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Reply to I'm Enrolling Myself in an IUL...     
Old 05-10-2011, 10:13 AM   #31
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I'm Enrolling Myself in an IUL... Re: I'm Enrolling Myself in an IUL...
Originally Posted by Larry Tew View Post
How does IUL work if your client wants access to the CV throughout the life of the policy?

"Joe, this IUL will receive the better of the index-based interest calculation or the guarantees... as long as you don't use the CV."

That isn't the conversation I want to have.
I'm not aware of an IUL policy that would change the interest rate based on loans from CV taken... what carrier are you referring to? (and don't use them!)
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Old 05-10-2011, 10:16 AM   #32
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I'm Enrolling Myself in an IUL... Re: I'm Enrolling Myself in an IUL...
Originally Posted by Larry Tew View Post
How does IUL work if your client wants access to the CV throughout the life of the policy?

"Joe, this IUL will receive the better of the index-based interest calculation or the guarantees... as long as you don't use the CV."

That isn't the conversation I want to have.

Thats not how it works at all.


First, I would never have 100% of the funds allocated to the indexed bucket. (not that it would have any bearing on your statement)

80% is as high as I will go, usually I do 70%-75%.

So there is always $ in the fixed bucket.

When you take $; it comes from the fixed bucket. Taking a distribution has no effect on what any of the crediting rates or caps are (fixed or indexed); nor does it affect the internal costs associated with the policy.

Taking a loan/withdrawal affects it no differently than taking one with a WL would.


Why would you think using the CV would make it default to guarantees???? That makes no sense.... does WL do this? Does traditional UL do this?

I dont understand why you would think this.... have you ever read an IUL contract or illustration?
(im not being an ass, but its the best way to educate yourself on the product, I would be happy to email you one to review)


Penn even uses NDR for their loans.... so this is the conversations Larry:

"Joe, this IUL will receive the better of the indexed calculations or the guaranteed rate. If you take any loans, the loaned amount will still be credited with whatever the interest crediting rate is. The loan will not affect the internal expenses, the indexed calculations, the guarantees, or the fixed account rate."



I think you try to overcomplicated these Larry. Its nothing more than a Traditional UL that determines the credited interest rate in a different manner; everything else works the same.
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Last edited by scagnt83; 05-10-2011 at 10:20 AM.
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Old 05-10-2011, 10:35 AM   #33
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I'm Enrolling Myself in an IUL... Re: I'm Enrolling Myself in an IUL...
Originally Posted by scagnt83 View Post
...Why would you think using the CV would make it default to guarantees???? That makes no sense.... does WL do this? Does traditional UL do this?

I dont understand why you would think this.... have you ever read an IUL contract or illustration?
(im not being an ass, but its the best way to educate yourself on the product, I would be happy to email you one to review)


Penn even uses NDR for their loans.... so this is the conversations Larry:

"Joe, this IUL will receive the better of the indexed calculations or the guaranteed rate. If you take any loans, the loaned amount will still be credited with whatever the interest crediting rate is. The loan will not affect the internal expenses, the indexed calculations, the guarantees, or the fixed account rate."



I think you try to overcomplicated these Larry. Its nothing more than a Traditional UL that determines the credited interest rate in a different manner; everything else works the same.
We were doing good until we got to where I quoted. I don't know how they work, I've never read an IUL contract, nor am I trying to complicate anything. I understand with the wise-cracking that may go on in some of the threads, it's easy to assume that anyone who asks a question is really trying to flame your point of view. But in this case, a question really is just a question. My line of reasoning is due to how withdrawals from FIAs prior to the end of the term affect the index rate / gtd rate.

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Last edited by Larry Tew; 05-10-2011 at 04:16 PM.
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Old 05-10-2011, 10:55 AM   #34
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I'm Enrolling Myself in an IUL... Re: I'm Enrolling Myself in an IUL...
Originally Posted by Larry Tew View Post
My line of reasoning is due to how withdrawals from FIAs prior to the end of the term affect the index rate / gtd rate.

Ah, I follow you.

So you are saying that if $ is taken from indexed bucket #1 (yearly p2p), on month 11 of a 12 month indexing term, will the $ taken out be credited the indexed gains for those 11 months or will it just get the guaranteed rate?

Correct?


This is why I made a point to say that loans/withdrawals are taken out of the fixed bucket, not the indexed; so this is a non-issue.
The fixed account credits fixed interest on a monthly basis (on policies I sell, I cant speak for all policies).
Most policies actually put the premiums in this account until the quarterly allocation date; so your $ is earning whatever the current fixed rate is for the policy.

Of course you do have to make sure you have $ in the fixed bucket; but this is where proper structuring of the policy comes in.

