- 4,882
yeah, I get that. Guess seeing Colorado Bankers Life go from a same AM best rating of B+ to E makes it a bit concerning to chase the best rates versus more solid carriers offering good/fair rates.
time will tell I guess
How does Fed Rate cut affect IULs/WL?
- Thread starter HoosierLife
- Start date
time will tell I guess
- 5,845
Penn Mutual
As I said above, the low rate environment affects the annuity products far more than the whole life products.
You have probably noticed the flurry of emails from carriers over the last three weeks announcing cuts to the their annuity rates. Annuity payouts and crediting rates can affect a companies profits, and for a mutual company, that can affect dividend rate over time.
Penn Mutual announced last week that they were suspending all FIA and SPIA sales. They are still offering their variable products, however. Now, why is that?
The reason is Penn Mutual is a conservative mutual insurer and they want nothing more than to protect that dividend. They know that in a low rate environment that profit erosion due to annuity crediting rates that are incommensurate with the market interest rate is likely. The interest crediting for FIA's and SPIA's is the responsibility and risk of the insurer. For variable annuities, the risk is on the client.
So, Penn has suspended additional sales of their FIA and SPIA products and my understanding is a re-pricing is 30 to 90 days away, as Penn doesn't want to have to do multiple re-pricing. They are going to wait until the roulette wheel of the Trump/Powell Fed stops spinning, and then they will place their bet.
I have a Penn policy on myself, and I am not at all concerned. In fact, I consider the safest money bet I've ever made and I was very pleased that the cash value I have in that policy was not in an index fund when the poop hit the rotary oscillating device a few weeks back.
- 5,845
I do! I think folks will be so starved for human contact that door knockers will flourish! I can't wait to get back on the doors ... Just the thought of it picks up my spirits.
The USA will thrive, and life will be good. And I mean that with all my heart. Don't worry. We survived a civil war, two world wars, a Flu and polio pandemic, the Great Depression, the Great Recession, an abominable terrorist attach on the capital of American capitalism, countless stupid and expensive regime change wars, Dubya, Obama, and now Trump - nothing will keep us down!
USA! USA! USA! USA!
- 5,460
Look at you being so politically correct.
- 17,040
Agents have to talk them out of meeting face to face now. JD had a lady call him yesterday that wanted to increase the coverage on her and her husband. He told her he can help her right then right over the phone. She wouldn’t have that. She wanted him to come over. He told her to hold off then for a month.
No matter how much you tell seniors to be suspicious of phone calls, viruses, scammers pulling frauds door to door, etc a huge portion of the will invite anyone into their homes, will give their Medicare number, SS number, and bank account to anyone that calls and they aren’t afraid of no virus. Protect your parents the best you can. Because they are too trusting.
- 5,884
Now that the doors are being closed for the moment... I think the increase in phone scams will most likely drive people to trust the doors more when this thing blows over. A face and a warm smile coupled with material the prospect can read in person will be the winner over an unknown, unseen, paperless voice over the phone regardless of how silky smooth it might sound.
I think that phone banks loaded with over eager untrained staff will leave a bad taste for some clients who will respond to the physical human interaction in very positive ways.
The psychology of the sale will change though... having a well manicured script tailored to meet the emotional questions prompted by the current crisis will yield positive results. I predict that door knocking will see a new resurgence after the smoke clears.
I think that phone banks loaded with over eager untrained staff will leave a bad taste for some clients who will respond to the physical human interaction in very positive ways.
The psychology of the sale will change though... having a well manicured script tailored to meet the emotional questions prompted by the current crisis will yield positive results. I predict that door knocking will see a new resurgence after the smoke clears.
- 4,882
Do insurance carriers invest their surplus or base their pricing assumptions on fed funds rate? I had always assumed that had more to do with banking & insurance carriers tended to be impacted more by 10 yr etc Treasury rates
Merle Gilley
New Member
I personally use the IUL as a storage tank to protect and grow my money. Grow it when times are good, and protect it when times are bad. One of the many benefits of having cash value in the IUL is access to capital. In today's environment when access to capital is critical, I am leveraging the cash value into under valued blue chip stocks to capitalize on the stock markets down turn. The loan rate on a line of credit to collateralize the cash value in a well funded IUL is less than 2% from my local bank. I can access 90% of the cash value through the line of credit for 2% and position the borrowed funds into a well designed equity portfolio to take advantage of the correction going on in the market. All while my cash value is still compounding and safe in the policy. I expect to make a nice profit on this market correction by having access to capital when others don't. This is how I've used my cash value in the IUL's over the last 20 years. I killed it in the housing bust, having access to capital when the banks were giving away foreclosed properties for pennies on the dollar was a huge opportunity. What is occur now is a big of an opportunity for those that have access to capital. The IUL is just a garage to park that sports car. It's not the sport car!
