IUL Questions

The thing about IUL... is that it's all about volatility in the underlying index segments.

If the S&P500 goes up 20% (not including dividends), then your policy is credited 13% (using your cap number).

If the next year the S&P500 goes down 20% (not including dividends), then your policy is credited 0%.

If this happens over a 2 year period, then your policy will average 6.5% per year (13% / 2 years).

If the underlying index doesn't move, then you'll get whatever rate is credited.

In general, every 4-5 years there is a stock market correction, which means that there won't be any interest to compound that year in an IUL.

When comparing WL vs IUL... THAT is the main difference. During down years, the IUL credits 0% while WL will still have interest compounding during that year. If the period is long enough, that could be 5 or more years of anticipated compounding that the IUL won't have. The resulting cash values will end up being about the same, I believe.

Here's the difference:
- People generally WANT to maximize their IUL so they can earn the most interest possible without risk to principal (aside from policy costs).
- Even a maximum target premium still has an account value to earn indexed credits for the first 3 years (compared to almost zero cash values in a base whole life policy), so it's a much easier annual review to hold with the policy holder.

Whichever plan that excites the client the most and keeps them wanting to put money in, and that I like to review with the client the most... is the best plan.

Just my opinion.
 
The thing about IUL... is that it's all about volatility in the underlying index segments.

If the S&P500 goes up 20% (not including dividends), then your policy is credited 13% (using your cap number).

If the next year the S&P500 goes down 20% (not including dividends), then your policy is credited 0%.

If this happens over a 2 year period, then your policy will average 6.5% per year (13% / 2 years).

If the underlying index doesn't move, then you'll get whatever rate is credited.

In general, every 4-5 years there is a stock market correction, which means that there won't be any interest to compound that year in an IUL.

When comparing WL vs IUL... THAT is the main difference. During down years, the IUL credits 0% while WL will still have interest compounding during that year. If the period is long enough, that could be 5 or more years of anticipated compounding that the IUL won't have. The resulting cash values will end up being about the same, I believe.

Here's the difference:
- People generally WANT to maximize their IUL so they can earn the most interest possible without risk to principal (aside from policy costs).
- Even a maximum target premium still has an account value to earn indexed credits for the first 3 years (compared to almost zero cash values in a base whole life policy), so it's a much easier annual review to hold with the policy holder.

Whichever plan that excites the client the most and keeps them wanting to put money in, and that I like to review with the client the most... is the best plan.

Just my opinion.

Just as a general practice... It is usually best to keep a low death benefit to maximize CV correct?
 
The thing about IUL... is that it's all about volatility in the underlying index segments.

If the S&P500 goes up 20% (not including dividends), then your policy is credited 13% (using your cap number).

If the next year the S&P500 goes down 20% (not including dividends), then your policy is credited 0%.

If this happens over a 2 year period, then your policy will average 6.5% per year (13% / 2 years).

If the underlying index doesn't move, then you'll get whatever rate is credited.

In general, every 4-5 years there is a stock market correction, which means that there won't be any interest to compound that year in an IUL.

When comparing WL vs IUL... THAT is the main difference. During down years, the IUL credits 0% while WL will still have interest compounding during that year. If the period is long enough, that could be 5 or more years of anticipated compounding that the IUL won't have. The resulting cash values will end up being about the same, I believe.

Here's the difference:
- People generally WANT to maximize their IUL so they can earn the most interest possible without risk to principal (aside from policy costs).
- Even a maximum target premium still has an account value to earn indexed credits for the first 3 years (compared to almost zero cash values in a base whole life policy), so it's a much easier annual review to hold with the policy holder.

Whichever plan that excites the client the most and keeps them wanting to put money in, and that I like to review with the client the most... is the best plan.

Just my opinion.

I have a question about this one.. I am a brand new insurance agent too. Do you know of any insurance company that offers IUL that during down years still have interest compounding that year?
 
I have a question about this one.. I am a brand new insurance agent too. Do you know of any insurance company that offers IUL that during down years still have interest compounding that year?

I believe Lincoln Life has a policy that has a 1% floor and 12% cap. Charges 5% premium load and 5% on the excess. I would like somebody else to confirm though. I'm not 100% sure
 
I have a question about this one.. I am a brand new insurance agent too. Do you know of any insurance company that offers IUL that during down years still have interest compounding that year?

Check every IUL policy that you're looking at. Just about every single one will offer a 0%/14% cap and maybe a 1.5%/12% cap.

Just check out the various index segments available and pick the one you're most comfortable with.
 
I work with Transamerica and they offer 15% with a 1% floor. The last 40 years these policies have been averaging a 10.7%.

Uh... no they haven't. These policies haven't been AROUND for 40 years. Twenty or so, yes, but not 40.

If you're going to be putting junk like this on the forum, be prepared to back it up.

Oh, and make sure your E&O is paid up if you're saying things like this to your clients. :no:
 
From what I have seen/heard, Trans has not been great come renewal time on those caps. LFG & NA have been very strong on renewals in my experience. It doesnt matter what the Cap is today, it matters what it will be 10/20/30 years from now. Most of these super high Caps (meaning over 12%/13%) are nothing but teaser rates imo.

And DHK is correct. These policies have not done that over the past 40 years. They could have done that over the past 40 years assuming that the Caps stayed the same... which would not happen since Caps always fluctuate.

And accumulation is only half of the picture. The Loan provisions can be just as important as the accumulation side.
 
Can they have different caps for inforce and new policies?

Would they? I understand Midland's IUL is at 14% cap, and I know that it can be reduced. Can they reduce a policy sold this year and leave new policies at 14%?

Would they?

Have they?
 
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