Maximum Premium Indexing Curtis Ray

[phoenixlord]

that was my thinking also & that flat years could hurt because of those costs. I would love to find an efficient way to do some of this with a portion my own equities portfolio as I tend to be more conservative than many. love to protect some of the downside & ok giving up some of the upside.

Thinking of researching some of the RILA products out there to compare

If you as an agent are not willing to pay 10% cost of insurance and that too when there is no cap on the upside, then you have no business recommending these IULs to your clients. If you don't have faith that you will come out with atleast 6% average on your portfolio in 20 or 30 years when you pay 10% cost of insurance, then how can you sell this whole IUL concept?

 

[Allen Trent]

If you as an agent are not willing to pay 10% cost of insurance and that too when there is no cap on the upside, then you have no business recommending these IULs to your clients. If you don't have faith that you will come out with atleast 6% average on your portfolio in 20 or 30 years when you pay 10% cost of insurance, then how can you sell this whole IUL concept?

Not sure if you are speaking in general or specifically to me. But as a reminder to previous comments, I have not been apersonally producing agent for 20 years, so I do not currently sell to the client nor have I ever sold an IUL directly. However, I have suggested the product in numerous suggestions to a pretty narrow set of situations not as a perfect fit for everyone & anyone.

Are you suggesting all IUL are uncapped & & that all IUL have & are guaranteed to only have any total costs if 10%

Lastly, are you calling an IUL a portfolio cause you say "if you don't have faith in your portfolio making 6% over 20 or 30 yrs"? An IUL is not a portfolio nor does it have any such characteristics of a diversified investment portfolio.

An IUL is an insurance policy 1st & foremost with a death benefit. If needed, that is perfectly fine to own, but if death benefit is not needed, it becomes an expensive cost to play at current charges, let alone what the charges could increase to. An IUL then as the investment component is driven not by the equity investment markets, but by the interest on fixed income Securities the carrier can get returns from. If those are sluggish or low, they have little to no money to go buy the derivatives needed to offer caps, participation rates, spreads. And unlike Equity investments, it misses out on all the returns generated from the stock dividends of the actual companies in the index.

So yes, today I am concerned that 6% in an IUL net of expenses can be achieved with a high probability. I have no concerns that a diversified portfolio of investments can achieve 6%

I believe max funded IUL for high income, high net worth & business owners can still be a solid supplemental place after other planning is complete. But I do not believe it should be sold to everyday consumers at target premium for their only investment dollars or their death benefit that must be there when needed. I believe history will show there are many sales being made where the agent made IUL the 1 size fits all solution to all clients needs & that lawsuits will follow

 

[phoenixlord]

Not sure if you are speaking in general or specifically to me. But as a reminder to previous comments, I have not been apersonally producing agent for 20 years, so I do not currently sell to the client nor have I ever sold an IUL directly. However, I have suggested the product in numerous suggestions to a pretty narrow set of situations not as a perfect fit for everyone & anyone.

Are you suggesting all IUL are uncapped & & that all IUL have & are guaranteed to only have any total costs if 10%

Lastly, are you calling an IUL a portfolio cause you say "if you don't have faith in your portfolio making 6% over 20 or 30 yrs"? An IUL is not a portfolio nor does it have any such characteristics of a diversified investment portfolio.

An IUL is an insurance policy 1st & foremost with a death benefit. If needed, that is perfectly fine to own, but if death benefit is not needed, it becomes an expensive cost to play at current charges, let alone what the charges could increase to. An IUL then as the investment component is driven not by the equity investment markets, but by the interest on fixed income Securities the carrier can get returns from. If those are sluggish or low, they have little to no money to go buy the derivatives needed to offer caps, participation rates, spreads. And unlike Equity investments, it misses out on all the returns generated from the stock dividends of the actual companies in the index.

So yes, today I am concerned that 6% in an IUL net of expenses can be achieved with a high probability. I have no concerns that a diversified portfolio of investments can achieve 6%

I believe max funded IUL for high income, high net worth & business owners can still be a solid supplemental place after other planning is complete. But I do not believe it should be sold to everyday consumers at target premium for their only investment dollars or their death benefit that must be there when needed. I believe history will show there are many sales being made where the agent made IUL the 1 size fits all solution to all clients needs & that lawsuits will follow

It is impossible to have an intelligent conversation when you don't remember the context of the conversation and only parrot what you know about IUL, portfolio etc. Please read the posts from the other posters also and try to remember that the conversation was about replicating IUL kind of returns outside of IULs and in people's brokerage accounts(equities portfolio) by buying put options thereby creating a floor just like in IULs but without a cap as in IULs. You said that you would like to do that yourself but you were concerned about spending 10% on puts where flat years could hurt your returns. Then my question was that this is the same concept of IULs and how come you don't have a problem recommending IULs when you yourself are not willing to spend 10% or so on put options as a cost of insurance to create a floor in your equities portfolio?. IUL and equities portfolio protected by put options are one and the same. To that, instead of answering, you let out a few paragraphs containing sophisticated words hoping people will think that I am dumb and that I don't know the meaning of portfolio.

