New IUL Options Offer Lower Expenses and Higher Cash Value and Income
What if you could take an already beneficial Indexed Universal Life (IUL) policy and lower the barrier for entry while increasing the value it accumulates? As of recently, new IUL products have been released that do exactly that.
When the new options became available on Jan 1st, 2021, carriers were able to update their IUL products to allow a lower minimum death benefit requirement. When designing a maximum funded IUL, we always structure at the minimum death benefit to reduce policy costs and maximize cash value accumulation. The new product guidelines allow us to build these IUL’s with less death benefit and therefore reduce the policy expenses to the consumer. This reduces the costs of insurance charges per thousand expenses, surrender charges, as well as the target premium.
Carriers were faced with a dilemma. Do they give all the benefits of the new guidelines to the consumer and reduce the commissions paid to the advisor? Or do they take a more balanced approach where the client is better off, but advisors are less affected.
To solve this problem, the new options allow a more neutral approach to both clients and advisors. The client benefits increased slightly, and the advisor commissions were just about unaffected. Because the targets were higher than all other products, most of the cost savings of the new policies have been negated. Since the targets were significantly raised, the only way this product will be competitive is with the minimum death benefit design. If a client is looking for more death benefits, they will want to consider purchasing a supplemental low-cost term insurance policy. They can add on the supplemental term rider to the new IUL policy, but it will reduce the cash value growth efficiency.
Let’s look at the key values to pay attention to. In this example, I used a 45-year-old male, PNT, $25k premium for 20 years, and income year 2021 through age 100.
As you can see, there is an improvement to the cash value growth and performance for the consumer. But one thing we want to make sure we are talking about is the client’s life insurance needs. With the large decrease in death benefits, we want to make sure our clients still have adequate life insurance coverage for their family or business.
For a more detailed, side-by-side comparison of the old vs. new insurance policies, please check out the report below we prepared for you and your clients:
Download Your Sample Life Insurance Policy Comparison Report Here »
Your Field Support Representative is well equipped to break down this report for you. Schedule a meeting with them below:
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If you’re interested in taking advantage of these new IUL products, reach out to your Field Support Representative today at (888)- LIFEPRO and ask about latest IUL options.
Comparison of Insurance Policies provided by InsMark, Inc. 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.