does not automatically guarantee lower COI. Minnesota doesn't guarantee it, it's their current practice to reduce it.

2. If their is no cost of insurance there could be a serious problem for GPT or CVAT violation and/or MEC violation. Technically you can't violate MEC unless you make a change or a premium payment and GPT would further afford the flexibility to peg MEC premium to GPT premium after year one. If there is no cost and no premium you are potentially okay, but specifically speaking to GPT, it raises a question about adequacy of the corridor itself. I've asked Minnesota's customer service department about this, and mum's the word.

3. Minnesota has an interest bonus that is dependent on the rolling 10 year average of the index performance. It can be as high as 1% and as low as 0. They default their illustrations to assume this enhancement at the maximum 1% in all years once available (starting year 11). While I have no problem with carriers illustrating interest enhancements that are guaranteed, this one seems a tad far reaching to just assume the best possible scenario. This is especially ripe for misleading if using their default assumed loan interest rate and indexed loans for income.



Their products do have a fair degree of cool upside potential, but you have to be very aware of the fact that it's very tentative.

If I remember correctly, their Variable Loan Option has no Cap on the interest rate charged.

Is that correct? If so, that would be a huge reason not to sell the product.