Top IULs
- Thread starter heynow5
- Start date
- 11,266
I picked 3 policies that are with the same company (ANICO). It's rather rare to find the same company that offers both IUL and WL. By doing this, I'm trying to eliminate "company bias" and show that it's about the individual agent (me), not the company.
It's too easy to say something like "XYZ is the only company that does it right"... when it's not about the company at all.
You can do it in any way you want. If you prefer a WL and you've got a good company, you can show a properly funded WL, and a target premium (or min funded) IUL and a term. It doesn't matter, as long as you show how YOU structure your favorite policy and how amateurs often try to structure their policies.
It's not just about amateurs, but about debunking the financial entertainers such as Suze or Dave or anyone else that seems to have a financial cult following.
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ANICO's WL policy is just weird. They allow you to "over-fund"... but only for 15 years. Then the rider ends. Plus, the non-guaranteed performance is just abysmal right now. I think it's illustrating only a 2% return? It's barely anything over the guaranteed columns.
It's too easy to say something like "XYZ is the only company that does it right"... when it's not about the company at all.
You can do it in any way you want. If you prefer a WL and you've got a good company, you can show a properly funded WL, and a target premium (or min funded) IUL and a term. It doesn't matter, as long as you show how YOU structure your favorite policy and how amateurs often try to structure their policies.
It's not just about amateurs, but about debunking the financial entertainers such as Suze or Dave or anyone else that seems to have a financial cult following.
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ANICO's WL policy is just weird. They allow you to "over-fund"... but only for 15 years. Then the rider ends. Plus, the non-guaranteed performance is just abysmal right now. I think it's illustrating only a 2% return? It's barely anything over the guaranteed columns.
William3
New Member
DHK, what you say “...the non-guaranteed performance is just abysmal right now. I think it's illustrating only a 2% return? It's barely anything over the guaranteed columns…”
I wonder, is Alico’s policy unique in that regard? I’d very much like to see some IUL performance actuals going back to, say, 2000. Or back at least to 2005 or to whenever these IULs really started to take off. I noticed on your PDF, you illustrated at 6.5%, which is lower than the 8%--12% I’ve been hearing about. But even 6.5%, how close to the norm return is that?
I wonder, is Alico’s policy unique in that regard? I’d very much like to see some IUL performance actuals going back to, say, 2000. Or back at least to 2005 or to whenever these IULs really started to take off. I noticed on your PDF, you illustrated at 6.5%, which is lower than the 8%--12% I’ve been hearing about. But even 6.5%, how close to the norm return is that?
- 11,266
ANICO's WL is unique, but not in a good way in this regard. If you wanted to sell WL, I'd recommend it from a different mutual company - Ohio National. Guardian, MassMutual, even Assurity Life. These tend to average 4-5% in real returns.
Also, don't believe blindly that 7% dividends are 7% rates of return. A dividend is from the company surplus being divided to policyholders and doesn't equate to a 7% rate of return on the policy.
I don't often reference Roccy DeFrancesco's website, but he did a calculation comparison of real whole life returns and compared them to IUL. IUL has better opportunities for growth, but it simply isn't guaranteed.
The Wealth Preservation Institute | Whole Life IRR 20-Year History (the shocking numbers)
As far as asking about a "norm return" on an IUL... it doesn't exist.
What?
Caps can and do change over time, often on a year-to-year basis. IUL is a concept sale, and not one where you can really do ethical back-testing, unless you can figure out an exact way that caps are determined by your specific company.
Plus, it's based on which MONTH you started the segment. If you're paying annually, it's a lot easier to track your performance rather than paying monthly. Each payment starts a new index segment to determine how much interest that MAY be credited, depending on the index performance.
If you want stronger guarantees of interest payments and a history of performance, I'd stick to a quality whole life company. Fixed premiums, fixed death benefit, fixed interest rates... and only a varying dividend that is not guaranteed from year to year.
But if you can embrace the concept sale of IUL, you can do very well for your clients. The thing about IUL is that it has flexible premiums, flexible death benefits, and non-guaranteed interest year to year. It must be managed with the agent over time to optimize it for someone's total picture.
Also, don't believe blindly that 7% dividends are 7% rates of return. A dividend is from the company surplus being divided to policyholders and doesn't equate to a 7% rate of return on the policy.
I don't often reference Roccy DeFrancesco's website, but he did a calculation comparison of real whole life returns and compared them to IUL. IUL has better opportunities for growth, but it simply isn't guaranteed.
The Wealth Preservation Institute | Whole Life IRR 20-Year History (the shocking numbers)
As far as asking about a "norm return" on an IUL... it doesn't exist.
What?
Caps can and do change over time, often on a year-to-year basis. IUL is a concept sale, and not one where you can really do ethical back-testing, unless you can figure out an exact way that caps are determined by your specific company.
