Paying the Index Return Myself, if Not Met

Jul 8, 2015

  1. pbar
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    pbar Expert

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    My illustration shows that as long as S&P performs 6.3% every year, my policy will last to my age 121 and I can have a good retirement income.

    My Question: If S&P does not perform 6.3% in any year, Can I contribute that amount in addition to the premium so that everything works as per the illustration?

    Or it does not count if I pay? only the index performance will count?

    Thanks
     
    pbar, Jul 8, 2015
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  2. unic.consulting
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    unic.consulting Guru

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    If you are not currently maxing out your IUL, you can add an additional sum that year to make up a difference in value. However, there is a maximum you can put in. Your agent should be able to run illustrations for you with different options.
     
  3. aclaro
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    aclaro Super Genius

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    There will also be expenses that come off the premium depending on your policy.
     
    aclaro, Jul 8, 2015
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  4. scagnt83
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    scagnt83 Worldwide Expert of Everything

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    The important question is at what index return does your policy not last until age 121?
     
  5. pbar
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    Anything below 6.3% will lapse the policy before 121.
     
    pbar, Jul 12, 2015
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  6. scagnt83
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    scagnt83 Worldwide Expert of Everything

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    Then its an underfunded policy and dangerous to own. You would be a fool to own it.

    IUl is not "get as much DB for your money as possible". It is "get as little DB for your money as possible".

    At that level of funding not only will it be very likely to lapse, but it will not yield as high of a rate of return that it could if it was properly funded.

    Again, you would be a fool to own that policy.
     
    scagnt83, Jul 12, 2015
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  7. pbar
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    So, how much should I fund?
     
    pbar, Jul 12, 2015
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  8. scagnt83
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    scagnt83 Worldwide Expert of Everything

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    Just below the MEC limit. Or in other words, you should figure out the premium you can commit to, and then drop the DB as low as it can go without the policy becoming a MEC.

    Honestly I do not think that you should obtain an IUL unless you are working with an experienced agent who can properly explain it to you, design it correctly, and help you by doing yearly reviews. Im not trying to be an ass, but your posts here show that you have an extremely poor understanding of the product and how it works. And that is a recipe for disaster. (if I remember correctly you are selling this to yourself once you are licensed)
     
    scagnt83, Jul 12, 2015
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  9. pbar
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    He is a good and knowledgeable agent. At that time, DB was my primary concern but now it seems CV is more important. If I drop DB now, wont I lose the premium?
     
    pbar, Jul 12, 2015
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  10. scagnt83
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    scagnt83 Worldwide Expert of Everything

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    If he is recommending a policy that will lapse if the index does not hit 6.3% each year then he is not a knowledgeable agent at all... he is the exact opposite of a knowledgeable agent when it comes to IUL.

    A UL policy (including IUL) is also called a "flexible premium universal life insurance policy". You can pay whatever premium you want to. There is no "set" premium that you must pay. You can pay the same premium and drop the DB down to the MEC limit. Dropping the DB does not effect the premium.

    You could not pay me enough to sell a policy that would lapse if it did not get 6.3% per year. That is a disaster waiting to happen and no single client is worth an E&O claim. Find an agent that knows what they are doing.

    If DB is your main concern then layer a term policy on top of a max funded IUL. Or choose an IUL that offers a term rider. If CV is your main goal then you need to figure out what premium you can afford and drop the DB down to the MEC limit.

    Either way I suggest finding a new agent who knows what they are doing. if they proposed that policy to you then they do not know what they are doing when it comes to IUL. That policy is not anywhere close to being properly designed.
    Is this guy a friend or relative?
     
    Last edited: Jul 13, 2015
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