IUL - Good or Bad? - Opinions Wanted

[rousemark]

I asked this in another post but it kind of got lost in a dispute so I thought I would try a new thread because I am really interested in hearing the opinions of others about IUL.

Other than the fact an IUL is a little more complicated to explain to the client, what is the downside when compared to a traditional UL? AGLA just came out with one and are promoting it heavily. I haven't written any (preferring their product that will guarantee to 121) but it seems to be a win - win for the client. If the cap or participating accounts are outperforming the declared interest accounts then they can use those to increase cash values. If not, they can seek the safety of a 3% guarantee in the DIA. I realize that interest rates, caps and cost of insurance are subject to the whims of the company but that is the case with all ULs.

 

[VolAgent]

Speaking in general terms, IUL is neither good nor bad. It is a tool and just is. That said, there are many agents who don't understand it and misuse it. Also, some product designs are better than others.

Probably not the answer you wanted, but it is the truth. IUL is just another policy type, match it to the right prospect and its great. Match it to the wrong prospect or poorly design it, and its the devil.

I do think IUL could replace every single dollar of VUL premium being sold, and the policyholder would be just as happy if not happier.

 

[rousemark]

Speaking in general terms, IUL is neither good nor bad. It is a tool and just is. That said, there are many agents who don't understand it and misuse it. Also, some product designs are better than others.

Probably not the answer you wanted, but it is the truth. IUL is just another policy type, match it to the right prospect and its great. Match it to the wrong prospect or poorly design it, and its the devil.

I do think IUL could replace every single dollar of VUL premium being sold, and the policyholder would be just as happy if not happier.

Thanks VOL.. I am trying to determine what could be the drawbacks over a traditional UL.. I don't really see any (other than it might require more insured management) but then I might be overlooking something. From your post, I take there could be some under certain circumstances? Oh, for the days when no one offered anything but plain old vanilla term and whole life.

 

[VolAgent]

Biggest drawback is I believe on most the charges tend to be higher. Also, you trade consistent interest for more of a roller coaster. Depending on the crediting method and market performance, you may get huge credited interest, or none.

 

[DHK]

Just as Vol said - IUL is a tool. Tools are only as good as the craftsman that uses them to help others achieve their goals. And no amount of "CE" is going to make a difference.

IUL, UL & VUL can all be good tools... as long as the agent will help monitor the policy on a regular and continuous basis. If you want a "hands-off" policy, better stick with whole life & term.

 

[dsimo11]

We all know Vol loves UL's in general. Haha, I would agree with the Volunteer I dont know why anyone would get a VUL in today's market. IUL's offer a huge upside of cash value if funded properly. The biggest hurdle or downside is that if they aren't funded properly they can lapse. I would never encourage someone to sell an IUL as a replacement for a whole life policy or even a GUL(although that market is about to blow up as well). IUL's in theory are great because they have minimum guarantees(floors) and still participate in the market to some degree. A lot of agents are using them now a days to fund a tax free retirement for the clients. The big problem I have is that a lot of these companies run their interest rates around 8% which to me is way to unrealistic of a number.

 

[VolAgent]

Hey, I was pretty fair to IULs.

The biggest single flaw in most ULs is the agent who sold it.

 

[Franz Kafka]

Good answers. You pay more for the lifetime guarantee of WL but I think any max-funded UL (sanc VUL) will work out very nicely.

 

[dsimo11]

Hey, I was pretty fair to IULs.

The biggest single flaw in most ULs is the agent who sold it.

You were, you were. Just thought I would throw a friendly jab at you was all.

 

[scagnt83]

Biggest drawback is I believe on most the charges tend to be higher.

I have found the opposite to be true when compared to accumulation oriented ULs... which is what an IUL should be compared to.