Exit Strategy for EIULs

Apr 4, 2018

  1. js44
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    js44 Expert

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    I read some of the posts here. It's unfortunate. I believe this forum can be a great resource to learn about a financial product and it's right use without any personal attacks.

    I am still researching these EIULs for my needs as an investor. My use of this vehicle is to use it like a bank to make more investments but looks like after 70 it's just not worth having this as COI gets higher and I was wondering about exit strategy to end this policy at that age and move my money to something else or to a policy on kids or grandkids without any tax.

    To keep it till the end, the S&P needs to make atleast 6% otherwise the whole thing goes to zero in a few years. It's not the amount of premium into this but the index returns that make it go bust. I don't understand this. Any insights into this by experienced agents would be very useful. Thanks
     
    js44, Apr 4, 2018
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  2. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    You can do a 1035 exchange of the cash values into either a single premium life insurance policy, or an annuity.
     
    DHK, Apr 4, 2018
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  3. js44
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    1035 exchange to a policy on grandchildren possible?
     
    js44, Apr 4, 2018
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  4. Justin Bilyj
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    Justin Bilyj Guru

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    Can you do both from one policy?
     
  5. js44
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    js44 Expert

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    I had an agent run this max premium till 100 but the policy still does not reach age 100 at 3%. Looks like insurance company wants to blame the index return for the failure of this policy.
     
    js44, Apr 4, 2018
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  6. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    It would probably make more sense to list grandchildren as the beneficiaries of the policy on your life - that's no problem.

    To 1035 into a policy insuring your grandchildren, I don't see why you can't - other than policies on children are best paid out over time, rather than a single premium.
     
    DHK, Apr 4, 2018
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  7. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    Sure. If you have $100,000 in a life policy - do $50,000 into both a SPWL and $50,000 into an annuity. The SPWL should buy a larger death benefit, so perhaps $100,000. It'll replace the values spent from income from the annuity.
     
    DHK, Apr 4, 2018
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  8. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    3% won't do it.

    Indexed UL policies are a concept. It's based on getting the upside of volatility without the downside risks.

    Key consideration: Has there EVER been a period of history where there wasn't volatility in the underlying indexes? Doesn't every US President want to show an increase in the stock market and take credit for it?

    We won't be having 3% or flat S&P 500 (or nearly any other index) for long periods of time.
     
    DHK, Apr 4, 2018
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  9. js44
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    Noted your point and yes, I agree there won't a prolonged 3% or less return without atleast a couple of spikes in the market.

    But the question is why lapse at 3%? There should be atleast something for investors even at 3%. Since, I don't care for DB, I will be waiting to cut my losses after say, 3 years of 3% or less crediting. I am not a day trader but an investor.

    Anyway, not your fault. I am just researching to see if these can be place to hold cash. These are great in terms of annual P2P crediting, tax free loans, floor of 0% but why build them like a casino. I will end it here before anyone takes it personally and this escalates. Thanks
     
    js44, Apr 4, 2018
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  10. pfg1
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    Well IUL is not really an "investment". So you can't look at it that way completely.
    The reason it runs out at 3% is because its assuming 3% forever. If you had one for the past 10yrs, you averaged MUCH higher than 3%. Many years capping out at 10-11-12. And understanding how IUL works, you WILL have years with no growth or growth under 3%....but no years of loss. You will also have years that cap out.

    A great thing would be to leave your grandkids is a pile of tax free death benefit, and if you set up a trust you can control it after you are gone. If you are concerned about the performance and costs, look at max funded WL. Good steady growth over time (cash and DB), and you can eliminate the premium payments in old age if you like.
     
    pfg1, Apr 4, 2018
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