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Thoughts on this product?
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Carriers you like?
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Equity Indexed UL
- Thread starter crimsontideagent
- Start date
- 403
UL insurers can often take bigger risks on current fixed-interest credited rates than on indexed UL participation percentages. Long term, traditional UL should beat indexed UL. Indexed sells because you can't compare it fairly to fixed, so its disadvantages are easily disguised.
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Aviva... War Eagle!
- 10,313
what exactly is that based on???
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there are plenty of threads to look over on this subject.
Assuming the majority of future markets will be positive, a traditional UL will be hard pressed to match a well designed IUL.
JMO is probably concerned about the recurring charges in off years adversely affecting performance.
But its no different than a VUL in that aspect.
LFG and Penn Mutual have two of the best IULs out there.
I know that the last time I checked LFGs P2P cap was around 11.5%-12%.
ING and Union Central also have a pretty good product.
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They can only increase it to the max amount, which is stated up front.
Plus the COI on IULs is usually no higher than on traditional ULs.
Also, they cant raise it retro, it has to be announced at the beginning of the year.
And even if they suddenly raise the COI up to the max amount its not going to suddenly tank the policy.
In most situations an IUL should be over/max funded, a rise in COI will not adversely affect a well designed policy.
And so far there is no history of carriers trying to conserve $ on IULs by maxing the COI. And even if they tried the effect would be minimal & would probably cost $ through pissed off customers.
So yes, the cap still matters... more than the COI imo...
Your statement sounds more like a scare tactic from a competing agent...
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Unless the COI is increased to the max, the client has no idea where in the middle they might fall and how they will effect policy performance. What's the difference in having a 12% cap with higher COI's and a 10% cap with lower COI's, or an 8% cap with even lower COI? It's the same game companies play with giving people 8% income riders on annuities instead of 6 or 7%, but lowering the payout rate from 5% to 4% to make up the difference. The payout is the same, but the number sounds good in the marketing piece.
Most consumers won't fully understand an IUL policy in the first place, let alone when they look at their statement in 15 years. Your average IUL policy sold also isn't to people overfunding it to the maximum level to build cash value. That might be your target market, but that's not the large majority of people buying them.
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Where the COI is at does not affect the policy like you are making it out to.
Plus, the COI is variable on most all UL policies, so this is not unique to just IUL.
Again, there is no history of carriers doing this. Plus, there is no history of big cap swings at all.
Its the same type of "what if" argument people use in saying that the guaranteed column of a UL or WL could likely happen..
1980's UL policies are blowing up left and right because of increased COI's and decreased interest rate crediting. The cap is 12% today, what's the guaranteed minimum, 5%? How's the guaranteed column look without massive overfunding and without 8% interest crediting? You can say they are "what if" scenarios...but what if it indeed happens? The "trust me" approach is how insurance companies are offering these products. I like written guarantees when it comes to insurance regardless of what type it is, not "trust me," but everyone is entitled to their opinion.
One of our clients did an annuity with Jackson National last year and their "claim to fame" was they had never in the history of the company reduced the caps on their ELIA. When we got the policy statement this year, they lowered the cap. Imagine that.
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