I bet that you will find some irrelevant point or word in my post and pounce on it with a 2 page post instead of answering my direct question. My goal here is to provoke thinking in people who are considering buying IULs and show them that even agents won't buy these when they are properly dissected and presented. This is nothing but gambling where you buy lottery tickets or feed the slot machine but only win a small amount occasionally. The cost to play lotto or the slot machine is much more than the potential wins. You said so yourself that you will not pay the cost of put options to hedge your equities portfolio because the potential returns don't exceed the cost of playing. Cheerio!

 

[IUL Questions]

I definitely feel compelled to post a reply to this thread. I've been trying to research this product over the past couple of weeks. Curtis Ray has gained a lot of traction recently on social media, specially TikTok. Ironically, his rise in followers was from a video he posted encouraging people to put the lowest amount down on a home purchase and invest the rest in MPI.

His books are free to download, specially "Lost Science of Compound Interest" which has more details on the MPI product and the "secure leverage" approach. I'm pretty skeptical the Caps can hold according to his assumptions. Its a little alarming watching the amount of interest around this advance financial product from people that may not have strong understanding of how this product works. I guess time will tell.

 

[scagnt83]

encouraging people to put the lowest amount down on a home purchase and invest the rest in MPI.

Which is illegal for an agent to recommend.

Regulators would take his license & carriers would cancel his contracts if he was recommending this to clients. (once enough complaints and lawsuits rolled in)

Instead, he is making a living from selling books and videos to other agents telling them to do this. Which is what most of these scammers do... they make their money off of other agents going out and doing the "dirty work".

If he is smart, the fine print talks about consulting carrier policies and state regs before implementing any of the "advice".

 

[Allen Trent]

he posted encouraging people to put the lowest amount down on a home purchase and invest the rest in MPI.

so, not only does the IUL have to maintain current or better Caps, Participation rates, internal load fees, cost of insurance, policy fees but it has to carry the added cost of PMI on a mortgage from someone putting the least down on a house & putting the other available cash into IUL?

With the invention of RILA annuities that you can select a safety net floor or buffer, wouldnt this concept look better utilizing an RILA Roth IRA if someone is looking for an index type product with some downside protection?. An RILA product appears to have no internal costs, fees or loads other than a CDSC Surrender schedule. For those without concern for downside, there are plenty of low cost ETFs that have no cap or participation rate & actually credit the dividend performance of the stocks in the index.

Of course, if the client has a need for Life insurance that should be taken care of 1st in term or permanent products of the clients liking, but this idea of equity harvesting of house value or not putting cash or payments to accelerate debt reduction using IUL is a bit of a math problem. Especially when most people suggesting it tell purchasers they can deduct their mortgage interest payments. That is just not factual currently for the majority of tax payers with the expanded standard deductions. Last I saw, 88% of taxpayers do not itemize deductions & therefore cannot deduct mortgage interest.

PS-- BTW, his lead into his online book (which I generally like the concepts) has a misleading chart. He picks 2000-2013 as one of the worst periods of the S&P showing the impression it made no money. Lets ignore that it is highly likely someone bought on that beginning day or sold on that ending day. Had a person invested a lump sum in the actual S&P500 index via an EFT or wherever they could, it would have actually been up 31.98% since purchase, not 0% like the chart shows. Had it been a periodic investment, IE: 1k per month, it would have had an annualized 4.98%. Both are far from 0 as indicated. Maybe an IUL would have done better after all the fees/COIs, or maybe not. But IULs had entirely different caps & participation rates during those 13 years than can be found today. Again, I like the concepts for the exact narrow target market of high net worth, high income, business owners & those already maxed out in other savings that still need life insurance. I just dont like all the math used with best case caps & best case spreads while simultaneously giving the impression the plan is guaranteed. It can be a lead in for sales to the masses that dont fit some of those narrow target markets in my mind. this will be the type of stuff that causes class action lawsuits & regulators to look closer at the products. Not his information, but that some agents use hand picked scenarios to sell to others. only the future will tell which math was correct in such books or materials. I am just not seeing 11% caps & 6% carrier general account returns that drive the bulk of the math in such books

 

[scagnt83]

I'm pretty skeptical the Caps can hold according to his assumptions.

