^^^Truth.
I know I've been fed a bunch of it along the way...took a while to figure it out.
IUL, and Future Withdrawals
- Thread starter sftong
- Start date
^^^Truth.
I know I've been fed a bunch of it along the way...took a while to figure it out.
AndrewRoche
Expert
- 50
Let me put in my two cents. I have found that for an index UL to adequately perform it must meet the following criteria.
1- Limited pay - in your case five years
2- No cap on earnings
3- 1% guarantee
4- 65% to 70% participation
5- No surrender charges
6- Increasing death benefit
7- Low cost of insurance - That's you, 39 year old preferred rate
IUL is a complex product and an effective financial tool for high net worth individuals who qualify for a low cost of insurance but I would never recommend it to older individuals with health problems or smokers.
I also think the this product is the antithesis of the normal understanding of life insurance. Instead of it being affordable, certain and without risk, these products are expensive, complex and volatile. The formula for returns can change and even though you have a floor you can have years that you lose money (Penn Mutual changed their floor from 2% to 1%)
It's not a product for the average consumer and should should only be sold to the sophisticated buyer who understands the risks of the policy.
Concerning the cost of insurance, in just the last quarter of 2015 William Penn/Banner increased the COI for all in force permanent products. Trans, AXA Voya and Pru had COI increases on blocks of their in force business and Genworth stopped writing life all together.
That said, you have to ask yourself if this type of product meets your needs. My concern is your time frame. It's a long term investment and personally I think it takes 15 years for an IUL to truly outperform other investments. Also I would compare the Hang Seng and Eurostoxx global indexes to the ones you are considering and if any products have returns based on Emerging Markets and a broader non-US developed country index (MSCI EAFE).
As long as you know that their is risk involved, that you are the second man on the totem pole (every IUL product is structured to first earn a profit for the insurance company) and you are not using just this product for death benefit protection (buy a twenty or thirty year term) then go for it!
1- Limited pay - in your case five years
2- No cap on earnings
3- 1% guarantee
4- 65% to 70% participation
5- No surrender charges
6- Increasing death benefit
7- Low cost of insurance - That's you, 39 year old preferred rate
IUL is a complex product and an effective financial tool for high net worth individuals who qualify for a low cost of insurance but I would never recommend it to older individuals with health problems or smokers.
I also think the this product is the antithesis of the normal understanding of life insurance. Instead of it being affordable, certain and without risk, these products are expensive, complex and volatile. The formula for returns can change and even though you have a floor you can have years that you lose money (Penn Mutual changed their floor from 2% to 1%)
It's not a product for the average consumer and should should only be sold to the sophisticated buyer who understands the risks of the policy.
Concerning the cost of insurance, in just the last quarter of 2015 William Penn/Banner increased the COI for all in force permanent products. Trans, AXA Voya and Pru had COI increases on blocks of their in force business and Genworth stopped writing life all together.
That said, you have to ask yourself if this type of product meets your needs. My concern is your time frame. It's a long term investment and personally I think it takes 15 years for an IUL to truly outperform other investments. Also I would compare the Hang Seng and Eurostoxx global indexes to the ones you are considering and if any products have returns based on Emerging Markets and a broader non-US developed country index (MSCI EAFE).
As long as you know that their is risk involved, that you are the second man on the totem pole (every IUL product is structured to first earn a profit for the insurance company) and you are not using just this product for death benefit protection (buy a twenty or thirty year term) then go for it!
Ive found that I have to take things as they are for the sake of eliminating confusion. Hence why, even though this thread is in an IUL section, UL was mentioned and so thats why I said what I said.
Seems you meant IUL, gotcha.
If you want no risk at all, maybe WL. Maybe a carrier that would support BOYB theories. I know you said "without much" risk, just throwing this out there.
IUL just has too many moving parts. With large funding as your planning, more isnt always best, if that makes sense. Too much death benefit works against your what youre trying to achieve. My biggest gripe here is the cost of insurance and maintainability.
Someone correct me if Im wrong, I havent worked an actual case similar to this or numbers as large.
Itll get to a point where premiums wont be necessary cause of that early funding or growth availability and cost of insurance probably sky rocketed as well. Taking care of the premiums still helps.
With this these type of numbers, youll have to find someone to look through the ins and outs, backs and fronts, top and bottom, this dimension and the next, etc etc.
Dont take what Ive said to heart as advice or as such though.
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