Whether I Need LT Rider with a IUL

Nov 10, 2014

  1. jdumond
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    jdumond Expert

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    Let's not get too crazy here.....:)
     
    jdumond, May 30, 2019
    #21
  2. pfg1
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    pfg1 Guru

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    I agree. I'd much rather have something simple like a 1% floor than a bunch of gimmicky "what if's"
     
    pfg1, May 30, 2019
    #22
  3. bluesky3000
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    bluesky3000 Expert

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    Uh thats gonna be a tough decision, would have to based it on your needs
     
  4. Allen Trent
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    Allen Trent Guru

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    I think the DIA & IUL are somewhat on the opposite end of the spectrum from each other.

    The DIA is entirely about guarantees and a monthly check that will come like clockwork. On the positive, there is only 1 main risk the client took & that is irrevocably trading a lump sum of cash. The carrier bears the risk that people don't live longer than they priced for & the risk they can earn the interest returns they priced for.

    With a IUL, the consumer is absorbing many of the risks to get a hypothetical non-guaranteed income under the assumption of a half dozen items. Risk of the carrier changing cost of insurance, risk of carrier changing cap & participation rates. There is also no guarantee of the current efficient options market will always be available at a reasonable cost that the carrier can have the money from their general fund to buy cost effectively. But designing with minimum face & max funding can minimize these risks somewhat.

    However, to give a consumer an IUL income projection as if it is identical to a DIA might be a bit disingenuous. IUL can be great for supplemental retirement, but not sure going through a costly insurance chassis is ideal for monthly guranteed income the client will for certain need. DIA/SPIA or a EIA/VA with lifetime income rider might be better suited.

    Saw an aggressive agent once propose a client take a Ford pension buyout to buy an IUL. Basically trade a old outdated guaranteed high pension check based on old mortality tables & old interest rates for an IUL complicated & costly plan that only showed checks for 15-20yrs in best case. I think the agent was clueless & had no idea the client would also get hammered on income taxes to take a retirennt account buyout in lump sum rather than monthly pension or IRA rollover
     
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