Two Reasons I Prefer IUL Over Whole Life
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- เผยแพร่เมื่อ 10 ต.ค. 2023
- What's the difference between Indexed Universal Life Insurance and Whole Life Insurance and which is better?
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Is there a reason that IULS offer 0% but Whole Life does not?
My experience with insurance is that nothing is magical.
If they guarantee 0% loans, they might have fluctuating, non-guaranteed (or simply higher) costs of insurance or another lever they can pull to even out this benefit. Like you mentioned a “Fox in the henhouse”
If you think about it, the carrier is losing 100% access to that capital that they were previously earning interest on. That loss has to be factored in somewhere.
Great thoughts. It's true! However, in this case, it's a lot simpler.
The "0%" loan is actually a "wash loan" provision usually means that you'll earn 2% on the cash value collateral on the loan and pay 2% on the loaned money. So, you'll give up the option to earn interest in the index account at higher rates in order to get the no-net-cost loans.
@@DallinBunnell thanks. a friend mentioned this to me after i commented. I was wondering if there is any 0% loans that also participate in the index?
@@AlexPerazaTV none that I've ever seen, unfortunately.
Bingo! I had multiple WL policies that I 1035 exchanged into IUL’s that have GUARANTEED wash loans after 10 years and a GUARANTEED FIXED participating 5% loan rate from almost day 1. Meanwhile my WL policies had a GUARANTEED -1% arbitrage loan rate for the life of the policy. I just couldn’t figure out a way to use my WL policy as an LIRP policy. With my IUL loan provisions I even like them better for “infinite banking” than my former WL policies. I can loan my business capital from my IUL at those guaranteed rates and then charge my business a market interest rate which is now above the internal guaranteed IUL rates and write off that interest to my business while paying my IUL back netting me that + arbitrage.
A kindred spirit!
Oh my god. You did what? You exchanged out of something that had no surrender charge to something that has a 15 years surrender charge. Which means you can’t borrow most of the cash value until year 15. You exchanged out of something that had a guaranteed death benefit into something without a guaranteed death benefit. You exchanged out of something with a lower cost of insurance in the latter years into something that has a annual renewable term cost of insurance. Which means cost of insurance increases every single year. With regards to your intent to withdraw income out of your cash value, you could actually withdraw 100% of your principal without any penalties or tax implications or loan interest and open a single premium immediate annuity. That way you are receiving income for life. Whoever advised you to do this is really negligent.
Actually if you were smart like you thought you were, you could have sold your WL policy to private companies out there whom will pay you more than your cash value because they want your guaranteed death benefit.
@@christham7852 @davidmcknight 100% I 1035 exchanged out of my WL policies and I don’t regret it one bit! To address your points. The surrender charge is for 10 years and it only is ~10% of the cash value which goes down each of those 10 years. Right now it’s only ~5% of the CV. It only applies anyway if I surrender the policy which I have no plans on doing. In regards to the death benefit I could care less about it as I want the policy for LIVING and retirement benefits. With the annual renewable term the COI is far less for the majority of my life until I get into my mid and late 60’s and beyond which allows me to build up my cash value much more efficiently than WL. As I get older my plan is to actively lower the DB and the net amount at risk to the 7702 minimums which will make the COI even at those higher ART rates only around ~1% of the cash value which to me is equivalent to your standard assets under management fee. In reference to the SPIA conversion, with my IUL I can do the same thing you talk about of withdrawing 100% of my principal without any tax implications to buy a SPIA, but that really doesn’t interest me in the least. Alternatively, I could also take out a zero cost wash loan to purchase a SPIA and by doing that I wouldn’t be limited to only my principle to avoid any tax implications which in theory would allow me to purchase a much larger SPIA. So thanks for your comments…none of which makes me regret my decision in any way.
@@christham7852 He can borrow from day one! He just cant surrender it without being charged a fee. that's what surrender charge means. IULs do not have the same restrictions as annuities, and the beauty of an IUL is that you can borrow from your cash value while its still growing just like a Fixed Indexed Annuity! (you can't borrow against your money with an annuity) This may surprise you and suggests you have a lot to learn about IULs.
Also, the "annual renewable term" fear-tactic is laughable. The rates are clearly illustrated in the cash value portion of the policy. You can see the exact rate at the exact age. The policies are structured to dramatically outgrow the cost of insurance (in fact you can stop paying any costs after year 7 if you choose), and you can see exactly what will happen to your policy all the way until age 121. Please learn more about IULs!
Great content, David! Can a life insurance agent go through your training to be certified?
Agree 100% but one comment iul is not that perfect as u said there is a risk of getting zero in the market and pay the fees (so lose money) and if done early enough and frequently enough will collapse ur policy
@@Unicorn-Blackyes zero and still have fees
@@Unicorn-BlackThat’s only if you choose a participating/indexed loan. My IUL’s have guaranteed wash loans after 10 years and a guaranteed-1% arbitrage loan in years 1-9.
@@Unicorn-Black that cannot happen if you are still funding the policy. The fees are taken out of your premium payment.
Once you stop funding the policy. It’s important to level and reduce the death benefit to decrease your fees.
Once those fees are decreased you can allocate a percentage of your cash value to the fixed interest rate for the sole purpose of paying the fees and COI.
Doing so eliminates the possibility of your cash value decreasing to pay for COI/Fees.
not exactly true, the whole magic in IUL is the accumulation of cash value that is faster than the DB, with the purpose of getting as fast as possible to a narrow difference between cash value and DB (lets call it money at risk (MAR) ), if your MAR is high when you are older you will pay more on fees, if it does not grow fast enough you are in bad shape, if you have years with the negative market the gap will stay high and might not collapse on time before the fees are too high (if you start early enough sure, but I'm not that young anymore) @@The_Walking_Asset
How many years do we have to wait to be able to request a loan? Thanks
Just until you have a surrender value but I’d recommend waiting at least 10 years.
@@DavidMcKnight why ten years?
What company offers a 0% loan provision
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All you IUL agents on here. If you’re going to push IUL’s, please run illustration at 4-5% and tell your clients to overfund otherwise these policies will lapse when clients are in their 70’s due to high cost of insurance and low rates of return. The 5-7% internal rate of return mentioned in this video was an exaggeration.
I never Push Anything on my clients. That’s said, most illustrations that I’ve seen and created show the guaranteed, alternate and current hypothetical tabular values. The 5-7% mentioned in this video is about the historical average over the course of many years if not the insureds lifetime. I’m an RIA and don’t sell IUL exclusively so I think it’s important for clients to have a diverse retirement plan that almost always includes insurance products as part of the equation.
Chris, I can back up everything I say in these videos with carriers that have proven track records of 5 to 7%. Your naked assertions don’t change that.
@@DavidMcKnight Didn’t mean to hijack your comment section. 😜
@@DavidMcKnightAnti-IUL people like to harp on the high cost of annual renewable term as one gets older while ignoring how much cheaper the ART premiums are compared to WL premiums until one reaches their mid 60’s and beyond. One can easily mitigate the increasing cost of ART by lowering the DB to the 7702 minimums which at age 65 is 20% above the Cash Value and steadily drops down to 5% above the CV by age 75. That lowers the COI to at most ~1% of the CV which is analogous to your standard assets under management fee. Yes, WL is better if you purely want a permanent DB, but IUL is FAR better for LIVING benefits!
IUL gets cheaper after the surrender period. Like most IUL naysayers, you don’t have all the facts.