Also, most products allocate premiums on a quarterly basis; meaning that a new indexed term starts each quarter (Penn has an option to do it on a monthly basis, so each month of new premium starts a new indexed term)


But yes, if $ is taken from an indexed segment, the potential gains are forfeited; but the policy will only take $ from the indexed segments when the fixed account is exhausted, and you can set it up to have $ go into the fixed account at set intervals... so with proper planning its a non-issue.
Attached Files
File Type: pdf IUL.understanding.illustration.pdf (38.9 KB, 51 views)
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Last edited by scagnt83; 05-10-2011 at 11:02 AM.
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Old 05-10-2011, 03:04 PM   #35
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I'm Enrolling Myself in an IUL... Re: I'm Enrolling Myself in an IUL...
Originally Posted by Larry Tew View Post
How does IUL work if your client wants access to the CV throughout the life of the policy?

"Joe, this IUL will receive the better of the index-based interest calculation or the guarantees... as long as you don't use the CV."

That isn't the conversation I want to have.
Depends on the product but here is how mine works. I can access my money either via withdrawals, guaranteed zero cost loans (if I'm dipping into gains) or via variable rate loans where my money stays in the index and I pay a market rate of interest (between 4-10% based on the Moody mid term bond index rate).

I'm not a big fan of the variable rate loan because to me it's nothing more than a margin loan against my cash values. I probably wouldn't do that personally and I don't think most of my clients would do that either but it is an option that I might choose in the future if my investment view plays out.

I have no problems telling my clients that they can get their money today, tomorrow or 30 years down the road with no charges, fees or interest. That is a conversation I enjoy having because no one else is having it with them or will have it with them.

As for IUL not performing like fixed products.?? Really??

What fixed products have earned over 7% in the last decade or done more than 8% over the past 5 yrs or 15% the past 2 years?

Now the past decade has also been the worst in the markets history yet my clients and I have earned returns higher than fixed and much higher than registered products.

What are those fixed products going to look like in the next 10 yrs with our prolonged low rates, terrible real estate market? Will the mutual companies all be out of the reserves they use to artificially boost dividends so they can still sell policies? I think that's highly likely.

And how will your clients reallocate in a fixed product when they realize that the Fed will not allow interest rates to rise and their paltry returns on fixed assets never increases but prices of goods and the stock market do? How do they get out with those surrender charges and front loads they paid?? Do you have to keep them in an under performing product because you had to make a bigger commission?

Now that's a conversation I don't want to have!

IUL is the perfect product for the Ben Bernenke world. He'll print the stock market higher and force bond rates to remain extremely low by being the only real buyer of debt because if rates go up the housing problem is even worse and if housing is worse then the banks are even more bankrupt and that won't be able to be hidden any longer.

He has only one tool he can use and that's the printing press and that means low rates and higher indexes, much, much higher. JMHO as someone with over 25yrs in insurance, investments and a high level degree in economics from a major econ school.
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Old 05-16-2011, 10:28 AM   #36
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I'm Enrolling Myself in an IUL... Re: I'm Enrolling Myself in an IUL...
The top IUL's for 20 year Net Cash Value accumulation and IRR (based on actual gains and expenses) were 1) North American Life, 2) Minnesota Life 3) Midland National Life 4) Allianz 5) Old Mutual (now F&G).... Surprised, well maybe not that surprised---that AVIVA was not in the top 10,,, they just have the best marketing I guess!

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Old 05-17-2011, 01:32 PM   #37
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I'm Enrolling Myself in an IUL... Re: I'm Enrolling Myself in an IUL...
Doesn't surprise me other than NACOLAH being different than Midland. From what I've looked at MNL has slightly better values. Do you know which products as Midland has 3 IULs. Not sure about NACOLAH although I have a contract with them.
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Old 05-17-2011, 02:21 PM   #38
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I'm Enrolling Myself in an IUL... Re: I'm Enrolling Myself in an IUL...
Midland National's Cash Value 3 (XL-CV3) placed 7th in the rankings, with North American's Builder IUL product leading the pack... we don't even offer the bulk of the "also rans".... as Minn Life, NA, suit most of my agents' needs for safety and best CV growth rate... Allianz is OK but they have a "deal killer" crediting policy.... wouldn't sell them!
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Old 05-17-2011, 02:48 PM   #39
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I'm Enrolling Myself in an IUL... Re: I'm Enrolling Myself in an IUL...
I have Pac Life on my two sons, and I wrote a North American IUL for my daughter.

Many of them have way too many crediting strategies, so I pick a simple point to point, a mix of 5 year (no cap) and 1 year on the Pac Life and one year on the North American.

I like the built-in chronic care rider with the NA.

The main thing I focus on is costs during the first 10-15 years or so. No way to know how the interest is going to end up, so the real differentiator is costs, in my mind.
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Old 05-17-2011, 04:34 PM   #40
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I'm Enrolling Myself in an IUL... Re: I'm Enrolling Myself in an IUL...
Originally Posted by dlvhi View Post
I have Pac Life on my two sons, and I wrote a North American IUL for my daughter.

Many of them have way too many crediting strategies, so I pick a simple point to point, a mix of 5 year (no cap) and 1 year on the Pac Life and one year on the North American.

I like the built-in chronic care rider with the NA.

The main thing I focus on is costs during the first 10-15 years or so. No way to know how the interest is going to end up, so the real differentiator is costs, in my mind.
are you using an increasing DB to maximize your cash value in the early years of the policies? just curious!
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