We all know IULs are a ripoff

[phoenixlord]

How many agents personally own an IUL product?

Most agents can't even afford a million dollar, 30 year term. Forget about WL or IUL.

They do take a small 10k DB WL and IUL just so they can tell their clients that they own what they sell but won't reveal how much DB. They gladly take the commissions they make on selling the risky IULs and put some in their IRAs or solo 401Ks.

 

[HoosierLife]

@HoosierLife Don't you have an overfunded IUL lol?

No, I have a $2.5MM overfunded Penn Mutual WL policy.

 

[Rob Lion]

No, I have a $2.5MM overfunded Penn Mutual WL policy.

I knew it was one of the two.

 

[Lloyds of Lubbock]

How do you know what most agents can afford?
While the attrition rate in the industry is extremely high, those that persevere and make it, do very well and most likely can afford whatever product they want.
If you think that little of the career, why are you in it?

 

[marindependent]

phoenixlord - do tell? Why the anger about IULs... did you get burned by one? Did you have an agent sell you one and then abandon you?

I am not a big fan of permanent insurance what so ever and was not attempting to defend their value.

 

[somarco]

I am selling hair styling products for men..

 

[phoenixlord]

I saw one agent teach his newbies to tell their clients that once they buy an IUL, it's 14.5% cap rate is locked in forever. Most of them never even read the illustration and go and infect many more like covid-19. Why don't they tell that the cap rate can be reduced to 1% and it will probably be reduced to a single digit very soon with the interest rates going down. Wait! noone will buy IULs then. "Designing it rightly" will not save IULs from imploding if the cap rates are lowered to single digits and expenses are increased. That's what makes this product dangerous. Insurance companies have all the power the way these contracts are worded and they will exercise their power sometime soon. Most of the agents are ignoring all this and going ahead selling these. I know a few who have stopped IULs altogether. I just wanted to see the pulse of the agents on this board about this and I think I got my answer. This will end pretty badly with lot of agents losing their licenses and more. It's not few bad apples bringing bad name to the industry, most apples are bad this time.

 

[marindependent]

I just wanted to see the pulse of the agents on this board about this and I think I got my answer.

Frankly I am not sure that you are going to get a 'pulse on the agents' by both the title and your opening paragraph of this post. There is a LOT of content with good solid debate about various permanent policies on this forum.

 

[phoenixlord]

Frankly I am not sure that you are going to get a 'pulse on the agents' by both the title and your opening paragraph of this post. There is a LOT of content with good solid debate about various permanent policies on this forum.

I have read lot of the posts here and some agents are very knowledgeable but the points I am raising here have no answers. I had some agents answer these by saying insurance companies sure can lower their cap rates or increase expenses but they haven't in over 200 years in business

The concept of tying the returns to the market is beautiful but they need to solve the problem of lowering the cap rates. I understand Call options being expensive when the market is volatile but they have lowered the caps when the VIX was in single digits

One way to solve this problem is offering returns even when the market falls. If they can buy CALL options, they can buy PUT options just as easily. If they offer -10% to +10% cap rate, policies will have some return every year because market either falls or rises every year, very hard to stay the same. Maybe there will be more innovation on these IULs and maybe these will be the greatest product of this century but as things stand right now, they are a ripoff.

 

[Orion1]

Real reason the stock market averages 8% over a 30 year period is even if it lies dormant for a decade, when it surges 400%, you get to keep all 400% and not cap it at 9.5%.

When talking about the markets and averages you are discounting the market risk and inflation risk that you are exposed to with direct participation.
I would rather be capped with a credit guarantee from an institution that is heavily regulated with proven reserves than fully exposed in a taxable or even tax deferred account. But that is me. The IUL is a tool that can be used in the right circumstances to deliver better risk adjusted protection than simply leveraging assets elsewhere.