- 10,363
Stuff like this will only exacerbate the pending class action suits against the IUL industry. Just wait...
Fees of newer multiplier index segments
- Thread starter Allen Trent
- Start date
gkatzfinancial
Expert
- 23
I am not a fan of the multipliers. I hate that they are being used and the product has changed so much over the past couple of years to play with the updated guidelines. However, dating back 5+ years I have been running illustrations at 6% (as we never know the future) and design to over fund the program. I feel comfortable with how I design the programs for the long term, but these crazy changes bringing up fees behind the scenes sure does make me feel uncomfortable.
Some of the carriers are now lowering their max illustrated rate down to around 6%. That's what I've always run in the past as well...now I'm going lower. I feel the same, if they max fund they will be fine. 6% is very attainable, imo... unless they continue to lower the caps so much that it kills the potential of the product.
gkatzfinancial
Expert
- 23
I have clients that got 10-14% returns for first couple years of their programs. Now when I meet they are head of my 6% projected. They’re happy with me. But unfortunately you just never know ..
- Thread starter
- #15
- 4,618
yeah, my UL my parents bought me in 1985 had some great years of 10-15%. But, when fixed rates started going down as our federal government went into hyper control of mortgage rates, those UL rates plummeted & stayed down.
if we enter into a cycle of 1-2% 10 year treasuries or even negative interest rates like is occurring in other countries, IUL carriers wont have any returns on their own money to go buy index options with or if they do, it will be super low participation & cap rates. wont matter if S&P 500 is making 10% each year if there is no fixed returns to buy options with
I sure hope fixed rates/treasuries improve soon for all these reasons.
gkatzfinancial
Expert
- 23
Yea absolutely. If rates ever get corrected we would hope that the insurAnce companies will bring the caps up. Most importantly, IULs with me are used as a piece to the overall plan. I don’t look to stuff all my clients money into them so we have multiple different buckets in place.
- Thread starter
- #17
- 4,618
Having violent stomach flu the day of an important meeting or event is a huge deal too. But neither that nor your comment is relevant to the thread topic
- 11,304
A lot of this thread had gone over my head until today. Today I was on American National's new IUL product webinar where they are rolling out two new multiplier options with asset-based charges.
I certainly don't like it. I'm glad that no one on this thread likes them. I agree that it's just an "illustration play" and not an ideal option for allocating the product premiums.
The biggest issue I have is that the use of multipliers negate the phrase "most of the upside with none of the downside". You cannot say that and use these multipliers.
Having discussed this with @indexedannuity_girl (Sheryl Moore) in the FB group, there are some products where the fee is tied to the PRODUCT, not just the index segment! (Ugh!)
I'll stick to the concept sale and just make sure clients don't allocate to these multipliers on their own.
I certainly don't like it. I'm glad that no one on this thread likes them. I agree that it's just an "illustration play" and not an ideal option for allocating the product premiums.
The biggest issue I have is that the use of multipliers negate the phrase "most of the upside with none of the downside". You cannot say that and use these multipliers.
Having discussed this with @indexedannuity_girl (Sheryl Moore) in the FB group, there are some products where the fee is tied to the PRODUCT, not just the index segment! (Ugh!)
I'll stick to the concept sale and just make sure clients don't allocate to these multipliers on their own.
- 5,568
The problem with all IUL illustrations, as I see it, s that the illustration is based on ACTUAL return, not an AVERAGE return. I’ve watched countless videos by agents,marketers, and carriers over the past two months on these products. This is the elephant in the room that rarely so much as alluded to, much less mentioned head on. Heard one today where he said “whole life guys” make a big deal about the fact that IUL’s will invariably and inevitably have “zero gain” years, but that the zero years don’t matter. All it takes is one zero year for a 6% illustration to show itself for the fiction that it is unless the index returns greater than 12.36% the next year AND the cap is greater than the gain. Get two zero years and you have a UL that over funded or not will likely implode eventually like the rest of its older brothers have.
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