IUL Questions

Both NA and LSW have dca options. Usually there is a fixed interest rate credited to premiums held in the dca account while waiting to allocate to the monthly accounts.

I think LSW is paying 5% on their dca account, not sure what NA is paying on theirs though... Maybe scagent83 would know.
 
North American/Midland probably have the best IUL at the moment.
After that there is LFG, Penn Mutual, & Allianz.

Always enjoy discussing/posting with you regarding IUL. We share a lot more in common than the 83.

I would add that Pacific Life's IUL is a front-runner in the industry. Not sure how much you've looked at it, however PAC has placed many of the largest IUL cases to date (COLI). the flexibility their product has to blend in temp term really juices the IRR on cv's.

You know I place a lot of IUL through Penn, just got back from their leaders conference in AZ last week. However, I've been doing more with PAC and really liking my experiences. Hands down they have the sharpest advanced planning team i have ever seen.
By pure coincidence, I just met a guy at the Penn conference who's group just placed 320 IUL's with a hospital on the west cost with avg annual premiums of 20k. Penn was a close second in getting this business. For deferred comp planning PAC's product gets a ton of play with the big dogs.

Also like PAC's statements...they look identical to an investment account brokerage statement. They've got servicing an IUL down to a science (i wish penn were better here). Their producer website has an inforce illustrator that is like running a morningstar report for an IUL.
 
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Always enjoy discussing/posting with you regarding IUL. We share a lot more in common than the 83.

I would add that Pacific Life's IUL is a front-runner in the industry. Not sure how much you've looked at it, however PAC has placed many of the largest IUL cases to date (COLI). the flexibility their product has to blend in temp term really juices the IRR on cv's.

You know I place a lot of IUL through Penn, just got back from their leaders conference in AZ last week. However, I've been doing more with PAC and really liking my experiences. Hands down they have the sharpest advanced planning team i have ever seen.
By pure coincidence, I just met a guy at the Penn conference who's group just placed 320 IUL's with a hospital on the west cost with avg annual premiums of 20k. Penn was a close second in getting this business. For deferred comp planning PAC's product gets a ton of play with the big dogs.

Also like PAC's statements...they look identical to an investment account brokerage statement. They've got servicing an IUL down to a science (i wish penn were better here). Their producer website has an inforce illustrator that is like running a morningstar report for an IUL.



I have heard a lot from other producers about PACs IUL. And yes, they are big in the NQDC world.

Dont they only run their life products through a BD?
 
No they do not. They appoint direct and through FMO's

Exactly.

Like Penn Mutual, for indy's PAC has regional directors and regional offices. I don't know how many of these regional offices they have though, I know here in Ohio we have one in Cleveland and they cover MI, IN, and some of PA I believe.

PAC does have a brokerage/imo presence however I hear most of their business is done through the regional directors. Most IMO's, as we all know, talk about the carriers that they get the most over-ride off of....PAC's structure doesn't give IMO's much of an over-ride preferring to pass more to the agent in a higher than normal base/street compensation.

I would be curious to see how PAC compares with North American Scagnt83. If you could (or anyone else who would be willing) attach an illustration to a reply post here on the following scenerio with North American:
-male age 45
-best rating class
-$500,000 DB
-$15,000 annual premium for life
-100% allocation to the S&P, annual pt 2 pt
 
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So compare that to a WL, where the DB is being forced increase year after year.

Show me a WL policy that has actually done this without the use of Paid Up Additions. A whole life policy is structured to mature at face value at age 121. I've never seen a WL policy become a MEC unless it was a single premium policy designed specifically to be one. Premiums never change, and a WL policy never lapses as long as premiums are paid.

You cannot say that about any form of UL. While the policyowner may never change the premium amount he pays, the COI inside the policy rises every year and will certainly exceed the planned premium within 10-15 years of the issue date in most policies. About the only way to avoid this is to maximum fund a UL policy. The problem with that is most people cannot afford to do so, and they compromise with a minimum premium -- to their peril.

GPT vs CVAT? The policy premium will determine which of these two tests is most beneficial. The higher the face amount, the more likely CVAT will be used. And it's usually not the agent who make that choice, but the illustration software. While the agent might present a sales illustration with GPT, the insurance company could deliver the policy based on CVAT.

Most agents don't understand the two tests, let alone the math behind these two tests, and couldn't explain their way out of a paper bag trying to do so. Much the same as they can't explain a Basic or a Supplemental Illustration.
 
Maxherr,

You don't understand UL vs WL. And since you're an analyst, I'm going to help you.

There is NO "increasing costs of insurance" in a UL policy... only increased disclosure.

