How the Fees Destroy Indexed Universal Life Insurance

One of the oldest arguments meant to take down indexed universal life insurance (IUL) centers around the drag that fees (load charges, per 1,000 charges, and cost of insurance) have on the policy in years where the underlying index receives a 0% interest credit. On the surface, it seems like a valid argument against using IUL as a place to warehouse and access cash. But we've long taken the position that a properly designed policy--that is one that seeks to minimize costs and maximize the return on cash--isn't in any real danger in a 0% year. And now we have empirical proof of our position. We reached back into our client files and pulled a 10-year-old IUL policy that should theoretically be suffering from the last year (and some others as well) where the policy received no index interest credits.  The policy was designed correctly and we know this for certain because we designed it for our client. In spite of that fact, the client (for reasons that are irrelevant) chose to fund the policy much less than originally planned. Over the last 10 years, they've only paid about 30% of the aggregate premium that could have been paid.  Now, logic would tell us that the policy is languishing. But after running an in-force illustration, we are able to report a few things that will shock you. If you want to hear all the details, you'll have to listen to the full episode. ---------------- And if you want to find out how a well-designed indexed universal life policy might work for you, please click right here to send us a message. We're happy to work with you to help you get the right policy with the correct design to meet your needs.