Wow, this is crazy. Sad that only one or two "zero" years can completely blow up a policy during retirement. Can you do a video that explains how the Net Amount at Risk goes up during zero years and how it impacts the cash value?
Thank you for explaining the market loss scenario. You said it losses money because we take money out and the market is not good. I wonder if I don't plan to take money out for retirement. The IUL is leveled and it is mainly for protection (passing money to the love ones and living benefits that comes for free). I am in early 30s, would you think if IUL will be a better choice than wholelife since it has lower premium for the same death benefit?
In this scenario, I would look and compare an IUL that has guaranteed riders for permanent insurance (most IULs don't) Then compare that to whole life companies that offer blended term riders. That'll get you the best bang for your buck and probably compete better on a guaranteed basis. It just depends how much risk you are willing to take on.... Schedule a call if you wanna work through options with different companies life180.com/clarity-call
Hey there, you have such informative content that has really helped me. I recently purchased an IUL, I’m 24 years old. I also am getting pushed to sell these for a living to make money, which has shown some red flags. do you ever look at policies so I can get a better understanding of if my policy is going to be worth it before I commit to paying this long term?
Hi, instead of asking Mr. Whole Life to explain your policy who will then try to pinpoint crap that wouldn't make any sense, go back to your agent or call the insurance company to ask them about your policy.
So where does one get proper training with either option? I cannot find straight forward compariosns i.e agents are not selling either (IUL/WL) as investment, both for cash value, one loan taken out each, no loan, max funded, tho they're not apples to apples per say, at least we can see a comparison with both policies showing both non gurantee, gurantee, insurance cost etc..
No...the insurance company is buying the call options. How would the life insurance be selling the call options? That is not the business they are in. They are buying, NOT selling
I would love to see an actual real life case study of someone using an IUL, or any UL policy for that matter, for retirement income. I’ve asked other channels that are proponents of IUL to show me a real life in force illustration of someone drawing income like this, and all I’ve gotten is a response that “IUL’s are too new for people to be drawing income from ”. I’ve then asked for someone to show me an example of just a base UL or VUL policy being successfully used for retirement income since they’ve been around a lot longer, and I’ve gotten the response “UL’s issued in the 80s and 90s were all underfunded because they were funded assuming 12% fixed accounts. If they were properly funded, it would have worked”. Very strange to me that people are putting capital (LOTS of capital) into something with basically zero track record of successfully doing the thing it’s pitched to do.
So you focus on the retirement years. Again my design and the LIBR solves that problem. You skipped past the funding years and cash value growth during those years.
@Life180..although I have a WL policy,I signed up for an IUL as an experiment..don’t fixed crediting rates go up if interest rates go up or it doesn’t work that way? Last year the fixed crediting rate for my allianz policy was 4.35%,I put in 25k, policy expenses was 2886$,my cash accum value(not surrender value) ended up at 23,090, I was credited 979$, thats a 3.92% returnnon my 25k ..this year they increased the rate to 5%, on 45,200$,I would make around 2300$..that is a 4.6% return on my 50k..What am i missing? I understand that there a lot of varibales and the company can reduce the fixed creditijg rate from 5% to 1% if they are not profitable so I will be forced to choose another Indexing option..by choosing a fixed crediting option..I am loosing 0.4% towards policy expenses but I am not worried about how the policy will perform in this crazy market..is there something I should watch out for? The only reason I signed up for the policy was because I had the money in my bank account and was not finding good investment opportunities..I wanted to remove it from the banking system and have the option to take policy loans when a good investment opportunity comes along..I am comparing the returns in this policy to what I would get in my bank account ..although cash accum is 46k, cash surrender is 42k..i can borrow 80% of this amount and pay 5% interest on policy loan..if I am making 5% and I am paying 5%, cost of borrowing is 0% ..I plan on using the funds borrowed from policy for Private money lending at 15% ..
