Episode #127: Proof That IUL Really Works

Episode #127: Proof That IUL Really Works

Americans are inundated with all the information now available on the internet. As consumers, it is our responsibility to sort through the positive and negative feedback, and more importantly, facts from fiction when we’re ready to buy.

In this episode of Money Script Monday, Kevin presents 3 essential keys to gain confidence in your Indexed Universal Life policy and provides examples of real life IUL success stories.


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Video transcription

Hey there, my name is Kevin Nuber. Thank you so much for watching today's Money Script Monday video.

Today, what I want to talk about is proof that Indexed Universal Life actually works.

You see, we've been writing Indexed Universal Life contracts for well over 15 years and we've written thousands and thousands and thousands of policies.

Over this period of time, we've seen so much bad information out there on the internet about Indexed Universal Life that we decided that as a company, we're going to start tracking and reporting to both our advisors and to our clients exactly how their policies have been performing.

We want to show them that Indexed Universal Life actually does work and it does come true.

What you hear…

Now, one of the most difficult things about making any important decision nowadays is when you go out into the internet, you can find all this incredibly bad information just about anything.

And if you go and do a quick search for Indexed Universal Life, you're going to find all kinds of stuff that are negative about Indexed Universal Life.

what you hear about iul

This list would go to the floor, it's so long.

What we found is that for the most part, for the people that understand how Indexed Universal Life contracts work, when you read this stuff that's out there in the internet, you instantly realize that the people writing this or having opinions on it, for the most part, have no concept about how Indexed Universal Life works or how it's used.

And most of the information that they put out there is just patently false.

But there's really no way for a consumer to know what is the good information and what is the bad information.

As an example of this, many times I'll tell a person to go on the internet and do a search for certain things to show that you can find bad information on just about anything.

And within a couple minutes, you can find people that had the absolute worst day of their life at the happiest place on earth, at Disneyland.

You would think for anyone that's been there, how can anybody have a bad time at Disneyland?

But I assure you that you can find pages and pages and pages of stuff on the internet about people that absolutely despise their trip to Disneyland.

So, when we go out there on the internet and we look up stuff about Indexed Universal Life, we're going to find all kinds of stuff.

We're going to find things like, "Indexed Universal Life never comes true."

What I'm going to show you today is Indexed Universal Life does come true, but I'm also going to show you that there are certain situations in which it does not come true.

That's an important thing for a consumer to know what makes an IUL work and what makes an IUL not work.

The second thing that I put up here is that insurance companies are just going to lower the rates, that's the interest rates, and they're just going to increase the cost of insurance and the client's going to be stuck inside this contract with surrender charges.

Well, what I say to that real quick is that it's a financial product and if interest rates go down in the United States, you would expect the interest rates to go down in an IUL contract as well.

It's basic Finance 101 and there's nothing different about an IUL with any other financial instruments that's out there.

We can also see things like it's too complex. And like I mentioned, this list goes on and on and on.

The truth is…

Well, like I mentioned, we found that over the last 15 years, for the most part, IUL does come true.

And of course, there's outliers, there's situations where it doesn't come true. But for the most part, when we actually look at these in-force contracts, we find that IUL comes true based on how we originally showed it to the client.

So, what we started doing is we started generating reports and this is a report that we provide to all of our advisors to provide to their clients.

This is called an Indexed Universal Life Annual Policy Performance Review. The purpose of this report is to show a client year by year how their policy is performing.

We take the original proposal, that original projection of what the cash values are going to be, what the rate of returns are going to be, and we compare it year by year to the actual statement that gets produced at the end of the year.

It provides you an ongoing documentation of how this policy is performing based on that original projection.

And it makes it so that although IUL can be somewhat complex, like any financial product, it shows you very quickly, is your policy on track? Is it behind or are you ahead of where you should be?

the truth about iul

This contract that I have here is a contract that was written 12 years ago.

12 years later, if you would read all the negative stuff on the internet, you would easily conclude that there's no way that this policy actually performed well or that original projection came true.

But I'm here to say that it absolutely did come true. The original proposal that we showed the client 12 years ago, we told the client that they should expect to have a cash value of $302,963.

So, how has that policy actually performed today? Well, today, it is actually earned...it has a cash value of $348,300. So, we're 40,000 ahead.

We're over 10% ahead of where we originally said that the client was going to be 12 years ago.

So, you would immediately ask, "Well, where are people getting this information about all these negative things that they're saying about Indexed Universal Life?"

What I'll say to that is that certain things have happened in order to make sure that your IUL contract will come true.

What we do is we've documented these thousands of policies and we put certain policies into a bucket that says, "These are the ones that have worked."

And we put other policies in another bucket that says, "These are the policies that did not work."

And we say, okay, what is the things that caused this policy to work and what's the thing is the caused these policies not to work?

Overwhelmingly it is not all of the things, it's none of the things that you read on the internet about Indexed Universal Life.

3 keys to IUL success

We've defined three keys to success in order to make sure that your in-force contract will come true.

3 keys to iul success

The first key is that the policy, it has to be maximum funded.

Now, this gets into the complexity issue a little bit, but there's an infinite number of ways to pay a premium into an Indexed Universal Life contract, but to simplify it, I'll say that there's a minimum and there's a maximum premium.

We've all been conditioned to always pay the minimum premium, but the way that we structure policies and our advisors structure them is that have the client pay the maximum premium.

That way the client can get the most cash value, the highest rate of return on all the benefits afforded to them by Indexed Universal Life.

That is the first thing that has to happen. It has to be maximum funded.

The second thing that has to happen is that it must be illustrated at a reasonable rate of return.

This proposal that I showed you where we're $40,000 ahead, we illustrated this at a 6% annual rate of return.

If we went back 12 years ago, I could have chosen to show this at 9% or higher for a rate of return, but we did not do that.

We did not just show what the insurance company told us to show. We backed it down and we showed a reasonable rate of return of 6%.

If we would've showed 9%, then we would not have had a policy that actually came true. So, you have to illustrate at a reasonable rate of return.

The third thing is that the client has to pay the premium.

If we set up, for example, on this policy, a client to pay a premium for five years, the client has to pay the premium for five years.

If they miss a premium payment or they delay it, we're permanently going to be behind by the amount of that payment. So, that is the third thing that has to happen.

What we found in reviewing all of these thousands of the policies is that when a client does these three things and an advisor does these three things, then you have a very, very high chance of having that policy come true or exceed what we originally proposed.

Now, what we've done is we've decided out of all these thousands of policies that we have, just to pick out a dozen or so examples to share with you.

So, we have a website that is LifePro.com/stories.

On this website, you're going to find these dozen or so policies. They're going to show you all kinds of different examples, policies that have performed well, policies they haven't performed well, and it shows you exactly was this formula followed?

If it wasn't, that's why it's not performing well because it was over-illustrated or the client missed their premium payments.

But then we have plenty of examples where all these three keys to success were followed perfectly. And it's just like this contract that I showed you where we're on track or we're ahead of where we should be.

So, once again, you can go to LifePro.com/stories and you can download those policy performance reports and see for yourself definitively that Indexed Universal Life can work and it will absolutely come true when you follow these three keys to success.

Thank you so much for watching.

The information presented here is not specific to any individual's personal circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials.

About Kevin Nuber

Kevin Nuber is the Vice President of Field Support at LifePro. He coaches hundreds of financial professionals on how to build effective financial strategies that achieve their clients' long term goals and helps them stay educated on the latest industry trends.


This information is meant for educational purposes only.

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