Guy Baker - The Box
https://www.youtube.com/watch?v=7WUQYdpSbzE

Let's make a comparison shall we?

Let's compare Whole Life to a bank CD. When you walk into a bank and ask to see the CD rates, does the bank disclose their costs on the CD? No. Why not? Because the CD has a fixed guaranteed rate for the period of time specified. If you surrender the CD before it matures, you may give up a portion of interest, and that's it.

Whole life is like a bank CD. It assumes fixed payments and assumes a fixed interest earnings. The only variation is annual dividends that are not guaranteed to be paid (but have a great history of being paid).

However, if you skip payments on a whole life policy, will that policy stay in force? It depends, as you know, on many factors... but even with APL, the policy will eventually lapse... just as a UL would.

Now, let's compare UL to a mutual fund. Mutual funds have prospectuses that discuss various share classes and expense structures. Why? Because of the nature of the investment that can have varying returns, including losses. You need to know what can and will affect your returns.

UL does not have a consistent fixed interest rate. It varies according to whatever it is tied to. Therefore, additional disclosure is required.

UL requires a cost of insurance disclosure... and WL does not. Yet both have the same internal costs.

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Now, one might bring up these 10-, 20-, or Age 65-paid up policies that are only available in a WL chassis and not a UL.

The costs of insurance are the same, but after the policy is paid up, the insurance company is then responsible for the ongoing costs of insurance (that were essentially built into the premiums to help offset these costs on a regular basis).

However, if a 10-pay or similar policy was going to be used as an ongoing income source, then it becomes the responsibility of the borrower to manage the loans to ensure the policy doesn't lapse (and cause "phantom income" and other tax issues). That means the liability has shifted back to the borrower regarding keeping the policy in-force.
 
Show me a WL policy that has actually done this without the use of Paid Up Additions. A whole life policy is structured to mature at face value at age 121. I've never seen a WL policy become a MEC unless it was a single premium policy designed specifically to be one. Premiums never change, and a WL policy never lapses as long as premiums are paid.

Show me a Par WL that has never paid a dividend....

Assuming a Par WL policy, and assuming the PUA option (which is chosen 90%+ of the time), CVAT forces the WL DB to increase, especially if funded over Base Premium. GPT would not cause this.

And it is easy to MEC a WL policy if you want to. No single premium required. Ive ran hundreds of WL illustrations and it is extremely possible to MEC a WL when max funding it.

Of course the illustration system tells you if it is a MEC. So a good agent will realize this and either increase the DB or reduce premium.

It is also important to realize that when agents are using IUL they are not looking to maximize the DB, they are usually maximizing the CV. Which means they are using a max funded policy. Everything in this industry is about the clients needs and goals.
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You cannot say that about any form of UL. While the policyowner may never change the premium amount he pays, the COI inside the policy rises every year and will certainly exceed the planned premium within 10-15 years of the issue date in most policies. About the only way to avoid this is to maximum fund a UL policy. The problem with that is most people cannot afford to do so, and they compromise with a minimum premium -- to their peril.

That is just completely incorrect on all accounts.

First, unless the policy is funded at Minimum Premium the COI will not exceed the premium in 10-15 years. No way no how if you are using a reputable carrier. Even at Target Premium this will not happen.

IMO, the correct way to sell UL is to max fund it (other than GUL). Or at least fund it well above Target so that the Guaranteed Illustration runs into the clients 90s.
And to say that most people "cant afford to do so"; just shows that you do not live in the real insurance world where we sell policies to clients. Every single one of my UL clients "can afford" to max fund their policy.
Your comment has no basis in the current real world on the ground situation in the permanent insurance market.

Clients do not choose to pay the Minimum Premium... agents unethically SELL the Minimum Premium to get an easy sale.
Any client that is properly explained what would happen at the minimum premium would never in the right mind agree to fund it at that level.

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GPT vs CVAT? The policy premium will determine which of these two tests is most beneficial. The higher the face amount, the more likely CVAT will be used. And it's usually not the agent who make that choice, but the illustration software. While the agent might present a sales illustration with GPT, the insurance company could deliver the policy based on CVAT.

Again. Your statements are totally incorrect.

The testing method that is most beneficial depends on the total policy design and goals of that policy. Not just the Premium. In short it is mostly the Premium to Death Benefit ratio, and how long the client plans to pay the premium.


Your statement also shows that you have never run a UL illustration yourself.
The software does not decide the testing method! The agent chooses the testing method. I have never ever seen UL software that makes the choice for the agent or changes the option.

Also, the carrier will not change the option. They might suggest a change... but it is not mandatory.