The part you're missing is the internal expenses and charges. When the policy is illustrated, all of the fees are illustrated at current assumptions. Those current assumptions assume an inflated return rate. The way the current assumption is calculated, it's about 50/50 that you will actually have that return year in and year out over the long run. That said, when you have down years (anything under whatever the illustrated rate is - say 5.8% for argument same) the policy underperformed the current assumption. When that happens, the charges in the policy actually go up. And those charges compound over time. At the end of the day, it winds up not being a huge deal UNTIL you start having loans against the policy - which is exactly why people are buying them and putting their money there... those loans compound the risk due to loan management costs along with other insurance costs, policy charges and rider fees. My problem with IUL is that they will look decent until you start leaning on them for loans. They will underperform expectations, but they won't look completely catastrophic until it's too late for you to realize...that's why I'm so passionate about helping people avoid them. These things are a ticking time bomb for our industry and for the millions of people storing their money in them - hoping to rely on them for retirement income. Furthermore, and this isn't you, this is just a side note for anyone else reading this that it might apply to... this is why I HATE MPI so much. Their RELOC strategy is simply taking loans against the policy to leverage positive Arbitrage to get more insurance. It illustrates well, but the loan risk is HUGE and it take a policy that would likely not be exposed to massive risk for 20-30 years (depending on age and time horizon) and will give it massive risk exposure in the first 10 years while you are still in the surrender period. Also, to touch on your fixed crediting strategy comment. Sure, fixed rates can go up or down, no doubt... but, once again, if you illustrated the policy using the fixed crediting strategy and you're happy with how it looks with today's assumptions, cool, you should not have that much risk. BUT in that case, I bet a comparable whole life policy would win. If however, you illustrated current assumptions using the index, then long term, every time the policy performs less than the current assumption (which it would when you used the fixed rate), it would increase the charges moving forward compared to what was illustrated.
@@LIFE180 thanks for taking the time to respond..since the first policy I signed up for was whole life, i made sure that the IUL illustration i was looking at was fixed crediting rate design and not an Index crediting rate illustration..I hate Premium financing policies because I would never take leverage to sign up for something which can only generate 1-2% more than the loan interest rate(especially a variable loan)..The only loan I like is a 30 year fixed rate mortgage on rental properties because my COC returns would be 15-20%..I am going to choose Fixed crediting rate as long as it is 5% or I am absolutely sure that we are in a bull market..I am using this policy as an experiment to see how it does, not planning to use it for income during retirement..If i see that the policy is not performing I plan on doing a 1035 exchange
Wow, this is crazy. Sad that only one or two "zero" years can completely blow up a policy during retirement. Can you do a video that explains how the Net Amount at Risk goes up during zero years and how it impacts the cash value?
Will do
Thank you for explaining the market loss scenario. You said it losses money because we take money out and the market is not good. I wonder if I don't plan to take money out for retirement. The IUL is leveled and it is mainly for protection (passing money to the love ones and living benefits that comes for free). I am in early 30s, would you think if IUL will be a better choice than wholelife since it has lower premium for the same death benefit?
In this scenario, I would look and compare an IUL that has guaranteed riders for permanent insurance (most IULs don't)
Then compare that to whole life companies that offer blended term riders. That'll get you the best bang for your buck and probably compete better on a guaranteed basis. It just depends how much risk you are willing to take on....
Schedule a call if you wanna work through options with different companies life180.com/clarity-call
Hey there, you have such informative content that has really helped me. I recently purchased an IUL, I’m 24 years old. I also am getting pushed to sell these for a living to make money, which has shown some red flags. do you ever look at policies so I can get a better understanding of if my policy is going to be worth it before I commit to paying this long term?
Absolutely. Shoot it over to chris@life180.com and I can have my team look it over
Hi, instead of asking Mr. Whole Life to explain your policy who will then try to pinpoint crap that wouldn't make any sense, go back to your agent or call the insurance company to ask them about your policy.
From what I understand the key is properly designed and max fund IUL..especially as policyholder ages in later years to prevent policy implode?.....
Max funding is a must, either way. But it doesn't protect it from what I am talking about in this video
So where does one get proper training with either option? I cannot find straight forward compariosns i.e agents are not selling either (IUL/WL) as investment, both for cash value, one loan taken out each, no loan, max funded, tho they're not apples to apples per say, at least we can see a comparison with both policies showing both non gurantee, gurantee, insurance cost etc..
I'll do that
🍿 I can’t wait!
isnt insurance company SELLING CALL options and hence profit will be more?. (they not buying call options)
No...the insurance company is buying the call options. How would the life insurance be selling the call options? That is not the business they are in. They are buying, NOT selling
I would love to see an actual real life case study of someone using an IUL, or any UL policy for that matter, for retirement income. I’ve asked other channels that are proponents of IUL to show me a real life in force illustration of someone drawing income like this, and all I’ve gotten is a response that “IUL’s are too new for people to be drawing income from ”. I’ve then asked for someone to show me an example of just a base UL or VUL policy being successfully used for retirement income since they’ve been around a lot longer, and I’ve gotten the response “UL’s issued in the 80s and 90s were all underfunded because they were funded assuming 12% fixed accounts. If they were properly funded, it would have worked”.
