Participating Whole Life

[aureo11]

Not if you are young and looking more for CV accumulation. Under age 45, an IUL with North American will outperform any WL plan on CV using current dividend scales.

Last year the S&P from Jan 1 to Jan 1 returned 25+% and most IUL's during that point to point period capped out from 9-14%.

If your objective is purely Death Benefit, than yes the Par WL with Guaranteed DB may be the way to go. If you are looking for Cash Value accumulation and a supplemental income at retirement, than IUL will outperform any apples to apples comparison to that of a WL plan and it's DB.

The only way a WL policy can compare in total return is using a current Dividend scale that is project out 40 years and then, "Maybe", it will come close to the returns of an IUL in Year 40....It is not even a fair fight in the 1-39 years with an IUL....It is Rocky vs. Gilligan.

TwiLight,

I'm assuming you are using an IUL indexed to the SP500 based on your comment about the return. Over the past 30 years the stock market has average a pretty solid return, hence IUL has done very well. However, I would argue that today the stock market is overpriced by as much as 50% thanks to QE. If the market comes down to more normal levels over the next 10 years, the overall return will be 0-2% per year. IUL may do better, especially if we see a big plunge occur in 1 or 2 years and a steady climb the others, but it may not.

I would suggest a blended WL policy, which will allow the OP to dump a lot of cash into the policy quickly. The CV is guaranteed to grow every single year, even when the market is down. Sure the overall return might not be as high I. The long run, but I bet it will be over 10 years, at which point he could take a policy loan and invest some of the money into the stock market if the market is cheaper.

 

[Larry Tew]

I should have been more clear with my question. I want to take a Par WL policy on myself in order to build the most CV and have a low cost. Most life insurance I sell is FE and I wanted some experts advise

The most CV FOR WHAT???

Are you going to leave it alone and let it build up and cash it in at age 65? Do you plan to access the cash value as your "private reserve" or "bank" along the way? Do you plan to put the money back that you take out?

Your question is understandable... but there's no good answer. Any good WL from the usual good companies (Ohio National, Penn, Mass, Guardian, etc) will work.

It comes down to how you think you're going to use the policy.

 

[liorselamb]

The most CV FOR WHAT??? Are you going to leave it alone and let it build up and cash it in at age 65? Do you plan to access the cash value as your "private reserve" or "bank" along the way? Do you plan to put the money back that you take out? Your question is understandable... but there's no good answer. Any good WL from the usual good companies (Ohio National, Penn, Mass, Guardian, etc) will work. It comes down to how you think you're going to use the policy.

My goal is to supplement retirement income and have my own "bank" resource for borrowing money for along the way (and paying it back because of my primary goal, retirement).

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Not if you are young and looking more for CV accumulation. Under age 45, an IUL with North American will outperform any WL plan on CV using current dividend scales. Last year the S&P from Jan 1 to Jan 1 returned 25+% and most IUL's during that point to point period capped out from 9-14%. If your objective is purely Death Benefit, than yes the Par WL with Guaranteed DB may be the way to go. If you are looking for Cash Value accumulation and a supplemental income at retirement, than IUL will outperform any apples to apples comparison to that of a WL plan and it's DB. The only way a WL policy can compare in total return is using a current Dividend scale that is project out 40 years and then, "Maybe", it will come close to the returns of an IUL in Year 40....It is not even a fair fight in the 1-39 years with an IUL....It is Rocky vs. Gilligan.

Thank for the detailed answer. Your help is much appreciated. What about having a younger child as the insured and being an owner instead of insuring myself? Does it make sense?

Thanks again,

 

[TwiLight]

What about having a younger child as the insured and being an owner instead of insuring myself? Does it make sense?

It does not for 2 reasons. The first is that you would need to bump up the amount of insurance on a child in order to get the limits needed to put the cash into the policy due to the Guideline premiums being lower at the younger ages. Also, many insurance companies do not allow face amounts higher than $250k on children and you would most likely need $1m.

