Paying the Index Return Myself, if Not Met

If he is recommending a policy that will lapse if the index does not hit 6.3% each year then he is not a knowledgeable agent at all... he is the exact opposite of a knowledgeable agent when it comes to IUL.

A UL policy (including IUL) is also called a "flexible premium universal life insurance policy". You can pay whatever premium you want to. There is no "set" premium that you must pay. You can pay the same premium and drop the DB down to the MEC limit. Dropping the DB does not effect the premium.

You could not pay me enough to sell a policy that would lapse if it did not get 6.3% per year. That is a disaster waiting to happen and no single client is worth an E&O claim. Find an agent that knows what they are doing.

If DB is your main concern then layer a term policy on top of a max funded IUL. Or choose an IUL that offers a term rider. If CV is your main goal then you need to figure out what premium you can afford and drop the DB down to the MEC limit.

Either way I suggest finding a new agent who knows what they are doing. if they proposed that policy to you then they do not know what they are doing when it comes to IUL. That policy is not anywhere close to being properly designed.
Is this guy a friend or relative?

Neither! just someone I looked up who is in our city. Do you deal with North American policies? could you help me?
 
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scagent83 is very knowledgeable on NA policies, and IUL in general. Listen to his advice.
 
My illustration shows that as long as S&P performs 6.3% every year, my policy will last to my age 121 and I can have a good retirement income.

My Question: If S&P does not perform 6.3% in any year, Can I contribute that amount in addition to the premium so that everything works as per the illustration?

Or it does not count if I pay? only the index performance will count?

Thanks

What I haven't seen anyone ask yet is, are you funding a retirement plan (i.e. - a 401k, IRA, etc.)? If your primary goal here is to have money in retirement, I am of the mindset that a life insurance policy shouldn't be the primary place to fund retirement. It should be used after you have taken advantage of other tax friendly investments. If you have extra monies at that point then an IUL could be a good fit. But as others have said, only if you are max funding it.

And I agree with scagent, if your current policy requires a 6.3% annual rate of return to stay in force for life, then you aren't funding it enough and/or your death benefit is too high. The scary thing here is if this agent has set yours up this way, then he has set others up the same way. These are disasters waiting to happen. And they'll happen when people are much older and no longer have the funds to keep the policy in force.
 
You can pay the same premium and drop the DB down to the MEC limit. Dropping the DB does not effect the premium.

He said if I drop the DB now, I will have to pay the surrender fee which is pretty much like starting over. Is this true?
 
Any IUL have surrender penalties. How many years have you been with the policy? All the companies that offer Indexed Universal Life have different surrender periods. Look into your policy and you will find the information.
 
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