IUL for Children

[PrivClientSG]

There are extended no lapse guarantee options on some IULs, which would make overfunding redundant though. sjm

I wasn't recommending overfunding to the max. I was making a point that if you did -- and that is a strategy that some people do with UL products -- it wouldn't matter because even though you are overfunding it to the max, you are still shifting risk back to the insured/owner.

Yes, you wouldn't have or do both. Depends on motivation, goal, want, etc. My point was about any UL-chassis type product and risk.

 

[Allen Trent]

you are still shifting risk back to the insured/owner.

some risks (COI changes, fees, caps/participation rates), but not all.

Couldnt you make the case that WL shifts some risks to the owner too? not being able to easily miss a premium payment, not being able to later increase premiums or drop in larger sums, some inflationary risk or interest rate risk as WL doesnt have much of chance at participated in better interest rate environment.

I own a ton of WL, no IUL so I am not arguing because I am a lover of IUL. I am just asking if it is so cut & dry that WL puts "all the risk" on the carrier & UL chassis puts all the risk on the owner. Definitely agree WL has better guarantees as required by Law, but for pure death benefit, WL also forces premiums to be a lot higher than No Lapse guarantee UL because WL by law must grow cash value to equal face at maturity----which for a pure death benefit play is not important to the purchases. IE: us owners of WL buying it solely for death benefit are being forced to pay higher premiums than No lapse UL, not to mention we can pre-pay NLG to be done paying in as little as 1 year or short pay & we cant do that with WL unless we knew we wanted to do that at time of purchase and selected a short pay WL contract.

I just dont sit on 1 side of the fence or other, both have their places in good planning.

 

[PrivClientSG]

some risks (COI changes, fees, caps/participation rates), but not all.

Couldnt you make the case that WL shifts some risks to the owner too? not being able to easily miss a premium payment, not being able to later increase premiums or drop in larger sums, some inflationary risk or interest rate risk as WL doesnt have much of chance at participated in better interest rate environment.

I own a ton of WL, no IUL so I am not arguing because I am a lover of IUL. I am just asking if it is so cut & dry that WL puts "all the risk" on the carrier & UL chassis puts all the risk on the owner. Definitely agree WL has better guarantees as required by Law, but for pure death benefit, WL also forces premiums to be a lot higher than No Lapse guarantee UL because WL by law must grow cash value to equal face at maturity----which for a pure death benefit play is not important to the purchases. IE: us owners of WL buying it solely for death benefit are being forced to pay higher premiums than No lapse UL, not to mention we can pre-pay NLG to be done paying in as little as 1 year or short pay & we cant do that with WL unless we knew we wanted to do that at time of purchase and selected a short pay WL contract.

I just dont sit on 1 side of the fence or other, both have their places in good planning.

I hear you. I too own a massive amount of WL. I also own SGUL/NLG UL. I also own PPLI. I own other policies as well.

So, that being said:

Answer: No, not in my opinion.

Why? I think people collapse flexibility, options, choices, etc., with "risk(s)" and negatives. All I said was UL-chassis products shifts risk back to the insured/owner -- which is contradictory to risk management where you want to mitigate or eliminate risk for yourself, and shift that risk elsewhere -- I didn't speak to what risks, because, I think it's a fallacious and futile argument people make when they start talking about what risks and everything that goes along with it.

That said, one, not being able to easily miss a premium payment, no, that is not the case when a WL product is properly designed. Missing a premium payment is and can be addressed at virtually any point (just like UL), and there are options for this, with any product, except term of course, LOL. Two, not being able to later increase premiums or drop in larger sums, no, this is also not the case when a WL product is properly designed or designed to make this type of situation available. Three, inflationary risk is a constant, and depending on your definition, concern, etc., if you have it in WL, you have it in UL. Four, as far as a chance at participating in better interest rate environment, again, no, I don't agree with this, and that is certainly not always the case. For example, it is not the case with a mutual company. It is also not the case when you have and receive dividends. It is also not the case when you have features, or options where you can allocate dollars to an index, which in turn, can also potentially increase dividends, and yet have no risk (only one reason being, because your WL policy is built upon a series of guarantees).

As far as the rest of what you said -- pure DB, WL vs. NLG UL, higher premiums, and all that. Yes, I agree with you. However, let's not collapse "price" and "cost". They are two completely different things. You may "pay" a higher premium for WL, but you are getting something -- something of value -- in return for that. And what you "pay" is not "your cost". If you don't want that something, then get the NLG UL. That is why I bought it -- for pure DB only, in that specific case, want, goal, desire, and strategy.

Yes, both products can be very powerful -- when properly designed, utilized, sold, funded, monitored, managed, and so on.