I would never sell, recommend, or own an IUL that will not sustain itself at a very low credited index return.

Ideally, it should sustain itself (not lapse) at 50% of the expected return for the current cap. But that scenario is getting harder and harder to find in the current IUL market. Most have to settle for not lapsing below a 4% or 5% return.

If the IUL design lapses under 5% credited index return, its not a safe situation long term.

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I dont know what his specific assumptions are. But I can tell you 2 things from a factual standpoint:
1. Renewal Caps are interest rate sensitive.
2. Every major IUL carrier has lowered Caps upon Renewal, often multiple times

So what do you think interest rates are going to do over the next decade? The Federal Reserve has made multiple statements recently saying their plan is to keep interest rates at current levels or lower, for the next 5 years minimum.


Some of the highest Caps being sold 4-5 years ago have had some of the biggest drops in the industry. In 2015, North American had a 14% Cap... now its at least 10% (maybe lower now, idk).


I have 10 year old IUL policies on the books with just a 2% drop in Caps... I have others with a 4%+ drop in Caps. I dont have a single IUL on the books older than 2 years that has not lowered Caps multiple times. And older policies have lower expenses than the ones being sold today... making them much more sustainable long term with lower returns vs. the current IUL market.

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Again, IUL renewal Caps are interest rate sensitive. All insurance products are interest rate sensitive actually. But Life Insurance especially.

WL Dividends have decreased in line with US interest rates. UL renewal rates have decreased in line. IUL renewal rates have decreased in line.

IULs still have some really high initial Caps. However, the internal expenses have increased more and more over the past 5 years instead of 1st year Caps being lowered... I think the reasons for that are obvious... its easier to market/sell... and more profitable for the carrier. All of these policies being sold with multipliers, essentially trying to leverage the policy... they are just shoveling on expenses to a setup that is already expensive during the years a Premium Load is charged (which is the biggest expense on an IUL).

Essentially, as interest rates have dropped in the US, IUL carriers have shifted more and more risk onto the client. And they are doing so with features that on the surface seem beneficial to the client. However, if everything does not work out perfectly as assumed... that could be index returns or lowered caps or increased expenses.... the client is screwed while the insurer has made their money.


Im not against IULs, Ive sold lots of them and have been a huge advocate for them over the years.... especially an advocate for the responsible and professional way to design the policy and set expectations with clients. Ive shared tons of info on this forum. Helped in numerous situations, sometimes compensated sometimes not. However, imo, there are very few IUL policies on the market right now that I would even consider personally owning. And when you use realistic assumptions on an IUL for the credited index return, often it looks no better than a WL policy right now. So the only benefit the IUL is giving you is the possibility of higher withdrawals because of the ability to use GPT testing (assuming the agent chooses gpt in the design).

 

[phoenixlord]

Again, I like the concepts for the exact narrow target market of high net worth, high income, business owners & those already maxed out in other savings that still need life insurance.

I keep hearing this BS all the time. Can you imagine what would happen if such a client decided to direct just 1 year of their premiums towards suing the agent? These high networth clients often are sold 50k annual premium policies. One of those premiums is enough to put the agent out of commission

 

[scagnt83]

I keep hearing this BS all the time. Can you imagine what would happen if such a client decided to direct just 1 year of their premiums towards suing the agent? These high networth clients often are sold 50k annual premium policies. One of those premiums is enough to put the agent out of commission

Agents carry E&O insurance. As long as they did not break the law during the course of the sale, the insurance covers them, so all they are looking at is a deductible of $1k-$2k.

Not many lawyers are taking on those cases yet. Ive actually been surprised in a few situations that no lawyers would take it. But most good lawyers dont take cases they have no chance of winning. When the client signs an illustration showing what is guaranteed and what is not guaranteed... in both values and rates... its hard for a lawyer to claim the person did not know that scenario was possible.

 

[phoenixlord]

Agents carry E&O insurance. As long as they did not break the law during the course of the sale, the insurance covers them, so all they are looking at is a deductible of $1k-$2k.

Not many lawyers are taking on those cases yet. Ive actually been surprised in a few situations that no lawyers would take it. But most good lawyers dont take cases they have no chance of winning. When the client signs an illustration showing what is guaranteed and what is not guaranteed... in both values and rates... its hard for a lawyer to claim the person did not know that scenario was possible.

lol you seem to be trying to convince yourself more than me. good luck to you and others. Cheerio.