IUL for a 71 Year Old?

[term2u]

I would also concur with scagnt83's assessment.

My *guess* would be that perhaps this was the only single premium life product that they had to sell, so that's why they sold it? AIG did just recently divest of their agent field force, so perhaps that was the reason for that recommendation?

Thanks for the input, guys! I was going to look into whether it would make sense to surrender this policy and put him into a SPGUL, guaranteed to age 121.

The problem is, is that he'll lose the roughly $3k in surrender charges.. Definitely a bummer, but the client is coming to me looking for a continuous pay GUL, so that's what makes it a tough call.

 

[pfg1]

Thanks for the input, guys! I was going to look into whether it would make sense to surrender this policy and put him into a SPGUL, guaranteed to age 121.

The problem is, is that he'll lose the roughly $3k in surrender charges.. Definitely a bummer, but the client is coming to me looking for a continuous pay GUL, so that's what makes it a tough call.

Losing $3k now is better than potentially all of it later if he outlives it. Of course you don't have a crystal ball so no way to know for sure. I would explain the differences between the guaranteed product and what he has...and ultimately decides is up to them.

 

[term2u]

Losing $3k now is better than potentially all of it later if he outlives it. Of course you don't have a crystal ball so no way to know for sure. I would explain the differences between the guaranteed product and what he has...and ultimately decides is up to them.

Yeah, I agree and thanks for the input.

After looking over he illustration, it looks like he'll lose almost $10k if he surrenders it now. I actually just spoke with the client today and he confirmed that he's more interested in permanent DB and doesn't need the cash, so this is not the policy that they were intending to purchase.. Pretty sad, as the previous agent doesn't seem to know what she was doing...

Anyone else care to elaborate on the probability to this thing actually carrying to age 100?

 

[DHK]

The probability for the current policy really ends up being an economic discussion regarding the underlying index in question.

Are you bullish on the S&P 500 for the next few years?

Are your CLIENTS bullish on the S&P 500 for the next few years? Or would they rather have a strategy that would work REGARDLESS of S&P 500 index performance?

 

[AndrewRoche]

Hi Term2U

I think you can tell by the back and forth in this post that there is significant disagreement on using a SPIUL or IUL for certain ages or underwriting classifications. That said, I think you were correct in wondering why anyone would sell this type of product to your particular client.

Because of the cost of insurance for a standard 71-year-old, I don't think there is any product out there that can generate significant cash value and the needed death benefit.

For cash value accumulation, DHK suggests using a SPWL and SCAGNT83 suggests using SPIUL. Everyone knows that maybe possible for younger ages with a lower COI, but they seem to think it can be done for older standard risks. Who knows? It would be great if they could post illustrations showing what companies can do this. With this information, the readers of insurance forum could learn something and possibly make some new sales!

In my opinion you either have a product like the AXA Bright Life (age 87-$56K) or the Lincoln Accumulator (age 90-63K. Both will get you the $105k death benefit and in both cases the cash accumulation is minimal.

Is there a particular reason why the insured wants to do a single pay? I ask this just based upon mortality. A GUL is about $325 a month. The 50k will take him out 16 years. Why not pay monthly or yearly and possibly give more to the heirs?

Long story short, AXA or Lincoln are better than the AIG and I would recommend monthly or yearly on the GUL but all this will probably change when DHK and SCAGNT83 send us the illustrations on their products. Also, no one knows how an IUL will perform so don't sweat the AIG policy. Maybe it will perform better than every other product.

Final note. Only the sophisticated client should consider an IUL. Even the home office personnel do not understand that 28-page illustration! These products are the exact opposite of how people think of life insurance. Instead of being affordable, certain and without risk they are expensive, complex and volatile.

Hope everything works out well for you and your client and I’m looking forward to seeing the new illustrations!

 

[scagnt83]

For cash value accumulation, DHK suggests using a SPWL and SCAGNT83 suggests using SPIUL. Everyone knows that maybe possible for younger ages with a lower COI, but they seem to think it can be done for older standard risks. Who knows? It would be great if they could post illustrations showing what companies can do this. With this information, the readers of insurance forum could learn something and possibly make some new sales!

First, I never said that HIS client should do that. Only that it is possible to do at age 71.

As I suggested in my original post.... why dont YOU run some illustrations and find out for yourself. Thats how I know it is possible. If it is not possible then you could easily prove me wrong by posting your own illustrations.

Now the biggest question for the OPs client is what DB does he actually need? Everything else is irrelevant until we know what the exact need and goals are. But since the OP has now said that the client does not have an interest in CV gains, then obviously an IUL is NOT the right product.... perhaps a GIUL but still unlikely.
They should be in GUL or WL. But even that is irrelevant since they are going to incur surrender charges at this point and it would likely be hard to get the 1035 past suitability.

If he is worried about a lapse, at this point it is most likely best to just bite the bullet and pay a little bit more per month. I would have to look at the illustration again as well as the inforce to really see if there is a way to possibly unwind it if he wanted to. But it wouldnt be easy and likely wouldnt be worth the effort and he would still probably lose a bit of principle.

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In my opinion you either have a product like the AXA Bright Life (age 87-$56K) or the Lincoln Accumulator (age 90-63K. Both will get you the $105k death benefit and in both cases the cash accumulation is minimal.

Are you saying that one of those two products are what you think he should be in? Just a different IUL than AIG??

 

[AndrewRoche]

Concerning both your questions.... I did run illustrations. That's why I said that Lincoln and AXA perform better on paper better than AIG. The cash value amounts are listed in the posts. Please review the post.

Obviously I don't think the client should be in any of the products mentioned and I'm confident you understand that, but you requested that I run illustrations and your wish is my command. It's a simple concept. The COI is too expensive for individuals that age. You cannot get the death benefit protection OR the cash value to make it a wise investment. Are we agreed that even to consider an IUL for someone that age you have to do a ten pay max till MEC funding? Have you run actual historical and average returns on someone that age?

Prove me wrong and send an example of a 71 male investing in an IUL or SPIUL and getting in your words "significant cash value" Please. please let me know of this magical product that seniors can invest in that grows their money and is still considered an insurance product.

Now you know exactly what I think about IUL and SPIUL being sold to seniors. Please prove me wrong.

 

[scagnt83]

Concerning both your questions.... I did run illustrations. That's why I said that Lincoln and AXA perform better on paper better than AIG. The cash value amounts are listed in the posts. Please review the post.

You misunderstand my request. What specifics did you use to get those figures?

I assume that you are using a $50k single premium.... but are you using Opt1 or 2? GPT or CVAT? Riders?

 

[AndrewRoche]

$50k One Pay
Option A
GPT
NLG Rider

 

[scagnt83]

$50k One Pay
Option A
GPT
NLG Rider

Ok. Here is the thing. If the client wants just DB then he need a SPGUL.

If he wants to max out CV then the DB needs to be essentially the same as the Premium.

Also, CVAT is usually best to use when maxing out the CV on a Single Premium policy. It allows you to minimize the DB compared to GPT. This is because GPT limits you to the Guideline Single Premium amount, which is lower than what the Max is under CVAT usually. Often CVAT is best for large 1035s for the same reason.


Anyway, here is the proof for you:
Age 71
Male
Standard Non-Smoker
Opt 1 / CVAT
$100k Premium
$100k DB
6.5% Credited Rate (which gives a 3.8%-4.5% RoR)

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And the COI is less than 2% of the CV.

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And the policy does not lapse even as low as a 3.5% Index Credited Rate.