Initial IUL Investment Limit

[RunnerDude]

How much can be initially be invested in an IUL policy?

 

[bmarsh]

As much as your insurable for on the death benefit side, usually 20X-30X your income
so say it's $5 Million, you can illustrate max funding a $5million death benefit.

 

[scagnt83]

For individual cases, its usually its whatever maximum DB is allowed by the carrier.

For a business case, there can be some other factors, but max DB limits still come into play with all.

But max DB limits are not set in stone. Personal circumstances differ from client to client, and sometimes you can get a bit creative when asking for exceptions to the financial guidelines.

 

[Lewis_FL]

insurance is not an investment...

 

[Allen Trent]

insurance is not an investment...

I agree with your thought, but technically some life insurance is indeed an investment, especially MEC contracts. MEC's came in to existence in the 1980s by law to differentiate between run of the mill insurance for death benefit policies & those being bought or investment purposes.

Even those non-MEC can by common definition be considered an "investment"---putting time or money into something & expecting a profit.

I make an investment in this forum expecting to profit. I own a CD as an investment. I overfund my ULs & WL as an investment.

Now, whether a producer or carrier can print marketing materials or state on an appointment that it is an investment is another debate. Insurance deposits are premiums, not investments.

But when I look at my policies & I see I have taxable gains & a cost basis in those items, I know they are being treated by the carrier & the IRS as an investment as I owe taxes on my gains when I take them out.

 

[Sheryl J Moore]

The appropriate response, @SuperGenius is that you could put an infinite amount of money into an indexed UL, but you must keep in mind that a corridor must be maintained between the cash value and the death benefit amount, before the contract is considered an "investment," rather than "life insurance," in the eyes of the IRS.

As our colleague so eloquently expressed, the maximum death benefit for the product (which the insurance company determines as an administrative practice, usually due to limitations for reinsurance agreements) is really the more salient question here.

So, asking "what is the maximum death benefit amount that most companies selling IUL will permit?" is the more relevant question.

Once you identify the insurance company's maximum death benefit limit, you can go into the illustration software, input that face amount, and solve for the maximum premium.

Good luck! sjm

 

[Tahoe Ray]

The appropriate response, @SuperGenius is that you could put an infinite amount of money into an indexed UL, but you must keep in mind that a corridor must be maintained between the cash value and the death benefit amount, before the contract is considered an "investment," rather than "life insurance," in the eyes of the IRS.

As our colleague so eloquently expressed, the maximum death benefit for the product (which the insurance company determines as an administrative practice, usually due to limitations for reinsurance agreements) is really the more salient question here.

So, asking "what is the maximum death benefit amount that most companies selling IUL will permit?" is the more relevant question.

Once you identify the insurance company's maximum death benefit limit, you can go into the illustration software, input that face amount, and solve for the maximum premium.

Good luck! sjm

Welcome back, Sheryl! Don't be a stranger here.

 

[Lewis_FL]

Come a long way since the days at the Competition Desk huh Sheryl?

 

[ATM]

insurance is not an investment...

What Is an Investment?
An investment is an asset or item acquired with the goal of generating income or appreciation. Appreciation refers to an increase in the value of an asset over time. When an individual purchases a good as an investment, the intent is not to consume the good but rather to use it in the future to create wealth. An investment always concerns the outlay of some asset today—time, money, or effort—in hopes of a greater payoff in the future than what was originally put in.

In the case of life insurance one can easily argue that it meets he definition of an investment.

 

[Allen Trent]

What Is an Investment?
An investment is an asset or item acquired with the goal of generating income or appreciation. Appreciation refers to an increase in the value of an asset over time. When an individual purchases a good as an investment, the intent is not to consume the good but rather to use it in the future to create wealth. An investment always concerns the outlay of some asset today—time, money, or effort—in hopes of a greater payoff in the future than what was originally put in.

In the case of life insurance one can easily argue that it meets he definition of an investment.

Yes, a general definition could be seen that way. However, there are also sometimes legal & regulatory definitions that restrict salespeople from using words & phrases in their sales presentation or what they label themselves to consumers. I think one such regulation in the US is the investment act of 1940 that prohibits life insurance as being sold as an investment