My First IUL

[ATM]

The entire block of business will receive that Credited Rate. But there will be many different Rates of Return on CV for that block of business due to the various ages/health ratings/riders chosen/years policy has been in force. The IRR is just a result of the Credited Rate, which is why agents always speak in terms of credited rate since it is the most quantifiable part of the equation.

And for 5.5%-7.5% you can expect 3.5%-5.5% in the short term, 4.5%-6.5% long term (as in 25+ years). Assuming the policy is fully overfunded, decent health rating, and from a decent IUL carrier.

The entire block of business will receive the credited rate only if the insurance company uses a portfolio rate approach. Some do but many use a new money/old money approach like most, if not all FIA companies.

I recall that Aviva, back when they were called that, were promoting a 17% cap index for new business and illustrating very high rates. They were also renewing existing policies with a 10% cap.

I think that's unfair and maybe even deceptive.

 

[pdavis1958]

Congrats for sure and many more ahead!!!!

 

[scagnt83]

The entire block of business will receive the credited rate only if the insurance company uses a portfolio rate approach. Some do but many use a new money/old money approach like most, if not all FIA companies.

I recall that Aviva, back when they were called that, were promoting a 17% cap index for new business and illustrating very high rates. They were also renewing existing policies with a 10% cap.

I think that's unfair and maybe even deceptive.

You are correct that some give a different cap to new $ vs. old. But my point was a broad generalization to illustrate the difference between Credited Rate and CV RoR. Not to explain the intricacies of the internal mechanics of a policy.

If you really want to get down to details in reality you will have many different "buckets" of money in an IUL and each one will have a different Credited Rate. All of them put together will create the average credited rate.
Of course all of that depends on the premium schedule, index allocation dates, new money rate, old money rate, etc.

 

[rickieb65]

In the end the real return will often depend on the track record of the carrier regarding claims and expenses two areas where they can play a lot of games check the history

 

[preshus]

Did you put in a DB and solve for the Target Premium? If so that is a very dangerous way to sell IUL.

IUL premium should always be above Target Premium!!

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This is exactly how to sell and design an IUL policy. I see that I taught Ray well


If you are using IUL for accumulation purposes, you always start with the premium, then solve for the Minimum DB. If not then you can get yourself (and more importantly your client into big trouble down the road).

I also would never set client expectations above the 7% mark. And I never set funding expectations above the 6% mark (meaning that if the premium does not sustain the policy at 6% then it needs more premium).

Pretty much the only UL that should be sold at Target is a GUL. (which is a totally different animal)

UL Target is a benchmark for what you are paid on. Not for what a policy should be funded at.

Fantastic job explaining policy design! Can you please give insight on what illustration software you rely on? I'm new to this site and these products.
Thank you for being patient in answering what may be general knowledge to everyone else.

 

[scagnt83]

Fantastic job explaining policy design! Can you please give insight on what illustration software you rely on? I'm new to this site and these products.
Thank you for being patient in answering what may be general knowledge to everyone else.

I use the carrier illustration software. It will have the most features/options/etc. compared to generic software like winflex. I absolutely will not sell an IUL unless I have ran the illustration myself from the carrier illustration software.

Running illustrations yourself is one of the best ways to learn the product. Actually reading the policy explanation in the front of the illustration is also one of the best ways to learn the product.

 

[preshus]

I appreciate you taking the time to share. Thank you again!

 

[scagnt83]

I appreciate you taking the time to share. Thank you again!

No problem

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[timamr]

I am curious as to what an agent gets commission-wise for selling a IUL policy? I know it probably depends on several factors, but on average, what is the commission structure.

We'll use the OP's $200/month premium. That equals $2400/yr in premiums. Is it like term, where you might get a 90% commission or is IUL policies lower on commissions?

 

[Tahoe Ray]

I am curious as to what an agent gets commission-wise for selling a IUL policy? I know it probably depends on several factors, but on average, what is the commission structure.

We'll use the OP's $200/month premium. That equals $2400/yr in premiums. Is it like term, where you might get a 90% commission or is IUL policies lower on commissions?

Designed the right way...he'd probably make 500 bucks.