lachjs789
Expert
The answer is an unequivocal maybe? The answer really depends upon your client and their needs. IUL can be a great product for clients seeking long-term coverage with a possible exit strategy option via cash value surrender or future income streams.
There are also IUL products in the marketplace that offer death benefit guarantees that provide peace of mind in the event the product does not perform to projections. IUL is also a viable option for your Premium Finance cases. It can reduce the collateral requirement and provide a way to retire the loan prior to death.
As long as the product is not oversold with aggressive projections, it can be managed quite effectively to satisfy a myriad of needs. Two primary errors I often see is first on the accumulation side where unreasonable interest rates are used to determine future cash and/or income streams.
Secondly, on the loan side. Many IUL products offer two loan types: 1. A traditional loan or 2. What is often referred to as a participating or variable loan. These latter type loans anticipate that the policy will earn a spread between the loan value interest rate and the crediting rate being accumulated on the cash value. While this is possible it is aggressive and potentially dangerous. I always like to error on the side of caution and illustrate traditional loans. Traditional loans come in two primary forms. Wash loans where the net cost is zero or spread loans where the loan rate is slightly higher than what is credited back to the policy. These will illustrate less income distribution than a variable/participating loan, but is more conservative.
These products are more complex than traditional UL's and you must manage client expectations more effectively, but IUL products can be a great tool in your arsenal.
There are also IUL products in the marketplace that offer death benefit guarantees that provide peace of mind in the event the product does not perform to projections. IUL is also a viable option for your Premium Finance cases. It can reduce the collateral requirement and provide a way to retire the loan prior to death.
As long as the product is not oversold with aggressive projections, it can be managed quite effectively to satisfy a myriad of needs. Two primary errors I often see is first on the accumulation side where unreasonable interest rates are used to determine future cash and/or income streams.
Secondly, on the loan side. Many IUL products offer two loan types: 1. A traditional loan or 2. What is often referred to as a participating or variable loan. These latter type loans anticipate that the policy will earn a spread between the loan value interest rate and the crediting rate being accumulated on the cash value. While this is possible it is aggressive and potentially dangerous. I always like to error on the side of caution and illustrate traditional loans. Traditional loans come in two primary forms. Wash loans where the net cost is zero or spread loans where the loan rate is slightly higher than what is credited back to the policy. These will illustrate less income distribution than a variable/participating loan, but is more conservative.
These products are more complex than traditional UL's and you must manage client expectations more effectively, but IUL products can be a great tool in your arsenal.
