- 11,502
No. Illustration software is (usually) only available to licensed and appointed agents with individual companies.
Exit Strategy for EIULs
- Thread starter js44
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- #22
First I could certainly offer you the Guardian product however I do not think you understand how these products work so as Fiduciary advisor I do not think this product or any other would be in your best interest.
If you are using the product for its savings features rather than guaranteed death benefit features then whole life in any form is not the way to go.
To answer your 3% return issue.First you should be looking at a policy with no surrender charges . Second you can lower the death benefit to the minimum amount and your policy should carry at 3%. However not all policies are created equally and I have no clue what you are looking at. Your death benefit is flexible on a IUL whole life is not. Premiums are flexible on IUL whole a premium must be paid every year. it may be paid from dividends or surrendering paid up additions but it must be paid. IUL will give you far greater access to cash values. Whole Life policies are not designed for loans. They will show cash coming to you from paid up additions or dividends but never taking loans on the entire cash value. No whole life company has ever matched its 10 and 20 year illustrated returns I see no reason why the Guardian policy will be different. The strength of an IUL is the ability to actually earn interest on your loaned value via the spread between interest earned and your loan interest rate. Loans never come from your cash value. You olicy cash values is what the insurance company loans against.
You should be using a IUL that has a maximum interest rate of no ore than 6%. There for if the S&P earns 10% you will earn the 4% on the loaned amount that you have invested in something else. You should be able to switch between fixed and variable loans at least once per year, the best policies allow this monthly.
There is much more to cover but not the time.
If you are using the product for its savings features rather than guaranteed death benefit features then whole life in any form is not the way to go.
To answer your 3% return issue.First you should be looking at a policy with no surrender charges . Second you can lower the death benefit to the minimum amount and your policy should carry at 3%. However not all policies are created equally and I have no clue what you are looking at. Your death benefit is flexible on a IUL whole life is not. Premiums are flexible on IUL whole a premium must be paid every year. it may be paid from dividends or surrendering paid up additions but it must be paid. IUL will give you far greater access to cash values. Whole Life policies are not designed for loans. They will show cash coming to you from paid up additions or dividends but never taking loans on the entire cash value. No whole life company has ever matched its 10 and 20 year illustrated returns I see no reason why the Guardian policy will be different. The strength of an IUL is the ability to actually earn interest on your loaned value via the spread between interest earned and your loan interest rate. Loans never come from your cash value. You olicy cash values is what the insurance company loans against.
You should be using a IUL that has a maximum interest rate of no ore than 6%. There for if the S&P earns 10% you will earn the 4% on the loaned amount that you have invested in something else. You should be able to switch between fixed and variable loans at least once per year, the best policies allow this monthly.
There is much more to cover but not the time.
- 11,502
ON, like many companies - the software has limitations as to what it will do and what you can illustrate. I've complained to my rep for years about their software...I guess I don't sell enough with them for my opinion to get heard. Some companies are much better, but again...its just an illustration.
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- #27
I am lost here. "my cash value" and "my policy cash values" are both the same, arent' they? Appreciate your post and your perspective. Thanks
Ok, I get it now. Loans are given against my cash value as security and my cash value still is indexed to the market. Yeah, I know. that's elementary.
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- #28
- 11,502
That's true - but I also never talk about arbitrage. I only talk about the compound interest curve and how, when we repay policy loans, we restore the policy earnings back to the policy.
With EIUL, IF there is max index credit in one year, the obviously it can pay for your loan interest for a while. Life doesn't always work for when we need money. Should the policy NOT have a gain, then you not only have costs of insurance deducted, but you also then have loan interest deducted. If the policy is well-funded, it won't be an issue for a couple of years. But for an extended period, it can be a problem. It can be too easy to neglect one's policies.
I'm not saying that you will, but it certainly happens because not all agents do reviews, or review policies with their policyholders. My Dad would've had a far healthier Variable Life policy (issued by Mass and receives dividends in addition to market returns), if someone would've gotten him to recontribute to the policy after he stopped making premium payments for about 8 years - from about 2000 to 2008 - a bad time to stop making premium payments. That policy is on "life support" now and it could've been avoided if insurance reviews were done by the rep or agency with my father. (I didn't sell it to him, but I do help advise him with it.)
With EIUL, IF there is max index credit in one year, the obviously it can pay for your loan interest for a while. Life doesn't always work for when we need money. Should the policy NOT have a gain, then you not only have costs of insurance deducted, but you also then have loan interest deducted. If the policy is well-funded, it won't be an issue for a couple of years. But for an extended period, it can be a problem. It can be too easy to neglect one's policies.
I'm not saying that you will, but it certainly happens because not all agents do reviews, or review policies with their policyholders. My Dad would've had a far healthier Variable Life policy (issued by Mass and receives dividends in addition to market returns), if someone would've gotten him to recontribute to the policy after he stopped making premium payments for about 8 years - from about 2000 to 2008 - a bad time to stop making premium payments. That policy is on "life support" now and it could've been avoided if insurance reviews were done by the rep or agency with my father. (I didn't sell it to him, but I do help advise him with it.)
If the IUL is returning 3% .. One of your exit strategy is to cash out, since you really don't need it for the death benefit. you are liable for the taxes of the gains but keep in mind your gains are not all that stellar at 3%.
You could also reduce the death benefit which could make this a MEC , you would be subject to taxation on anything you take out until you use up the gains.
but i'm with DHK .. if an IUL is doing 3% .. there is something wrong with the economy (or the insurance company's financials) if the insurance company rates are no longer competitive they are risking losing money with people getting rid of their policies.. so they have to have some sort of a balance.
You could also reduce the death benefit which could make this a MEC , you would be subject to taxation on anything you take out until you use up the gains.
but i'm with DHK .. if an IUL is doing 3% .. there is something wrong with the economy (or the insurance company's financials) if the insurance company rates are no longer competitive they are risking losing money with people getting rid of their policies.. so they have to have some sort of a balance.
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