Have you dismissed Indexed Universal Life (IUL) because you think your clients will lose their investment? Maybe now is the time to re-visit IULs and recognize the industry has made tremendous changes to these products.
Assume a healthy 35 year old female inquires about a cash value life insurance policy. The premium required for the whole life policy providing a $100,000 death benefit would be $1,190 annually. We use that same premium to fund a $100,000 death benefit IUL with guarantees. Using the below graph, it's easy to see that an IUL can significantly outperform a whole life policy.
The reason most advisers shy away from IULs is due to the non-guaranteed values. In this illustration, we also provide a guaranteed death benefit to age 120. The performance of the death benefit and cash value are based on non-guaranteed assumptions. In the above graph, this assumes a 7.11% rate of return. Many advisers question these returns, but see the table below. As you can see, a 7.11% average rate of return over the long term, is quite possible within the IUL product.
