In the following, we distinguish between several annuity types: Immediate vs. Deferred, Fixed vs. Variable vs. Buffer, and Income vs. Accumulation products. An annuity is a reverse bet from Life Insurance. It is an investment you make to self-sponsor your own pension plan. Money grows tax-deferred. The income derived will also be tax-free if bought …
Planning for a shorter life expectancy risks outliving one’s savings. Planning for a longer life expectancy may mean spending less during retirement and leaving behind a larger than intended legacy. An Annuity can help mitigate both types of risk. The longevity risk is the risk of outliving one’s life savings. Life expectancy in the U.S. …
IUL policy design and selection involves a multitude of factors. It should be done once and done right! Indexed Universal Life (IUL) is a complex financial instrument masquerading as an insurance product, and it is an excellent choice for retirement planning. However, a number of factors are involved in picking a top-performing IUL in the …
General observation about agent qualification, sales tactics, commission, product benefits, asset diversification and product research. The cash value insurance products and Annuities have a bad reputation for two reasons: sales tactics and agent commission. While the insurance products have evolved (see “Life Insurance Product Types”) to become complex financial instruments, the credentials needed to qualify …
Separating Facts from Myths in the Cash Value Insurance Business Read More »
IRC 7702 is what gives IUL its tax benefits. To qualify, the policy should be designed with a GPT or CVAT, and maintained in a non-MEC status. IRC 7702 provides IUL with Roth-like tax benefits. Investment grows tax-deferred and can be withdrawn tax-free. However, IULs are required to carry a life insurance coverage with a …
Comparison and contrast between Increasing vs. Level Death Benefit IUL designs, Cash Value vs. Accumulated Value accounts, and Wash vs. Participating loans. Indexed Universal Life (IUL) policies can be designed with a Level or Increasing Death Benefit (DB), referred to as option A and B respectively. The Cash Value (CV) can be accessed via a …
IUL costs are dominated by sales charges, which are front-loaded, along with the cost of insurance which increases with age. The lifetime cost of holding an IUL investment is about the same as for any other money management fees, which is typically 1-2% of AUM. Indexed Universal Life (IUL) investments offer both tremendous growth potential …
We compare two different investment scenarios—endowment and income strategy, in which IUL trades off a couple of points in market return for a much lower volatility. Let us compare the performance of an Indexed Universal Life (IUL) policy with the S&P 500 index over the last 50 years. For this analysis, we used the annual …
IUL / FIA is a conservative alternative to direct investment in the Stock Market. It protects the principal while trading some performance for a much lower volatility. Investments like Indexed Universal Life (IUL) and Fixed Index Annuity (FIA) use an index crediting method to track their stock market return. Spread, Cap and Participation are the …
IUL / FIA Credit Strategies and Capital Preservation Explained Read More »
Investments like IULs and Annuities use an index crediting method to track market return. These methods effectively narrow the range of returns for IULs and Annuities. In what follows, we show how a point-to-point index credit system works, according to different market scenarios, in an IUL (Indexed Universal Life) and FIA (Fixed Index Annuity). There …
