We all know IULs are a ripoff

[Markthebroker]

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.

Ok phoenixlord. This is a safe place, and we are all friends. How about you just show us on the picture of the agent below where the IUL hurt you.

 

[phoenixlord]

Ok phoenixlord. This is a safe place, and we are all friends. How about you just show us on the picture of the agent below where the IUL hurt you.

View attachment 6276

IULdidn't/doesn't hurt me. It is what it is. An exotic/bizarre insurance/investment product. In addition to the Index risk, my clients have to put up with cap risk, expense risk, participation risk and still there is insurance company going down risk. With all these risks, what is it that my clients are gaining?. Just a projection that it may outperform whole life. That's it, just a projection.

In addition to insurance, I am knowledgeable in the stock market, options market. I watched S&P move tick by tick for 20 years. It doesn't go up 10% every year. If it does, IUL would be the perfect investment. Instead, S&P goes up 20 or 25% 2 or 3 years and down or flat for few years. It is very important to capture those 20 or 25% gains in order to average 8% in a 30 year period but when they cap it in single digits, it is akin to robbing my poor clients.

For most clients, 10 to 30 year term is enough. for some who need life long coverage at a cheaper rate GUL is the right product and for some who need to access cash in later years tax free, whole life suits them. IUL is neither an insurance product nor an investment product. That's why I said it's an exotic investment (if you heard about exotic options like lookback options, barrier options etc).

IUL did not hurt me. It hurts me that other agents don't see any risk in IUL and are putting people who need insurance the most in it and what's more appalling is some agents are lying(and some not telling the truth). This is what is hurting me the most. In that picture you posted, I would say, it's the heart area.

 

[HoosierLife]

IULdidn't/doesn't hurt me. It is what it is. An exotic/bizarre insurance/investment product. In addition to the Index risk, my clients have to put up with cap risk, expense risk, participation risk and still there is insurance company going down risk. With all these risks, what is it that my clients are gaining?. Just a projection that it may outperform whole life. That's it, just a projection.

In addition to insurance, I am knowledgeable in the stock market, options market. I watched S&P move tick by tick for 20 years. It doesn't go up 10% every year. If it does, IUL would be the perfect investment. Instead, S&P goes up 20 or 25% 2 or 3 years and down or flat for few years. It is very important to capture those 20 or 25% gains in order to average 8% in a 30 year period but when they cap it in single digits, it is akin to robbing my poor clients.

For most clients, 10 to 30 year term is enough. for some who need life long coverage at a cheaper rate GUL is the right product and for some who need to access cash in later years tax free, whole life suits them. IUL is neither an insurance product nor an investment product. That's why I said it's an exotic investment (if you heard about exotic options like lookback options, barrier options etc).

IUL did not hurt me. It hurts me that other agents don't see any risk in IUL and are putting people who need insurance the most in it and what's more appalling is some agents are lying(and some not telling the truth). This is what is hurting me the most. In that picture you posted, I would say, it's the heart area.

Well see that was a very level and well articulated response.

If you had led with that, there wouldn’t have been as many responses though lol.

This is the reason I chose to invest my safe money in WL versus an IUL.

I also would recommend you read the book below.

Whole Life will grow a smaller nest egg, but because of its tax advantages it will have a greater ROR in retirement income stream.

Amazon product ASIN B0842YHBT6

 

[Allen Trent]

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.

I don't own IUL, but own a ton of term, WL, UL & SPWL. Total premiums exceeding 25k per year. But ihave no issue with IUL when used for no lapse protection or max funded for high net worth/income clients, especially business people that need the flexibility of premiums. Had some business clients owned such a product like max funded IUL or WL+PUAR instead of having all their money tied up in their business, they might be able to weather this current financial crisis. Many businesses will fail because of lack of liquidity & access to cash reserves to get through this crisis.

You mention IUL caps will be in single digits. That has already been the case for many index segments.

You also seem to misunderstand what controls those items, as you say the carrier controls all of it. However, much more of it is a function of the economy, treasury rates & bond rates that the carriers don't control at all & the cost of call options sold by the investment banks are driven by volatility, which again, is not controlled by the insurance carrier. Client controls the premiums & not taking all the cash out. The carrier controls the cost of insurance & fees, but as we have seen recently with UL, regulators do not allow carriers to merely raise COI costs if their mortality experience has not deteriorated.

IUL is one of the last products I would endorse if asked by a friend or family member, but there are some situations that warrant. like a friend that just put 125k into 500k no lapse IUL with 500k also available for CIA at 20k per month. 1 check from a CD that was making 1% taxable now guarantees to deliver 500k as either nursing home costs or death benefit. I didn't sell the policy, but I couldn't argue against what the product will do for this friend based on what he went into the marketplace looking for.