Very strange to me that people are putting capital (LOTS of capital) into something with basically zero track record of successfully doing the thing it’s pitched to do.
exactly.. every1 is so much pumping into IUL.. Only folks making money is AGENTS who are selling with huge promises.
100% truth. Could not agree more
The longer your policy continues the fee getting all charge
So you focus on the retirement years. Again my design and the LIBR solves that problem.
You skipped past the funding years and cash value growth during those years.
Truth
@Life180..although I have a WL policy,I signed up for an IUL as an experiment..don’t fixed crediting rates go up if interest rates go up or it doesn’t work that way? Last year the fixed crediting rate for my allianz policy was 4.35%,I put in 25k, policy expenses was 2886$,my cash accum value(not surrender value) ended up at 23,090, I was credited 979$, thats a 3.92% returnnon my 25k ..this year they increased the rate to 5%, on 45,200$,I would make around 2300$..that is a 4.6% return on my 50k..What am i missing? I understand that there a lot of varibales and the company can reduce the fixed creditijg rate from 5% to 1% if they are not profitable so I will be forced to choose another Indexing option..by choosing a fixed crediting option..I am loosing 0.4% towards policy expenses but I am not worried about how the policy will perform in this crazy market..is there something I should watch out for? The only reason I signed up for the policy was because I had the money in my bank account and was not finding good investment opportunities..I wanted to remove it from the banking system and have the option to take policy loans when a good investment opportunity comes along..I am comparing the returns in this policy to what I would get in my bank account ..although cash accum is 46k, cash surrender is 42k..i can borrow 80% of this amount and pay 5% interest on policy loan..if I am making 5% and I am paying 5%, cost of borrowing is 0% ..I plan on using the funds borrowed from policy for Private money lending at 15% ..
The part you're missing is the internal expenses and charges. When the policy is illustrated, all of the fees are illustrated at current assumptions. Those current assumptions assume an inflated return rate. The way the current assumption is calculated, it's about 50/50 that you will actually have that return year in and year out over the long run.
That said, when you have down years (anything under whatever the illustrated rate is - say 5.8% for argument same) the policy underperformed the current assumption. When that happens, the charges in the policy actually go up. And those charges compound over time.
At the end of the day, it winds up not being a huge deal UNTIL you start having loans against the policy - which is exactly why people are buying them and putting their money there... those loans compound the risk due to loan management costs along with other insurance costs, policy charges and rider fees.
My problem with IUL is that they will look decent until you start leaning on them for loans. They will underperform expectations, but they won't look completely catastrophic until it's too late for you to realize...that's why I'm so passionate about helping people avoid them. These things are a ticking time bomb for our industry and for the millions of people storing their money in them - hoping to rely on them for retirement income.
Furthermore, and this isn't you, this is just a side note for anyone else reading this that it might apply to... this is why I HATE MPI so much. Their RELOC strategy is simply taking loans against the policy to leverage positive Arbitrage to get more insurance. It illustrates well, but the loan risk is HUGE and it take a policy that would likely not be exposed to massive risk for 20-30 years (depending on age and time horizon) and will give it massive risk exposure in the first 10 years while you are still in the surrender period.
Also, to touch on your fixed crediting strategy comment. Sure, fixed rates can go up or down, no doubt... but, once again, if you illustrated the policy using the fixed crediting strategy and you're happy with how it looks with today's assumptions, cool, you should not have that much risk. BUT in that case, I bet a comparable whole life policy would win. If however, you illustrated current assumptions using the index, then long term, every time the policy performs less than the current assumption (which it would when you used the fixed rate), it would increase the charges moving forward compared to what was illustrated.
@@LIFE180 thanks for taking the time to respond..since the first policy I signed up for was whole life, i made sure that the IUL illustration i was looking at was fixed crediting rate design and not an Index crediting rate illustration..I hate Premium financing policies because I would never take leverage to sign up for something which can only generate 1-2% more than the loan interest rate(especially a variable loan)..The only loan I like is a 30 year fixed rate mortgage on rental properties because my COC returns would be 15-20%..I am going to choose Fixed crediting rate as long as it is 5% or I am absolutely sure that we are in a bull market..I am using this policy as an experiment to see how it does, not planning to use it for income during retirement..If i see that the policy is not performing I plan on doing a 1035 exchange