Which IUL for Me?

[scottstreet]

No one can show you because they don't know what will happen over the next 40 yrs and neither do you....."past performance is no guarantee of future results"

 

[Dscaggs]

Do you have any other sources of income planned out for retirement? 50k

 

[stuy119]

It's also important to take taxation into account when comparing the two vehicles.

 

[jacobtn]

It's also important to take taxation into account when comparing the two vehicles.

Roths grow tax free, and loans from an IUL are also tax free so not sure what you mean by that. unless you are speaking of the taxes on the death benefit.

 

[mcleanbr]

Milkman
There was a recent post that compares various iul policies for growth and income. I am mobile now and not able to see it. You should look at how much premium at a minimum death benefit get to your income goal. I am touching on this lightly. You need to know your underwriting class as this might chage things.

A low death benefit will cause a MEC at a lower premium. One benefit of the IUL over the roth is being able to put more money in.

You might want to put up a scenerio.

 

[Larry Tew]

Roths grow tax free, and loans from an IUL are also tax free so not sure what you mean by that. unless you are speaking of the taxes on the death benefit.

The principal is always tax-free no matter when it's withdrawn, but the growth in a Roth above cost basis isn't tax free at withdrawal unless the Roth is over 5 years old and the individual is over age 59.5.

 

[CFP83]

Lincoln National, ING, North American, Penn Mutual are the top players.

And probably about in that order IMO.

LFG has a competitive cap (13%) and low Loan Rates (2% participating/3% fixed). They also have a yearly 1% min.
They are also a top notch company.


ING is good. 13% (if I remember right) cap, 3% loans, 1% yearly min.
They have a Global IUL that takes the best 2 out of 3 indexes for the year. It is a strong Indexing method with some of the best historical returns in the industry.


NA is strong too. But I like LFG better as a company.

Are you a life agent too? (I know your P&C)

What is your business structure? Are you planning to run this through your business in an executive bonus type arrangement?
- - - - - - - - - - - - - - - - - -


Not all that much, they both use after tax income to provide tax free retirement income.

I agree with most of your list....except you have ommited two carriers who both have a stronger iul than lincoln and ING....pacific life and minnesota.

 

[vic616283]

I would love to see how an insurance product with cost of insurance charges and caps on interest rates which can be changed by the insurance company at any time can outperform a passive S&P index fund over a period of 40 years.

Post an email, I will send you a spreadsheet where I compare the two. I took the historical S&P 500 end of year values, and I compared investing $36,000 every year into the an S&P500 index ETF vs investing it into an iul. Trying to favor the S&P I assumed no transaction costs, no bid ask spreads, and no premium above NAV (I did this because when I did this work, I was on your side of the fence and I was trying to prove that IULs are bad- my spreadsheet is even named something like "IUL is a scam.xls"). I also assumed no loans taken out on the IUL but rather a full surrender with income taxes paid. The iul wins almost every time. The only time the mutual fund comes out on top is if you time your retirement just right so that you retire at the very peak of a bull run.

In addition to this, no investment should be evaluated in terms of pure return unless you're a dummy. Seeking alpha is better than seeking returns any day. If this weren't the case then why don't we all throw all our savings at penny stocks all day? IUL's offer alpha which is leaps and bounds better than the market. The historical returns are out there - some of the index strategies by companies mentioned in this thread are in the 7.5-8.5% range, with resulting IRRs in the high 6's and low 7's. This is with very low volatility. This alpha beats the market any day.

 

[Tahoe Ray]

Post an email, I will send you a spreadsheet where I compare the two. I took the historical S&P 500 end of year values, and I compared investing $36,000 every year into the an S&P500 index ETF vs investing it into an iul. Trying to favor the S&P I assumed no transaction costs, no bid ask spreads, and no premium above NAV (I did this because when I did this work, I was on your side of the fence and I was trying to prove that IULs are bad- my spreadsheet is even named something like "IUL is a scam.xls"). I also assumed no loans taken out on the IUL but rather a full surrender with income taxes paid. The iul wins almost every time. The only time the mutual fund comes out on top is if you time your retirement just right so that you retire at the very peak of a bull run.

In addition to this, no investment should be evaluated in terms of pure return unless you're a dummy. Seeking alpha is better than seeking returns any day. If this weren't the case then why don't we all throw all our savings at penny stocks all day? IUL's offer alpha which is leaps and bounds better than the market. The historical returns are out there - some of the index strategies by companies mentioned in this thread are in the 7.5-8.5% range, with resulting IRRs in the high 6's and low 7's. This is with very low volatility. This alpha beats the market any day.

Did you run your IUL assumptions using a straight return?

 

[vic616283]

Did you run your IUL assumptions using a straight return?

No... illustrated current costs and used an if statement to determine the return that would have happened year by year. If s&p went down, return was zero minus fees, if s&p went up, return was whatever it was up til the cap of 15, minus fees. Its all based on mnl's illustrated values. I did the same for aviva's iul and it actually loses to the market a lot of the time