 

[Allen Trent]

IULdidn't/doesn't hurt me. It is what it is. An exotic/bizarre insurance/investment product. In addition to the Index risk, my clients have to put up with cap risk, expense risk, participation risk and still there is insurance company going down risk. With all these risks, what is it that my clients are gaining?. Just a projection that it may outperform whole life. That's it, just a projection.

In addition to insurance, I am knowledgeable in the stock market, options market. I watched S&P move tick by tick for 20 years. It doesn't go up 10% every year. If it does, IUL would be the perfect investment. Instead, S&P goes up 20 or 25% 2 or 3 years and down or flat for few years. It is very important to capture those 20 or 25% gains in order to average 8% in a 30 year period but when they cap it in single digits, it is akin to robbing my poor clients.

For most clients, 10 to 30 year term is enough. for some who need life long coverage at a cheaper rate GUL is the right product and for some who need to access cash in later years tax free, whole life suits them. IUL is neither an insurance product nor an investment product. That's why I said it's an exotic investment (if you heard about exotic options like lookback options, barrier options etc).

IUL did not hurt me. It hurts me that other agents don't see any risk in IUL and are putting people who need insurance the most in it and what's more appalling is some agents are lying(and some not telling the truth). This is what is hurting me the most. In that picture you posted, I would say, it's the heart area.

Now you are making more sense that some agents are ignorant or crooked & I do believe IUL & even VUL plays to that more than most products.

Are you as hurt in the heart about the high cost of fund fees or VA over the last 20 years? Does your heart hurt for all the people paying $400 to 800 per month in car payments. Again, I don't personally own or sell IUL, but I think the average American would fare better I'm an IUL than car payments, up-sized houses, restaurant food, Starbucks, etc

I don't agree with any life plans being sold instead of saving in other plans. I believe people should be putting 10% in investments or maxing qualified plans before seeking out max funded permanent life plans.

 

[phoenixlord]

You also seem to misunderstand what controls those items, as you say the carrier controls all of it. However, much more of it is a function of the economy, treasury rates & bond rates that the carriers don't control at all & the cost of call options sold by the investment banks are driven by volatility, which again, is not controlled by the insurance carrier. Client controls the premiums & not taking all the cash out. The carrier controls the cost of insurance & fees, but as we have seen recently with UL, regulators do not allow carriers to merely raise COI costs if their mortality experience has not deteriorated.

I am very sorry but this sounds again like sales pitch throwing big words around to impress the client. VIX or volatility index aka fear gauge was in single digits during 2015 to 2020(before the crash) when the S&P was climbing. I watched every day and options in the market were cheap. Insurance companies buy options privately and get even better prices. But this was the same time, they started lowering the cap rates and this is a fact. Can you explain why?

I am just not comfortable with the sentence in the IUL contract which says caps can be reduced to 1% anytime, participation rate can be reduced to 10% and max expenses column can show policy lapsing even when the illustrated premium is paid on time. Why have so much leverage at their disposal? Would you enter a business deal like that even with a friend? When the push comes to shove, your clients hand will be tied and they will watch helplessly as the policy slowly bleeds. I have seen this happen.

 

[phoenixlord]

Are you as hurt in the heart about the high cost of fund fees or VA over the last 20 years? Does your heart hurt for all the people paying $400 to 800 per month in car payments. Again, I don't personally own or sell IUL, but I think the average American would fare better I'm an IUL than car payments, up-sized houses, restaurant food, Starbucks, etc

Now this hurts me even more. If they delay gratification and sacrifice buying cars, houses and want to invest, then I would never put them in an IUL. Because here they get nothing, atleast let them enjoy their cars, houses. IULs are for people who have nice cars, houses and have money left over after funding 401k, ira, WL first.

 

[Allen Trent]

Can you explain why?

Where do they get the money to buy the options? From the returns on their general funds. If they have a 100k CV & have to guarantee 100k is still in it 12 months from now & they are making 5% on their bond/treasury/mortgage portfolio, they need to leave 95k in to get back to 100k I'm 12 months. If their returns on their portfolio drop to 4% due to treasuries & other interest rates dropping, they need to leave 96k to get back to 100k. That means they only have 4k to buy options compared to the year before. Even if options are selling for the same price as the prior year, they can't buy as high of a par or cap rate due to the return on their general account funds.

 

[fed up]

If you don't like IUL's don't recommend them, don't sell them, and move on already. I don't like VOYA investments, won't recommend them, won't sell them. I like Universal Life, I like big dogs, fast cars, and pretty women. I also won't fill 7 pages of postings disparaging other agents

 

[Tahoe Ray]

I am very sorry but this sounds again like sales pitch throwing big words around to impress the client. VIX or volatility index aka fear gauge was in single digits during 2015 to 2020(before the crash) when the S&P was climbing.

Now you're just blatantly making things up.

2017 was the only year where the VIX was in single digits.