IUL - Good or Bad? - Opinions Wanted

[NinjaNic]

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.

ING has a great tool that will show historical rates based on percentile. For example Mr. Client, 100% of the time 4.33% occurs, while 80% of the time 5.99% occurs. The other agent showing you 8% is showing you something that has only a 20% chance of actually happening.

 

[nathan.lee]

ING has a great tool that will show historical rates based on percentile. For example Mr. Client, 100% of the time 4.33% occurs, while 80% of the time 5.99% occurs. The other agent showing you 8% is showing you something that has only a 20% chance of actually happening.

Allianz has a similar tool within their web based illustrations. One of the potential pitfalls that I have seen with "tax free retirement" concept is that the IUL's are being illustrated at the maximum allowed return and with the minimum loan rate. Once again it goes back to agent's presentation of the product and not anything inherently good or bad about the product itself.

Couple a tool like this and a conservative illustration with well managed client expectations and and advisor should be able to do well by his clients and keep them happy.

 

[Larry Tew]

Allianz has a similar tool within their web based illustrations. One of the potential pitfalls that I have seen with "tax free retirement" concept is that the IUL's are being illustrated at the maximum allowed return and with the minimum loan rate. Once again it goes back to agent's presentation of the product and not anything inherently good or bad about the product itself.

Couple a tool like this and a conservative illustration with well managed client expectations and and advisor should be able to do well by his clients and keep them happy.

That is exactly what Patrick Kelly is doing in his new book "The Retirement Miracle". Plus, the writing style seems to patronize the reader too much.

 

[mcouper]

I'd take a VUL over IUL - I can ride out down years with unlimited upside potential -- that being said, I'd opt for a Lincoln VULone or JH with lifetime guarantee....cash and death benefit. Don't like caps, participation rates.

 

[DHK]

Let's think about this... limited downside (down to $0)... with increasing costs of insurance... = a bad combination IF you bought your VUL for insurance protection.

If you bought it primarily for cash accumulation... then have fun with it!

 

[Franz Kafka]

I'd take a VUL over IUL - I can ride out down years with unlimited upside potential -- that being said, I'd opt for a Lincoln VULone or JH with lifetime guarantee....cash and death benefit. Don't like caps, participation rates.

Matter of perspective .. you can ride out up years with unlimited downside potential ..

nothing wrong with taking risks - higher the risk higher the upside potential .. life really is fair IMO.

 

[mcouper]

Let's think about this... limited downside (down to $0)... with increasing costs of insurance... = a bad combination IF you bought your VUL for insurance protection.

If you bought it primarily for cash accumulation... then have fun with it!

If you bought for protection -- is why both products mentioned offer full death benefit guarantee. Id prefer the diversification of subaccounts vs two or three indices.

Seeing more interest in VUL these days, and with the guarantee, an easier conversation.

 

[DHK]

mcouper,

Your death benefit "guarantee" is only as strong as the cash values within the contract. If & when the contract implodes on itself, will the insured be able to qualify for a new one? And then at what cost?

 

[mcouper]

DHK - nope -- the premium paid is for a guaranteed death benefit and has no relation to the cash value. The prem needed to guarantee the death benefit will actually over-endow the contract at age 100 at an assumed rate of 6.5%....whether or not the cash value goes to 1 billion dollars or zero, the death benefit will be inforce at death. Nice cut and paste though.

 

[InsuranceBrah69]

okay one of my company's life gurus tells us that an IUL is a great way to save for retirement. How realistic is this? Like pumping in 10 g's anually for 20 years and then withdrawing 50 g's a year once you hit age 65 ot something.