Tim Lumbao
Expert
- 36
Best index Universal For growth and accumulation 25-30 years with 7-pay. I'm looking at Transamerica right now or Mutual of Omaha accumulation. Any suggestions?
Best index Universal For growth and accumulation.
- Thread starter Tim Lumbao
- Start date
- 5,253
No way to know for sure. Will only know in 30 years which will have done good or best. My personally opinion is those that illustrate the absolute best will end up near the bottom as history plays out. Being aggressive in pricing, creative with illustrations can cause those same carriers to negatively impact inforce business with raising internal costs or changing caps & participation rates. IUL, like any UL is a lifelong commitment for the client & agent to monitor not only the interest credited but also how the carrier is changing internal costs, etc.
PS are you asking which are best at max 7 pay premium testing or for a client that only wants to pay for 7 years?
PS are you asking which are best at max 7 pay premium testing or for a client that only wants to pay for 7 years?
- Thread starter
- #3
Tim Lumbao
Expert
- 36
Personally. If a client can do a 7-pay premium, what company/product do you guys prefer for accumulation and why? Do you guys add LTC rider if it's available?
- 11,009
I personally use Penn Mutual or AIG for accumulation. Im warming up to Securian but still not selling it.
You couldnt pay me enough to sell Transamerica. Sh*t carrier, sh*t product.
MoO is not the greatest for accumulation. I do use them for protection cases sometimes.
Have you run illustrations from various carriers and compared them all against each other? That is where you need to start.
You can call the carriers sales desk to get an illustration. Ask for the expense report to be included. Also ask for renewal rate history for the carrier. Also ask for a Specimen Contract so you can see what % they can increase the expenses (max expenses are often 100%-200% higher than current).
LTC Rider is up to the client and their needs. A true LTC rider comes at a cost and creates additional expenses on the policy. There is little reason to sell the MoO LTC rider imo because the free Chronic Rider does not require permanent impairment.
Is your background final expense? I only ask because of the 2 carriers you asked about.
The main factor you want to consider is the renewal history of the carrier. They can and will drop the Caps/Participation Rates. Illustrations are largely meaningless because most carriers decrease Caps/Participation after y2. They can also take away those fancy hybrid indexes they like to promote... and they do... and they can replace it with whatever they want.
So you better sell IUL based on the benchmark indexes, meaning S&P/Dow/Nasdaq. And based on renewal history of the carrier. Also based on the max expenses the carrier can charge in the policy... because they can and will increase expenses.
You couldnt pay me enough to sell Transamerica. Sh*t carrier, sh*t product.
MoO is not the greatest for accumulation. I do use them for protection cases sometimes.
Have you run illustrations from various carriers and compared them all against each other? That is where you need to start.
You can call the carriers sales desk to get an illustration. Ask for the expense report to be included. Also ask for renewal rate history for the carrier. Also ask for a Specimen Contract so you can see what % they can increase the expenses (max expenses are often 100%-200% higher than current).
LTC Rider is up to the client and their needs. A true LTC rider comes at a cost and creates additional expenses on the policy. There is little reason to sell the MoO LTC rider imo because the free Chronic Rider does not require permanent impairment.
Is your background final expense? I only ask because of the 2 carriers you asked about.
The main factor you want to consider is the renewal history of the carrier. They can and will drop the Caps/Participation Rates. Illustrations are largely meaningless because most carriers decrease Caps/Participation after y2. They can also take away those fancy hybrid indexes they like to promote... and they do... and they can replace it with whatever they want.
So you better sell IUL based on the benchmark indexes, meaning S&P/Dow/Nasdaq. And based on renewal history of the carrier. Also based on the max expenses the carrier can charge in the policy... because they can and will increase expenses.
- 5,253
Be careful with adding LTC rider to an accumulation focused sale. I am not against it being involved, but far too many agents oversell the swiss army concept that you can use your policy to borrow from and supplement retirement income and use for Chronic Illness/LTC and for a death benefit. However, every distribution & claim from a policy lowers all the other uses, so it should be an "OR" not and. If I have a 500k policy with $500k chronic illnesss rider that I take a & 50k distribution in my 40s, then start taking $5k per month from age 60-70, there will likely be zero left for Chronic illness/LTC in my 70s or 80s because my benefit reduced every time I took money out. Adding a chronic illness rider or having the "free up front & non underwritten" version can be a plan B on an accumulation concept, but my personal opinion is they are 2 entirely separate needs, so chronic illness & LTC are best served in my mind with separate protection focused products not intended to use for cash access or accumulation.
If someone can fund now for 7 years, why not show continuing to fund & accumulate for longer.
- Thread starter
- #6
Tim Lumbao
Expert
- 36
If someone can fund now for 7 years, why not show continuing to fund & accumulate for longer. What do you mean by this?
- Thread starter
- #7
Tim Lumbao
Expert
- 36
What do you mean by this?
- 5,253
Why only show paying for 7 years on accumulation design. If someone can afford say $10k a year today at say age 40, why not show them continuing to fund to age 60, or 65 to grow the cash value even greater? In my experience, most people that are consistent saver types, have more money to save as thet get older, not less money. Especially if when kids are out of house, house is paid for, etc.
- 5,253
I don't know how to explain it any differently as I explained it very detailed already. If you are having trouble understanding this, I think you might need to slow down on selling IUL as it could mean you are not grasping all the moving parts of the very complicated nature of the inner workings of IUL, the added riders & how they impact the cash & impact the death benefit & the laws/taxation connected to it
- 11,009
Plenty of IULs and WLs are set up as a 7pay.
Actually, because of MEC calculations & CVAT/GPT calculations, a 7pay or 10pay will perform better from a rate of return standpoint vs. a longer term payment period.
So one reason can just be to max out the performance in the policy.
Now its fairly negligible.... maybe 25bps, but with large sums it can add up over time.
However, stacking policies is not always better either because of the y1 premium load.
Actually, because of MEC calculations & CVAT/GPT calculations, a 7pay or 10pay will perform better from a rate of return standpoint vs. a longer term payment period.
So one reason can just be to max out the performance in the policy.
Now its fairly negligible.... maybe 25bps, but with large sums it can add up over time.
However, stacking policies is not always better either because of the y1 premium load.
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