Hey everybody I'm new to the forum and Just became an independent agent. Was with New York Life before. When I was at New York Life I heard nothing but bad things about IUL. Iv since then opened my eyes to the product and see it was not what they made it out to be. However, I still have a few questions. Has anybody here experienced the policy lapsing on a client? Also, I was looking at a illustration with NorthWestern and it looked phenomenal. 2400 annual premium for 16 years, thev payer stops paying and is able to withdraw about 46,000 a year, beginning in year 30, for the rest of there life. Does this sound right? I feel confident in my understanding of the product and how it works i just want to make sure I'm advising a person on a solid product. Thanks for any input
IUL Questions
- Thread starter A.Lopez
- Start date
I can't speak to the illustration you saw specifically.... but keep in mind, its just an illustration and you are looking at non-guaranteed numbers. They can certainly do well assuming they are max funded the whole time, but there is no way to know until you get there because of the limited guarantees. Historical numbers say there is a good chance of it performing well, especially if you illustrate a reasonable rate and its designed and funded properly.
Not trying to burst your bubble at all. Its a good product for the right folks, when designed and funded properly... but it ain't a magic product. I write more WL than IUL, both are good products that can do some great things for the right clients. I suggest you bone up on IUL, I'm assuming you know plenty about WL.
Not trying to burst your bubble at all. Its a good product for the right folks, when designed and funded properly... but it ain't a magic product. I write more WL than IUL, both are good products that can do some great things for the right clients. I suggest you bone up on IUL, I'm assuming you know plenty about WL.
- Thread starter
- #4
Yes it was at %7.42
Do you think a 7.42% return is realistic over the next 16 years in today's markets?
- Thread starter
- #6
Thanks for your response. I agree, but in this case i think IUL is fitting. It's for a client with no kids or spouse. Who, at the moments, doesn't make enough or have enough saved up to put into securities. Also the client is concerned with risking principal.
- 11,273
Let me help you.
Regarding your first question on policy lapsing... you're missing a VERY key ingredient in that question: a skilled and trained agent. (No, this isn't a knock on you, but bear with me here.)
A skilled and trained agent should be conducting annual financial reviews and keeping in regular contact with his clients. This helps ensure that the plan you have put together will continue to be funded. Plus, it's a great opportunity to show your professionalism and ask for introductions to others.
IUL needs more of a skilled and trained agent than WL does... however, WL policies really SHOULD have more agents doing more to serve their policy holders. It's just good business. But because of the turnover of agents in the career agency system, it makes sense for career agents to focus more on WL because it doesn't need a lot of service, over those companies that offer IUL.
Keep in mind that any company that badmouths IUL... but also offers a VUL... has a bias towards their in-house product. I don't blame them, but it's also pretty stupid when you actually think about it.
Second - let's look at your numbers: 2400 x 16 years = $38,400 and then you pull out $46,000 per year? I think you forgot a zero.
However, $46,000 from $384,000 = 8.34% distribution rate. That just looks high. Hopefully you are setting the illustration to take loans (so the original balance continues to grow) and later withdraw principal.
NWM does traditionally show a higher dividend yield than most, so just make sure you are understanding the nuances of what you're selling.
- Thread starter
- #8
That's what I was thinking. But the average Annual earning over the past 25 years is 8.5%. I know past performance is not an indicator of future results, but it does seem to have a history of performing well. Unless I'm missing something. The current cap for that particular product is 13%
And its not even just the next 16, its the next "however many years" on that illustration until the policy ends (probably age 100). My guess is the next 60+yrs at that rate (on that illustration).
My only issue with IUL and its not a huge one, is that they illustrate so well, but have never actually been tested long term. IUL's haven't even been out for 30yrs, much less have someone pay on one for 20-30yrs, then stop paying and take income for 30yrs or more. That is why I run mine at 6%. Assuming no major changes to the policy internally, (which normally is not the case - but could happen)....I feel like it has a better chance of doing that over time. And as long as the client overfunds they will most likely be fine.
I just wish that on IUL's, since they can illustrate so much - that they could guarantee a little bit more.
I am by no means an IUL guru, hopefully SC and some others will chime in as well.
- Thread starter
- #10
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