The UL Illustration

[James]

“…the annual index growth that will be recognized in the calculation of the index earnings for an equity indexed segment on a segment anniversary. We will determine in advance the participation rate applicable to each equity indexed segment for each twelve month period and will communicate it to you in an annual report or in notices to you.”

For all that live by the EIUL Illustration, this is a common language about the Illustration backing up claims of 8-9% or greater. So tell me, what does this kind of language mean? Well, it means that they will credit what they want when they want!

Moral of the story? Know the Policy and Contractual Language you are selling. Now don't expect to find this language in any Brochure of the EIUL. Some suggest that the EIUL is nothing more then a gimmick to get pass the accepted practice of presenting Illustrations, agreed to in 2001 by the Insurance Industry.

 

[bobson]

Clearly using illustrations on UL policies can be misleading. Check out the mid 80's when UL was invented. That is UL, love it or hate it. It doesn't offer guarentees like whole life.

Your description seems logical enough to me. The company will tell the insured what the participation rate will be for the upcoming year.

 

[Mr. Bill]

If you're running illustrations, you don't have to use the company's rate, you can ratchet it down.

 

[James]

If you're running illustrations, you don't have to use the company's rate, you can ratchet it down.

You can I suppose, yet how many people out there selling EIUL's do that? Most I see demand a company generated illustration, which typically shows the Guaranteed Rate, Midpoint and Current. Yet that tends to be on a multiple page illustration, which is I admit easy to concentrate on the current rate and push the idea of the Equity Index. What is usually not discussed is the fine wording of the policy. As in WL is usually built around Guarantees written down where likely in most UL's, EIUL's need magical returns to keep their guarantees going. Not to mention other provisions built in to end the guarantees as the SG and NLGP. Such as if you borrow a dollar from most SGUL or NLGP's it ends the guarantee, how many brokers are suggesting the CV within those UL's can be access with cheap to zero loan provisions? Let us not even bring up the "Catch Up Provision".

 

[bobson]

The nice feature of EIUL is that it isn't the insurance company deciding the interest rate, it is a stock market index which the insurance company doesn't control.

I'm not saying EIUL (I think we should call it FIUL) is a great product that has no pitfalls, it has the potential to do a lot better for both life insurance purposes and cash accumulation purposes then does fully guarenteed whole life. Of course there is more risk involved and it has to be treated differently than a whole life plan.

 

[James]

The nice feature of EIUL is that it isn't the insurance company deciding the interest rate, it is a stock market index which the insurance company doesn't control.

I'm not saying EIUL (I think we should call it FIUL) is a great product that has no pitfalls, it has the potential to do a lot better for both life insurance purposes and cash accumulation purposes then does fully guarenteed whole life. Of course there is more risk involved and it has to be treated differently than a whole life plan.

As stated, read the policy too whatever contract you are referring and see if you find language like this:

“…the annual index growth that will be recognized in the calculation of the index earnings for an equity indexed segment on a segment anniversary. We will determine in advance the participation rate applicable to each equity indexed segment for each twelve month period and will communicate it to you in an annual report or in notices to you.”

If so that is how the calculate the earnings, which is whatever they decide! I know we all love the nice brochures they pass out, but the policy is what counts. I'm starting to believe the skeptics of the EIUL, it just another gimmick to promote high illustrations as we have seen in the past. Not much different then the SG or NLPG, with wording that if you are ever one day late with the premium, or borrow a dollar from the Cash Side or maybe even breath wrong your guarantee goes up in smoke.

 

[CHUMPS FROM OXFORD]

"That is UL, love it or hate it. It doesn't offer guarentees like whole life."

Actually...some UL contracts do.

 

[James]

"That is UL, love it or hate it. It doesn't offer guarentees like whole life."

Actually...some UL contracts do.

Care too share which UL gives you the same guarantees?