Midland National Strategic Accumulator illustration

Allen Trent

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Anyone have Midland National IUL access & want to run a Strategic Accumulator quote for me? I am in possession of a spreadsheet that looks very inaccurate & comparing to an equity investment with really bad assumptions for the equities annual taxation on interest/dividends 24%, capital gains rate of 22% when most capital gains are at 10-15% & worst is 20%, turnover ratio 35% used in spreadsheet v S&P 500 closer to 4-5%. Equity account in spreadsheet assumes 6.42% (likely to compare IUL 20 yr average) when actual S&P 500 closer to 10-12% when dividends shown & reinvested.

Male, 38 NT Preferred
$750k face increasing death benefit
$15k annual premiums for 27 years.
$99,400 annual distributions from age 64 to 95

IULs I have access to run out of money after 16 years even though spreadsheet from agent showing Midland has projected IUL crediting rate of 6.46% & ones I am running are 6.42% & 6.38%

I will buy you an online beer if you have the 5 minutes to assist. If no, I understand not wanting to provide the illustration. I love our industry's products, I just hate when people use wrong math or illegal materials without a license to sell a case.

NOTE--I don't have an agent or an upline involved as the client materials don't show where it came from, so I am not trying to turn the agent in, just trying to show the math might be fuzzy
 
Anyone have Midland National IUL access & want to run a Strategic Accumulator quote for me? I am in possession of a spreadsheet that looks very inaccurate & comparing to an equity investment with really bad assumptions for the equities annual taxation on interest/dividends 24%, capital gains rate of 22% when most capital gains are at 10-15% & worst is 20%, turnover ratio 35% used in spreadsheet v S&P 500 closer to 4-5%. Equity account in spreadsheet assumes 6.42% (likely to compare IUL 20 yr average) when actual S&P 500 closer to 10-12% when dividends shown & reinvested.

Male, 38 NT Preferred
$750k face increasing death benefit
$15k annual premiums for 27 years.
$99,400 annual distributions from age 64 to 95

IULs I have access to run out of money after 16 years even though spreadsheet from agent showing Midland has projected IUL crediting rate of 6.46% & ones I am running are 6.42% & 6.38%

I will buy you an online beer if you have the 5 minutes to assist. If no, I understand not wanting to provide the illustration. I love our industry's products, I just hate when people use wrong math or illegal materials without a license to sell a case.

NOTE--I don't have an agent or an upline involved as the client materials don't show where it came from, so I am not trying to turn the agent in, just trying to show the math might be fuzzy

No idea how they are getting those numbers. Lowest DB I can generate with Sammons on a 38 male NT preferred is 1,033,347 using those premiums numbers.
 
No idea how they are getting those numbers. Lowest DB I can generate with Sammons on a 38 male NT preferred is 1,033,347 using those premiums numbers.

Who knows. Are you sure? I can get 15k into a $486k policy for that age on minimum face solve, even using GPT test, not CVAT. here is the spreadsheet given to the client (note--lots of errors & misinformation on the Equity left side of spreadsheet in terms of equity returns, tax rates, capital gains rates, portfolio turnover, etc.)

Strategic Accumulator pg1.JPG Strategic Accumulator pg2.JPG
 
I started many moons ago with NML. The illustration software was spitting out some crazy numbers in the later years which I brought to the attention of the powers that be. They blew me off. My point? Illustrations should be used to explain the mechanics of a policy.
The actual numbers should be taken with a grain of salt.:idea::fibs:
 
I don’t have access to Midland National’s software so I used North American’s Builder Plus IUL 2 plan.

Gender: Male
Age: 38
Risk Class: Preferred Non-Tobacco
Initial Death Benefit: $750,000
Death Benefit Option: Return of Premium (which appears to have been used in the Midland illustration)
Premium: $15,000 annually for 27 years
Annual Loan Amount: $99,400 from policy year 28 through policy year 46 (and then the death benefit is no longer supported)

Illustration Rate: 6.46%
Loan Type: Variable
Loan Rate: 5.46%

Result: Loans are supported for 19 years.