The second reason is that the insurance is not needed on the child if you die. who would pay the premium? You need to keep the insurance on yourself so that any Death Benefit can be used by your spouse to complete the supplemental retirement plan. Any argument that you can just buy more term is just wrong as you are buying essentially term with an IUL at a much lower cost and would basically mean that you do not understand how an IUL truly operates.

 

[Larry Tew]

My goal is to supplement retirement income and have my own "bank" resource for borrowing money for along the way (and paying it back because of my primary goal, retirement).

In that case, I like companies that don't reduce dividends when loans are outstanding. This is called "non-direct recognition" versus "direct recognition" where the company reduces the dividend when loans are in place.

Ohio National, Penn, Lafayette, New York Life are non-direct. Guardian is direct.

On top of that, variable versus fixed loan interest rates come into play. For example... Ohio National currently charges 4.4% variable loan interest rate and doesn't reduce dividends when loans are outstanding. You might be thinking "yeah, but since it's variable it could really get higher than other company's fixed rate." It could, but with Ohio National for example, their loan rate has been less than 8% (a standard fixed rate with some top companies) since 1993.

Guardian charges 8% fixed and reduces the dividend. That's why your intended use matters. Guardian might counter this by suggesting their dividend or cash value growth is larger, therefore minimizing the effect of dividend recognition and loan rate type. However, when looking at 3rd party resources such as Full Disclosure, the companies that always seem to rank highest in income stream are Ohio National, Penn, and Mass.

There are even some companies that will allow you to choose variable or fixed loan rate.

Even with these differences, it is almost impossible to say that there is one right company to choose. The difference in the top 5 or 10 companies might be the difference in a couple of weeks at Disney over your lifetime.

 

[liorselamb]

Max fund an IUL with North American....Cash value will do much better. Max funding is when you pay above target premium but below the Guideline annual premium to stay within the definition of a Life Insurance Contract. Since you pay for a smaller face amount of insurance the Life Portion is irrelevant to the CV accumulation.

Which product is suitable for retirement planning and build CV quick? Is it Builder or Rapid Builder IUL? Or maybe the GIUL product?

 

[Mattschmidt]

Which product is suitable for retirement planning and build CV quick? Is it Builder or Rapid Builder IUL? Or maybe the GIUL product?

You may want to work with an IMO such as Pinney Insurance...They can teach you all of this, and help you determine which product would be ideal...Reach out to them, as they are great and knowledgeable people

 

[smokin goose]

You may want to work with an IMO such as Pinney Insurance...They can teach you all of this, and help you determine which product would be ideal...Reach out to them, as they are great and knowledgeable people

What is their website?

 

[Mattschmidt]

What is their website?

Pinney Insurance Center, Inc.

Also, contact PicNic on this forum ( Nic West) He's always accessible to email as well.

 

[scagnt83]

Which product is suitable for retirement planning and build CV quick? Is it Builder or Rapid Builder IUL? Or maybe the GIUL product?

The Builder is better for long term growth. Rapid is best for short term growth.

Forget GIUL for CV growth.

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TwiLight,

I'm assuming you are using an IUL indexed to the SP500 based on your comment about the return. Over the past 30 years the stock market has average a pretty solid return, hence IUL has done very well. However, I would argue that today the stock market is overpriced by as much as 50% thanks to QE. If the market comes down to more normal levels over the next 10 years, the overall return will be 0-2% per year. IUL may do better, especially if we see a big plunge occur in 1 or 2 years and a steady climb the others, but it may not.

I would suggest a blended WL policy, which will allow the OP to dump a lot of cash into the policy quickly. The CV is guaranteed to grow every single year, even when the market is down. Sure the overall return might not be as high I. The long run, but I bet it will be over 10 years, at which point he could take a policy loan and invest some of the money into the stock market if the market is cheaper.

The IUL play isnt just about capturing higher returns (which is debatable).

An IUL/UL is able to be designed to be more efficient for accumulation/distribution by using GPT testing.