Does anyone have an IN FORCE IUL that's doing exceptionally well?

[Allen Trent]

This policy is over 20 years old and all the major contract expenses have dropped off the policy. The returns are gross before expenses and the COI. I'm currently paying an expense ratio that averages 1.3% for 4 funds. There's a current $7.00 monthly contract charge (maximum of $96 annually), and there's a 3.25% premium tax deducted from every premium. The fixed account pays 4.00% interest rate and loans are fixed at 6.00%.

Those seem to be inline, but there has to be some ART COI charges on that, correct? Plus, I doubt the 3.25% is a tax, it is likely a load fee.

VUL never concerned me during great markets, especially during early young years. It is the big market sustained bear markets in old ages that scare me. Saw too many after the 1999 crash & 2008 crash on people in their 70s that lost 30-40% of the CV & then saw the COI skyrocket. not only because of age & ART COI, but because the net amount at risk skyrocketed because of the 30-40% drop in CV. 2 particular cases got horribly bad because the policy or ILIT couldn't receive any more premiums to help offset these double edged problems

I am seeing a lot more VUL being sold right now after seeing very little the last 10-15 yrs. Likely because they can illustrate great based on last 10 yr bull market.

I like IUL better than VUL because of that. Willing to sacrifice the best years over 10-15 % in exchange for 0% worst year credit

 

[Tahoe Ray]

I doubt the 3.25% is a tax,

Premium taxes exist in several states (at least in my home state of Nevada and next door in CA).

Maybe not the case here but in case people were unaware.

 

[f55c6]

Those seem to be inline, but there has to be some ART COI charges on that, correct? Plus, I doubt the 3.25% is a tax, it is likely a load fee.

VUL never concerned me during great markets, especially during early young years. It is the big market sustained bear markets in old ages that scare me. Saw too many after the 1999 crash & 2008 crash on people in their 70s that lost 30-40% of the CV & then saw the COI skyrocket. not only because of age & ART COI, but because the net amount at risk skyrocketed because of the 30-40% drop in CV. 2 particular cases got horribly bad because the policy or ILIT couldn't receive any more premiums to help offset these double edged problems

I am seeing a lot more VUL being sold right now after seeing very little the last 10-15 yrs. Likely because they can illustrate great based on last 10 yr bull market.

I like IUL better than VUL because of that. Willing to sacrifice the best years over 10-15 % in exchange for 0% worst year credit

I would have purchased an IUL over a VUL for the downside protection. However, at the time I'm not sure NYL offered IUL in early 1997. The below is taken from illustration regarding charges.


"The illustrated values reflect the deduction of underlying fund expenses, which are based on a weighted average of charges for each Investment Division to which cash value has been allocated. These charges are based on the policy's current Separate Account values as of 01/22/2020. In addition, the illustrated values reflect a sales expense charge of 5.0% of each premium in years 1-10 and 0% thereafter (5% maximum in all years). A state tax charge (if applicable) of 2% of each premium, a Federal tax charge (if applicable) of 1.25% of each premium, current monthly cost of insurance charges, current annual contract charges of $84 ($96 guaranteed maximum) in all years. A separate mortality and expense risk charge of 0.60% (0.90% guaranteed maximum) and an administrative charge of 0.10% of the average daily net asset value on an annual basis are made against all amounts in the separate account."

My current Weighted Investment Division Charges Totals 1.37%

 

[f55c6]

Those seem to be inline, but there has to be some ART COI charges on that, correct? Plus, I doubt the 3.25% is a tax, it is likely a load fee.

VUL never concerned me during great markets, especially during early young years. It is the big market sustained bear markets in old ages that scare me. Saw too many after the 1999 crash & 2008 crash on people in their 70s that lost 30-40% of the CV & then saw the COI skyrocket. not only because of age & ART COI, but because the net amount at risk skyrocketed because of the 30-40% drop in CV. 2 particular cases got horribly bad because the policy or ILIT couldn't receive any more premiums to help offset these double edged problems

I am seeing a lot more VUL being sold right now after seeing very little the last 10-15 yrs. Likely because they can illustrate great based on last 10 yr bull market.

I like IUL better than VUL because of that. Willing to sacrifice the best years over 10-15 % in exchange for 0% worst year credit

The returns are gross before the COI, contract charge, and premium tax. A separate mortality and expense risk charge of 0.60% (0.90% guaranteed maximum) and an administrative charge of 0.10% of the average daily net asset value on an annual basis are made against all amounts in the separate account. This is weighted and along with separate account fees for a total expense charge of 1.37%.

 

[f55c6]

We all know the VUL is vulnerable to market declines. As an example the recent declines in the market this past week caused my VUL ROR to go from:
RATE OF RETURN 01/01/2020 - 02/20/2020

6.81 %
TIME FRAME
Year To Date
To:
RATE OF RETURN 01/01/2020 - 02/28/2020

-2.35 %

However, this is a great opportunity and I just mailed in an additional $1,000 to buy more units.

 

[Denzel Rodriguez]

I've had one for 15 years. I did over fund the first 3 years, but nothing to brag about. I'd say it's 5-7% return typically. I'm pretty happy with it.

What year was your break even point I’m very curious to know 5-7% return is very similar to a WL.

 

[Allen Trent]

What year was your break even point I’m very curious to know 5-7% return is very similar to a WL.

It will depend on the design. If only paying the target premium, it will take longer to break even than if paying the max funding allowed by govt guidelines.

 

[ATM]

I have a IUL I purchased in 10/2011.

It has outperformed some of my mutual funds even after expenses.

It's break even point was day 20 when the guaranteed floor rate exceeded the monthly cost of the policy.

I like it so much I bought another on my wife.

 

[f55c6]

I know IULs haven't been around that long and we sell it conceptually. I'm curious to see how policies that are 10 years or older have been performing. Obviously there are a lot of factors that come into play, just curious if there are any policies that have built up a good amount of CV.

The biggest backlash I hear is high COI in the later years, which is a valid concern if the market doesn't perform well in those years or if the cap is dropped substantially in the later years. Any input is appreciated.

UPDATE

RATE OF RETURN 01/01/2020 - 09/25/2020

17.24 %
TIME FRAME
Year To Date

RATE OF RETURN 09/26/2019 - 09/25/2020

27.61 %
TIME FRAME
Past 12 Months

RATE OF RETURN 06/26/2020 - 09/25/2020

7.85 %
TIME FRAME
Past 3 Months

 

[DHK]

I thought you had a VUL with mutual fund sub accounts, not an IUL?