Pacific Life Policy Performed 22%

[scagnt83]

Do those other carriers have a 4.98% or 7.5% design charge.

Honest question, in a flat year on $100k cash value, does this mean a client could would see their following anniversary be at $92,500 because of the 7.5% design charge in addition to whatever the annual COI charges are?

Im not sure what you are speaking of. Are you asking about premium load?

Most IUL products have about 3 or 4 different expense columns. Premium Load, COI, & admin are the usual categories.

Some are now doing an asset charge instead of admin, or dropping the COI in later years and letting the asset charge take over.

 

[Allen Trent]

Im not sure what you are speaking of. Are you asking about premium load?

Most IUL products have about 3 or 4 different expense columns. Premium Load, COI, & admin are the usual categories.

Some are now doing an asset charge instead of admin, or dropping the COI in later years and letting the asset charge take over.

The documents he posted showing the 130 multipllier par rate mention 1 version has a 4.98% charge & the other a 7.5% policy design charge. I was wondering if this is a charge for the multiplier. Otherwise, it seems odd to mention the load fee like this or the 1st 10 year policy fee, etc.

 

[scagnt83]

View attachment 8340
The documents he posted showing the 130 multipllier par rate mention 1 version has a 4.98% charge & the other a 7.5% policy design charge. I was wondering if this is a charge for the multiplier. Otherwise, it seems odd to mention the load fee like this or the 1st 10 year policy fee, etc.

Ah. I thought you were talking about an internal charge in the policy.

Yes. That is the charge for those riders.

7.5% deduction in index return to get a 2.7x multiplier.

4.98% deduction in index return to get a 2.14x multiplier.

The multiplier is not guaranteed and can be reduced to 1x at any time.

All the sales material Ive seen for this does not show how the index would have performed during the 80s/90s/early 2000s. They only show the largest bull market in US history.

Oh... and the participation rate on the index is not guaranteed.

Its not guaranteed and costs 7.5%.... and somehow Pac is able to spin this as a positive.... LMAO!!

 

[Allen Trent]

Ah. I thought you were talking about an internal charge in the policy.

Yes. That is the charge for those riders.

7.5% deduction in index return to get a 2.7x multiplier.

4.98% deduction in index return to get a 2.14x multiplier.

The multiplier is not guaranteed and can be reduced to 1x at any time.

All the sales material Ive seen for this does not show how the index would have performed during the 80s/90s/early 2000s. They only show the largest bull market in US history.

Oh... and the participation rate on the index is not guaranteed.

Its not guaranteed and costs 7.5%.... and somehow Pac is able to spin this as a positive.... LMAO!!

So, am I correct that a year in which the index or flat that the client will actually lose 4.98% or 7.5% in addition to the deductions for load fee, policy fee, COI?

 

[scagnt83]

So, am I correct that a year in which the index or flat that the client will actually lose 4.98% or 7.5% in addition to the deductions for load fee, policy fee, COI?

No, that is incorrect.

If the index is flat or negative, the policy is credited with 0%, or whatever the minimum floor is for that product.

That is soley a means to calculate the index return. The policy has a guaranteed minimum annual floor of at least 0%.... which internal costs would then be deducted from.

All IUL could possibly have a negative year if the policy costs exceed the credited rate. But the credited rate will always at least be 0%. Some policies credit a 1% or 2% annual minimum each year to prevent that issue.

 

[scagnt83]

Ah. I thought you were talking about an internal charge in the policy.

Yes. That is the charge for those riders.

7.5% deduction in index return to get a 2.7x multiplier.

4.98% deduction in index return to get a 2.14x multiplier.

The multiplier is not guaranteed and can be reduced to 1x at any time.

All the sales material Ive seen for this does not show how the index would have performed during the 80s/90s/early 2000s. They only show the largest bull market in US history.

Oh... and the participation rate on the index is not guaranteed.

Its not guaranteed and costs 7.5%.... and somehow Pac is able to spin this as a positive.... LMAO!!

Interesting they refuse to call it a spread.... basically they created a new term that nobody is familiar with in an attempt to make it sound better.

But its a 7.5% index spread. Almost unheard of in the IUL space to my knowledge.

 

[Allen Trent]

No, that is incorrect.

If the index is flat or negative, the policy is credited with 0%, or whatever the minimum floor is for that product.

That is soley a means to calculate the index return. The policy has a guaranteed minimum annual floor of at least 0%.... which internal costs would then be deducted from.

All IUL could possibly have a negative year if the policy costs exceed the credited rate. But the credited rate will always at least be 0%. Some policies credit a 1% or 2% annual minimum each year to prevent that issue.

That is good to know. Seems like some wholesalers of competitors have the impression that anything with multipliers would take away from 0% floor from the charge of the multiplier.

The ironic part is I consider myself decent at following the various products in our industry. I can't imagine how the average agent or any consumer can begin to understand them

 

[Allen Trent]

Interesting they refuse to call it a spread.... basically they created a new term that nobody is familiar with in an attempt to make it sound better.

But its a 7.5% index spread. Almost unheard of in the IUL space to my knowledge.

If it is a spread, but 0% floor, can you explain 2007 & 2018 on their far right coumn showing negative in years where index was a .3 & .9% positive? 2018 is showing a negative 6.34% when index had a positive .9%

 

[Lloyds of Lubbock]

If you financed this policy what type of lending value woukld the bank put on the cash value? Theoretical question, not looking for an answer.
Depending on your collateral if you jad a negative or a flat year, it may result in a margin call.

 

[Allen Trent]

If you financed this policy what type of lending value woukld the bank put on the cash value? Theoretical question, not looking for an answer.
Depending on your collateral if you jad a negative or a flat year, it may result in a margin call.

Fair question. I first want to know, can it actually have less than 0% on the CV from index change tied to the multiplier/cap/rider. We all know a 0% or even a positive 1-2% could result in a net drop in the CV depending on the various charges of COI, policy fee, or net premium/withdrawals