Indexing Vs. Direct Investing (Calculator)

You don't have NEARLY enough disclosures on there to help interpret the calculations.

First, unless you're explicitly showing a SPIUL, this is the wrong way to show this. IUL is (generally) a multi-year calculation.

Second, unless you're varying the caps &/or participation rates according to interest rates, this is still going to be misleading according to the past performance compared to the S&P 500.

Third, the S&P 500 generally includes dividends, and indexing does not.

You've got a lot of work to do, if you want to make this remotely compliant.
 
hi dhk, i've seen your posts on a number of topics and i know you know your life policies. i wasn't able to send you a private message but i have a question about working backwards from a guarantee of 3% on an IUL to keep the policy in-force. for some reason i can't wrap my head around how to do this and i do understand there's a number of variables involved. but without simply "playing" with the premiums is there a way to do what im asking in a rough way?
 
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Thank you for the compliment, but I must admit that my knowledge of IUL primarily comes from Scagnt83. If you search his posts, he'll tell you how he structures IUL to help ensure that it will remain in-force using moderate interest rate assumptions, switching from increasing to level DB, etc.
 
hi dhk, i've seen your posts on a number of topics and i know you know your life policies. i wasn't able to send you a private message but i have a question about working backwards from a guarantee of 3% on an IUL to keep the policy in-force. for some reason i can't wrap my head around how to do this and i do understand there's a number of variables involved. but without simply "playing" with the premiums is there a way to do what im asking in a rough way?

Not sure exactly what you are trying to accomplish. If you are trying to find out what rate will keep it from lasping, just run it at max funded premium and adjust the rate until you get what you want. If you are trying to figure out something else, please explain. And yes, SC is the iul guru. :yes:
 
Thank you for the compliment, but I must admit that my knowledge of IUL primarily comes from Scagnt83. If you search his posts, he'll tell you how he structures IUL to help ensure that it will remain in-force using moderate interest rate assumptions, switching from increasing to level DB, etc.

i know these things already, thanks!

Not sure exactly what you are trying to accomplish. If you are trying to find out what rate will keep it from lasping, just run it at max funded premium and adjust the rate until you get what you want. If you are trying to figure out something else, please explain. And yes, SC is the iul guru. :yes:

yes this is more what i mean about max funding but how is that figure determined? how can i determine if i'm funding at the highest premium still maintaining non-mec? btw i prefer NA's IUL if you're curious what product and carrier engine i am using.

and while we're discussing IUL illustration i'd like to know this across the board with any permanent policy at given guaranteed rate. i.e. how much premium is required at the guaranteed rate in order to keep the policy from lapsing. i guess this will vary based on policy and admin fees from carriers but there's got to be a way to work the numbers backwards if that makes sense. maybe i am just a nut case ;p
 
You don't have NEARLY enough disclosures on there to help interpret the calculations.

First, unless you're explicitly showing a SPIUL, this is the wrong way to show this. IUL is (generally) a multi-year calculation.

Second, unless you're varying the caps &/or participation rates according to interest rates, this is still going to be misleading according to the past performance compared to the S&P 500.

Third, the S&P 500 generally includes dividends, and indexing does not.

You've got a lot of work to do, if you want to make this remotely compliant.

I know it's over simplified and I didn't feel like working on it too long. Took me about 3 hours to whip up.

In illustrations though I don't see any variation in participation and interest(except with LSW) - I guess not all of them show this variation

Basically just trying to get the concept of indexing across to some folks.

Open to guidance on how to make it better but not sure I want to spend a bunch of time on it.

Thanks for feedback DHK!

Atticus
 
i know these things already, thanks!



yes this is more what i mean about max funding but how is that figure determined? how can i determine if i'm funding at the highest premium still maintaining non-mec? btw i prefer NA's IUL if you're curious what product and carrier engine i am using.

and while we're discussing IUL illustration i'd like to know this across the board with any permanent policy at given guaranteed rate. i.e. how much premium is required at the guaranteed rate in order to keep the policy from lapsing. i guess this will vary based on policy and admin fees from carriers but there's got to be a way to work the numbers backwards if that makes sense. maybe i am just a nut case ;p

Problem is, you are only taking a snapshot in time. If you run it at maximum cash / min db (non-mec) and then adjust the rate until you are just above where it lapses you will see where it is TODAY. Assuming no changes in anything on the company side over the next 20-30-40 years, and the client funds at the illustrated premium - you will be fine. Bottom line with IUL, there are no true guarantees, but historically... if funded properly, even if the rates turn out lower...it should likely work out fine. If they adjust down the funding, who knows. That is why I like WL better personally. Not so much the product, but the client behavior is what can cause IUL to fail.
 
Problem is, you are only taking a snapshot in time. If you run it at maximum cash / min db (non-mec) and then adjust the rate until you are just above where it lapses you will see where it is TODAY. Assuming no changes in anything on the company side over the next 20-30-40 years, and the client funds at the illustrated premium - you will be fine. Bottom line with IUL, there are no true guarantees, but historically... if funded properly, even if the rates turn out lower...it should likely work out fine. If they adjust down the funding, who knows. That is why I like WL better personally. Not so much the product, but the client behavior is what can cause IUL to fail.

good insight, thanks!
 
Hey guys

I whipped up this IUL calculator that shows the power of indexing. I picked 3 different indices (S&P 500, Dow Jones real estate, Gold) and use actual company indexing strategies. Happy to add more. Shows the power of caps and floors.

MGB Insurance Services LLC

No branding or links on there (for now)

Atticus

Do you have some that takes into account the cost of insurance, management fees for IUL's, etc, etc.
 
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