Note: The North American cash value after policy year 27 (that is, before loans commence) is $958,486 versus $981,397 for Midland National.
 
I don’t have access to Midland National’s software so I used North American’s Builder Plus IUL 2 plan.

Gender: Male
Age: 38
Risk Class: Preferred Non-Tobacco
Initial Death Benefit: $750,000
Death Benefit Option: Return of Premium (which appears to have been used in the Midland illustration)
Premium: $15,000 annually for 27 years
Annual Loan Amount: $99,400 from policy year 28 through policy year 46 (and then the death benefit is no longer supported)

Illustration Rate: 6.46%
Loan Type: Variable
Loan Rate: 5.46%

Result: Loans are supported for 19 years.

Note: The North American cash value after policy year 27 (that is, before loans commence) is $958,486 versus $981,397 for Midland National.

Excellent, thank you greatly. That is also what I found on 2 other illustrations from different carriers. To get the distributions to last til age 95, using variable loan rates & face amount in the high 400-500k worked, but only got up to 88k distribution. Looking like using mulipliers to get a 6.4% rate to look like an 8% rate is what is the difference.

Have a great weekend & thank you again.
 
I, too, was thinking whether an Account Interest Multiplier is accounting for the difference. The North American product has a 15 percent multiplier in years 1 through 10 and 10 percent thereafter, on unloaned values.

The difference in cash values at the end of the year prior to illustrating loans would not seem to support that a materially different multiplier exists with the Midland product, at least not to the extent to illustrate so many extra years of cash flow via loans.
 
I found the following on https://www.midlandnational.com/indexed-ul-performance:

The Strategic Accumulator product has a current Account Interest Multiplier of 15% in Policy Years 1-10 and 10% thereafter. For purposes of these illustrated values only, we are assuming a 15% Account Interest Multiplier in all years. The Account Interest Multiplier is applied after interest credit or index credit is determined and before any interest bonus. The multiplier is not applied to the interest bonus, the minimum account value, nor to any portion of the account value that is policy debt. The multiplier is guaranteed on the index account, and conditionally guaranteed on the fixed account. The multiplier is paid on the fixed account when the declared interest rate is in excess of the guaranteed rate of 1.5%. The multiplier has a guaranteed minimum of 10% starting in policy year 1, but it could be higher and it could vary by index selection.
 
I found the following on https://www.midlandnational.com/indexed-ul-performance:

The Strategic Accumulator product has a current Account Interest Multiplier of 15% in Policy Years 1-10 and 10% thereafter. For purposes of these illustrated values only, we are assuming a 15% Account Interest Multiplier in all years. The Account Interest Multiplier is applied after interest credit or index credit is determined and before any interest bonus. The multiplier is not applied to the interest bonus, the minimum account value, nor to any portion of the account value that is policy debt. The multiplier is guaranteed on the index account, and conditionally guaranteed on the fixed account. The multiplier is paid on the fixed account when the declared interest rate is in excess of the guaranteed rate of 1.5%. The multiplier has a guaranteed minimum of 10% starting in policy year 1, but it could be higher and it could vary by index selection.

I was aware of that also. So, if the multiplier is projected even on a loan balance interest credit, maybe that is the difference. Scariest part is none of these multiplier impacts are guaranteed as after market share is grown as desired by max illustration sales, the 3 or 4 levers they can pull of higher costs, lower caps or lower cap rates can be placed on the inforce business. Especially if they don't have high enough returns in their general funds to but the index options needed.

Comdex carrier ranked in top 10 -15 might be better to go with than one ranked at 100 even if it's max distributions illustrate 10% less. Illustrations are entirely hypothetical & I am worried too many clients & agents are relying on the 10 moving parts of an IUL to work out exactly as illustrated
 
I just ran those parameters on Midland. Policy lapses at age 87.

Midland does have slightly lower internal costs than NA. Mainly because there is no IMO involved to take their cut.
 
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