Do IULs Ever Perform Close To Illustrations?

[DHK]

Nope. A single premium. Year 1. No premiums paid y2+.
Explain this?
Better yet provide the illustration.
If you see a single pay on Guardian's illustration, it is not for new business.
It is for the exercising of a DuoGuard rider and it shold be a MEC
Now I have been retire for a bit so if I am wrong , I would appreciate the education.

Easy. 1035 from a non-mec into a new single premium contract. No additional premiums are to be paid or it will MEC.

That's the only way I know of. I know OneAmerica does it. I guess there are others as well.

 

[Allen Trent]

WL uses CVAT.

UL will not work as well because most do not offer a term rider. And you cant RPU and guarantee no more premiums with a UL.

Guardian allows a 15:1 PUA to Base Premium ratio in y1.

That combined with Term Rider, Premium Offset using Dividends, & RPU in year 8. Gives you a single premium.

The key is the term rider opening more MEC room. While the 15:1 PUAR is awesome & great for performance, i don't think that creates the premium room that the term rider does.

But, in reality i wouldn't consider this technically single pay as it relies on a non guaranteed dividend to be used to cover contractually required ongoing base & term premiums. There were a ton of single pay ULs in the 80s, but not contractually guaranteed to be single paid, merely illustrated to solve for a single deposit

 

[Lloyds of Lubbock]

Very creative use of the software!
But that is not a single pay, I like it though!

 

[Lloyds of Lubbock]

Really?

 

[scagnt83]

Very creative use of the software!
But that is not a single pay, I like it though!

It depends what you consider a single pay.

It is a single payment into a WL, with no further premium requirements for the client to pay.

It is not a product that only accepts 1 premium.

Glad you like it though!

I wish the LTCI Rider did not decrease so much when you RPU.

 

[PrivClientSG]

If you want to see -- the minimum -- of exactly how a policy will perform, simply look at the guaranteed side of the illustration. Generically speaking, a WL illustration will perform a lot closer to what is illustrated than an IUL, simply due to direct contractual guarantees as long as you are not in an extremely high interest rate environment. I've maintained a database of illustrations going back 25 years -- WL, UL, VL/VUL, IUL, and PPLI -- and unless you are manipulating illustrations, WL performs much closer to illustration if you are looking at legitimate, mutual, insurers. Even the UL's that are "properly" funded have had substantial deviations due to increasing mortality costs and the limitations on the illustration software and what you can/can't show regarding mortality costs.

Illustration discussions are a fallacious argument.

 

[jboussea]

I don't write a lot of IUL's because that's not my target market... but the one that I wrote over 6 years ago .. is damn near on par with illustrations ..

Mind you the cap back then was MUCH HIGHER .. I think it's like 7.5 now
it's not a huge contract.. about 2.5k a year. . yet it's close to breaking it even.

I think I had it breaking even around 8 years in the illustration.

Thanks to a couple oof the vets on this forum and the insurance pro guys .. I was able to learn about what IUL is and waht it's not and able to provide a great policy to someone who wanted it.. She is still paying for it on schedule...

 

[PrivClientSG]

No, they don't -- because for the most part, more than 90% of the illustrations I have seen are what I call "manipulated" -- for self-serving/sales motivations, to deflect away from, downplay, or eliminate the inherent weaknesses of the product design and some of the features that have major impact on the product, are not realistically accurate, to look great and thus are not reflective of reality, to look super and too good to be true, and thus, they are!

Like any product that has a strong, quality foundation and construction -- if it's designed and constructed properly, illustrated properly, and funded properly -- it can work just fine and fill the need that it was designed for. However, most of the time it is not.

Most important -- remember -- any IUL product, every single one of them, shifts the risk to the insured, not the insurance company! That in and of itself may be contradictory to risk management and the purpose of buying insurance.

 

[PrivClientSG]

Lloyds great answer.

I worded my initial post ambiguously. I realize it's my fault. Let me rephrase my issue. Have you ever seen an IUL perform as well as whole life, or beat it, if the market conditions are good for performance?

The only reason I ask is the guy who trained me showed me an IUL policy that had good years for indexing only to have all the profit cut out of it with some terms on page 42 that no one reads.

In theory I like the product, I just want to make sure what I'm selling has the opportunity to perform without too much calibration by the insurer so the buyer isn't getting the opportunity to do well. I hope that makes more sense.

Unfortunately, everyone gets caught up in "performance" -- what performs better, what result is better, etc. That gets them to focus on what? More DB? More CV? More? More, more, more. Performance is not the answer. The answer is what's the goal, the objective, the need or want that you are trying to fulfil. Sure, you can say the answer is where will I get the most DB or where can I get the most CV. That might be the goal.

However, the answer -- the right answer -- is NOT which product illustrates better. You cannot have the answer to that question contingent upon simply an illustration. There is so much more you have to look at. In addition, if you do look at that -- you have to look at the "guaranteed" side of both illustrations! Decouple both to show zero rate of return and no dividend. Don't tell me that will never happen. You have to look at it anyway. If you don't think you have to simply because that will never happen, then you don't understand proper, prudent, what due diligence, analysis, etc., is required.

You will have to decouple and run dozens of illustrations -- not for what if purposes -- but to understand the construction and performance of each product.

Most important...who is taking on the risk? The client or the insurance company. That is the one thing almost everyone overlooks. If the answer is the client...then you are comparing apples and bowling balls.

 

[PrivClientSG]

IUL's that are funded as planned generally have performed as illustrated. Of course they all aren't 100 perfect in that respect. My go to IUL carrier just put out a document show what was illustrated over the past 15 years and how the policies performed. The resulting numbers were fairly consistent with the projected numbers. Here is link the white paper. Pages at the end show the historical numbers. https://app.aiflipbooks.pro/share/flipbook?fid=9f396fe44e7c05c16873b05ec425cbad

That link doesn't seem to be working. Is it working for anyone else? Sorry, am I missing something? Thanks.