Best IUL 29 Yo Male, Preferred, Non-smoker, 100k/yr 15 Years
- Thread starter Bluefin646
- Start date
- 10,328
Im not sure if there is a book or not. Lots of carriers have info on their websites and illustration systems.
WL has expenses, they just arent disclosed like they are for UL. So it is impossible to compare the expenses between the two.
UL has a bad history with expenses eating up the policy because it was often sold incorrectly back in the 80s and 90s by agents who did not understand how to properly fund it. But a UL can be just as Guaranteed as a WL policy can be. It is all about how much premiums you pay in relation to the DB. A lot of agents did/do sell UL at Target Premium, which should never be done unless it is a GUL. Of course by pitching the lower premium it makes it an easier sell...
For a fully overfunded UL (meaning the lowest DB possible for that premium without creating a MEC), assuming it is a decent company, the COI will be 1%-2% or less of the CV in ages 80+. How does that compare to a WL?? Well no one really knows since WL does not disclose expenses...
Also, there are more costs than just COI, there is admin & premium load too. In the early years premium load is often way more than COI is. But it also trails off (or stops when premiums stop). Often admin reduces too. Then you just have the increasing COI. But the initial COI is super tiny on a UL, the cost is WAY less than if you bought a term policy (which it is often compared to).
But as you probably know, the WL uses a level COI. So technically you pay more up front and less on the back-end.
Most people think that the COI is the largest difference between the two products. But really it is the ability for UL to use a different "Testing Method".
The IRS allows 2 different "tests" to determine if a policies values pass as a life policy (this is different than MEC).
CVAT - Cash Value Accumulation Test
GPT - Guideline Premium Test
In reality the test is just an internal calculation which automatically adjusts either the Premium, CV, or DB, depending on which test is used.
WL always uses CVAT.
UL gives you the option to use CVAT or GPT. You also can choose to have a Level DB (opt 1) or an Increasing DB (opt 2).
WL always uses an increasing DB.
CVAT- When the CV gets too high in relation to the premiums paid & the DB, CVAT automatically increases the DB to keep it within the guidelines of a life policy.
GPT - When the CV gets too high in relation to the premiums paid & the DB, GPT automatically limits the amount of premiums you are able to contribute. But it leaves the DB alone.
Because CVAT automatically increases the DB as the CV grows, a higher COI must be used vs. a policy using GPT, since GPT does not increase the DB.
So assuming the UL is using an Increasing DB (opt 2) along with GPT; the UL only has 1 variable that increases the DB.
But a WL uses Opt 2 plus it uses CVAT; so it has 2 variables that increase the DB... thus creating a higher COI vs. a UL using GPT/Opt 2.
All of this is easily proved by playing with UL illustration software and looking at the expense report. When you use CVAT you will see a higher COI vs. using GPT (assuming you use the same DB option).
Basically you can set up a UL to act just like a WL by using CVAT/Opt2. The only difference is that you start with a small COI and build up to a larger COI. But if you fund the same DB with a similar premium as a WL you will see that the policy is usually guaranteed for life.... just like a WL...
Of course for CVAT, that internal "adjustment" of increasing the DB, is accomplished by diverting premium/earnings into the DB to increase it.
But with GPT, those premiums/earnings that would have been diverted just go to the CV and the normal/lower COI. That does not mean that the DB will not increase with GPT, even with a Level DB. The DB must increase eventually once the CV gets close to passing the DB (which obviously cant happen). But that increase is tiny and way down the line compared to CVAT increases.
Usually when maxing out a UL, you will switch to a level DB after you stop paying premiums. Once this happens often the CV will get extremely close to the DB. That is because GPT is not increasing the DB... it is limiting premiums... and since no premiums are being paid at that point, the only adjustment made is making sure the CV does not pass the DB. Sometimes it will end up being around 95%-99% of the DB in later years.
All of this is why UL is by far the most complicated life insurance product to sell. And why I always tell people that they need to learn how to run their own illustrations. Because 1; that is the best way to learn the product, and 2; that is the only way to truly know if the policy is designed correctly and max funded (if that is the goal).
Hopefully that all makes sense.
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Good product. Probably in the top 4 or 5 right now last I compared them. Allianz has a strong renewal history and the Caps/Spreads are nice on that product. I know that BNTRS has become a fan of them and he keeps up with the IUL world more than I do these days. He probably has a comparison on his blog The Insurance Pro Blog
Of course everything he knows about IUL he learned from me
jk
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- Thread starter
- #23
Bluefin646
Expert
- 41
Great post here, ty.
Wow scangnt83.... thank you very much for taking the time to write the post and illustrate us on the matter.
Now seeing that you are a person that knows his IUL. Can you tell me what are your favorite 5 IUL products out there and why?
I am very limited to the indexed products I have available here where I am from, hope to see at least one.
Thank you very much for the info!!
Clau
Now seeing that you are a person that knows his IUL. Can you tell me what are your favorite 5 IUL products out there and why?
I am very limited to the indexed products I have available here where I am from, hope to see at least one.
Thank you very much for the info!!
Clau
- 10,328
My favorites are from extremely well rated carriers, they have strong caps/spreads/etc., and they have favorable Loan options.
NA/Midland, LFG, Pac, Allianz, Penn, Axa are all strong products.
Check out the website I mentioned earlier, Brandon does comparisons each year. He keeps up more than I do these days. But Midland is what I sell these days unless there is a UW issue.
For those who are interested (specifically about cash value accumulation potential):
Best Indexed Universal Life Products
Best Indexed Universal Life Products
Please do not ask your favorite broker or a consultant for a comparison of plans --they will give you company produced numbers and unless you are able to compare mortality assumptions (companies lie) it is a waste.
The basic problem with IUL is two fold 1) --sales of IUL are high when the market has been strong when the market is weak the healthy bail out and go to UL or another product leaving less healthy and smaller pool
2) these are stock companies working for stock holders they spend little money on service-- focus more on new products than old--change favored plans constantly
and once they have your money and high surrender fees you v are cooked.
Buy a whole life from a strong mutual company NML MM Guardian they are very good investors in safe products and when interest returns go up you will get their return plus service is good
The basic problem with IUL is two fold 1) --sales of IUL are high when the market has been strong when the market is weak the healthy bail out and go to UL or another product leaving less healthy and smaller pool
2) these are stock companies working for stock holders they spend little money on service-- focus more on new products than old--change favored plans constantly
and once they have your money and high surrender fees you v are cooked.
Buy a whole life from a strong mutual company NML MM Guardian they are very good investors in safe products and when interest returns go up you will get their return plus service is good
- 11,277
How's that kool-aid?
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You need to watch Guy Baker explain "the Box" of permanent life insurance.
https://www.youtube.com/watch?v=7WUQYdpSbzE
Whole life is a fully bundled product... so the increasing costs don't have to be disclosed.
UL is an UNbundled product and interest sensitive... so the increasing costs ARE disclosed.
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You need to watch Guy Baker explain "the Box" of permanent life insurance.
https://www.youtube.com/watch?v=7WUQYdpSbzE
Whole life is a fully bundled product... so the increasing costs don't have to be disclosed.
UL is an UNbundled product and interest sensitive... so the increasing costs ARE disclosed.
Wow scangnt83.... thank you very much for taking the time to write the post and illustrate us on the matter.
Now seeing that you are a person that knows his IUL. Can you tell me what are your favorite 5 IUL products out there and why?
I am very limited to the indexed products I have available here where I am from, hope to see at least one.
Thank you very much for the info!!
Clau[/QU
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Do not sell iul it is a scam
- 11,277
Would you like to back up your BS comment and opinion with some kind of facts?
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