Even if the insurer refused to issue at the chosen testing method, they would not just automatically change it. They would inform the agent/client if they were unable to honor anything on the original illustration other than the Health Rating before moving forward. Heck, most insurers notify of a Rating other than illustrated before moving forward...


Max,
It is very clear that you do not sell UL. Your comments are totally out of line with the reality of the current UL market. You say that most agents cant explain GPT or CVAT, but based on your comments neither can you... to add to that your comments show that you most likely have not run a UL illustration yourself in the past decade at least...
 
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There is NO "increasing costs of insurance" in a UL policy

LMAO. If you truly believe this, you have no business marketing any form of UL to any consumer. As for "increased disclosure", combine that with "no increasing cost of insurance" and you have the basis for virtually every civil lawsuit ever successfully prosecuted against nearly every major insurance company offering UL products since their inception in the 1970s.

IMO, the correct way to sell UL is to max fund it
You are absolutely correct. Problem is, very little individual UL is ever sold with a max funded premium -- because the average insurance consumer is unable to afford that. The most common exception is UL sold to corporations to backstop nonqualified deferred compensation plans. Those folks can generally afford the required premiums.

When a UL policy is issued with less than max funding and unrealistic interest crediting assumptions, the policy is set up to eventually fail. The annually increasing COI -- yes, the annual COI is based on ART rates, despite what DHK wants consumers to believe with his "increased disclosure" -- will eventually exceed the planned premium less all the monthly deductions for COI, admin charges, contract charges, no-lapse guarantees, riders (such as Waiver of Monthly Deductions -- important for self-employeds and those in high risk occupations, such as law enforcement, firefighting, and certain construction trades, to name a few, more than most others).

Ive ran hundreds of WL illustrations and it is extremely possible to MEC a WL when max funding it.
I'm sure you have. And that's fine. Except that what you refer to as "max funding" is, in reality, "overfunding". When you use WL as it is intended by its design, it cannot be "overfunded" unless dividends are added to cash value, which causes them to become taxable to the policyowner.

All of this discussion concerning the CV of UL or WL policies originates with the idea that the cash value is a source of "income", and the need to amass lots of CV to accomplish the deed. I'm not saying this is impossible, because it certainly is possible, what I'm saying is that "Bank On Yourself" and its variations on a name, is not what life insurance was intended to do. It is simply what is currently permitted under the Internal Revenue Code.

In the not too distant future, when Congress must eventually pull its collective head out of the sand (or some other southern part of the human anatomy) and address the unfunded liability that the PPACA is creating, plus the unfunded liability that threatens the viability of Social Security and Medicare, the only viable solutions will be the "increased revenue" they talk about today to fund other ridiculous adventures, such as the "war on terror" or the "war on drugs".

The basic problem is that politicians who want to be reelected (which ones don't?) won't talk about general tax rate increases -- it's too public and distasteful, so they find hidden ways to do this.

They've already chosen to tax Social Security benefits (up to 85%), but they won't raise the "premiums" workers pay -- they just increase the maximum income on which contributions are assessed. Thirty years ago, they took away the deductibility of consumer interest other than most mortgages (which, at the time, included student loan interest, and which has since been restored in the last few years).

So just what other sources of "revenue" could Congress choose to loot? Eliminating the home mortgage deduction (which has been eliminated for mortgages above a certain limit, generally $1 million) has come up for discussion in nearly every session of Congress since 1987, but they have not felt compelled to do so. But when push comes to shove, they probably will.

And we know they love to tax "income". The PPACA alters the IRS MAGI equation to require adding back in "tax-free income" from municipal bonds for the purpose of denying taxpayers full access to the premium tax credits to help make health insurance "affordable." So what else sounds the same as this?

It's all that "tax-free income" those of you promoting BOY and similar "strategies" are encouraging consumers to take advantage of.

Know the history of MECs? It was EXACTLY the same discussion in the 1980s, when UL was in its infancy, and WL policyholders were being sold on the idea of using IRC 1035 Exchange to move CV to UL, take a big deductible policy loan (yes, before TRA 1986, the phantom interest in a life insurance policy loan was deductible, even though not actually paid), and use the money for other purposes, leaving the policy underfunded. For those who didn't have a WL policy to "roll over", the solution was dumping massive amounts of cash into the policy to generate "tax-free income". Congress smelled a rat, and rightly so, and closed the loophole with the creation of the MEC.

If you don't believe Congress can't tighten the noose once again, then continue to drink the Kool-Aid. That's all I'm saying. Calling "borrowed" money "income" is not "increased disclosure" -- it's subterfuge.
 
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