Plus, it's based on which MONTH you started the segment. If you're paying annually, it's a lot easier to track your performance rather than paying monthly. Each payment starts a new index segment to determine how much interest that MAY be credited, depending on the index performance.
If you want stronger guarantees of interest payments and a history of performance, I'd stick to a quality whole life company. Fixed premiums, fixed death benefit, fixed interest rates... and only a varying dividend that is not guaranteed from year to year.
But if you can embrace the concept sale of IUL, you can do very well for your clients. The thing about IUL is that it has flexible premiums, flexible death benefits, and non-guaranteed interest year to year. It must be managed with the agent over time to optimize it for someone's total picture.
William3
New Member
“IUL is a concept sale”--love it! DHK, taking the 30 kilofoot view as this newbie can only do, IULs strike me as a fair bit of genius :-) Given they have so much flexibility, so many moving parts, and the usual less than total transparency from the providers, you’re hard put to nail down actual past performance. Could even be impossible. Meanwhile, seems like IUL index accts don’t necessarily have to track indexes. Dunno about other IULs, but with the Transamerica FFIUL, you don’t even get a % participation commitment to the indexes. This all reminds me of a remarkably frank quote I recently read in Financial Times from Aegon CEO Alex Wynaendts, "...life assurers had boosted profit margins by selling complex products..." Meanwhile, early ULs (from the ‘80s) getting some challenging press in WSJ, Forbes, etc. for soaring premiums causing holders to drop them. Just last month here in Calif, the class-action Feller vs Transamerica was launched. How much do the early UL probs stem from issuance in the super high interest period of the 80s? How much is endemic to the UL structure? How much of got fixed in the IULs which, IIRC, really got going only mid last decade so still too early to see if any late-cycle blowups? Maybe I’ll be selling Term/GUL/WL longer than I expected. Till the IUL stuff shakes out more.
- 11,266
In contrast with the 80's with high interest assumptions... we're talking about MAXIMUM funding a contract up to the MEC guidelines. Maximum premium, minimum death benefit.
In the 80's, UL was sold as "I can get you a whole life policy for half the price." This was a minimally funded policy with high interest rate assumptions. When interest rates decreased, these policies needed more premium to keep them afloat.
It's all in the policy structure AND expectations set with the client.
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It took me a while too to get my mind wrapped around IUL properly. Just keep your mind open to realize that there is a market for every legitimate product. Until you can see the right market and the right way to sell it... don't sell it.
In the 80's, UL was sold as "I can get you a whole life policy for half the price." This was a minimally funded policy with high interest rate assumptions. When interest rates decreased, these policies needed more premium to keep them afloat.
It's all in the policy structure AND expectations set with the client.
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It took me a while too to get my mind wrapped around IUL properly. Just keep your mind open to realize that there is a market for every legitimate product. Until you can see the right market and the right way to sell it... don't sell it.
Hang in there William3, took me 3 to 4 months of playing around with concepts/illustrations and forum lurking through DHK and Scagnt's posts to even grasp IUL to a point where I'm comfortable to be in the field with it.
Still learning as I go though but the general concept is there to stay.
Not sure if it's true for others but I find myself writing more apps on GUL/Term and WL.
The concept behind IUL is spot on but it all depends on the clients risk tolerance. Also, the illustration software plays a role too, I've noticed some are more flexible and user friendly.
After taking in so much from your posts, here I thought you were the IUL only preference type of agent. Just kidding. Lol.
Still learning as I go though but the general concept is there to stay.
Not sure if it's true for others but I find myself writing more apps on GUL/Term and WL.
The concept behind IUL is spot on but it all depends on the clients risk tolerance. Also, the illustration software plays a role too, I've noticed some are more flexible and user friendly.
After taking in so much from your posts, here I thought you were the IUL only preference type of agent. Just kidding. Lol.
I understand that you're kidding but for the purpose of this thread, these are two different markets.
I don't have industry stats, only personal experience, but a lot of GUL is sold to 60+yo whereas IUL is more of a 30-50ish sale.
What is sold is largely dependent on your market, not on product advantages/disadvantages (again...not directed towards you).
Those range on numbers in the bold are similar for me as well. Although I do run across a few potential clients who are in their late 50s to early 60s getting IUL quotes @ minimum/target. Makes me wonder what kind of world we live in.
Strongly agree with what you've said though.
To me, where IUL really shines is when you have a client that plans to max fund, but needs the ultimate in premium flexibility. Like business owners that have widely varying income year over year, etc. Its a perfect fit for them.
I sell much more WL than IUL, but there is a place for both. If its designed and funded properly, I feel it will do just fine. I rarely illustrate over 6%, then they have a realistic expectation and if it does better...great.
I sell much more WL than IUL, but there is a place for both. If its designed and funded properly, I feel it will do just fine. I rarely illustrate over 6%, then they have a realistic expectation and if it does better...great.
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