New FIA with 10.25% Cap and 50% S&P 500 Par Rate (A-Rated w/No Fee)

If you missed last week’s newsletter about the NEW FIA with the “best” par and cap rates, click on the following link to learn more) (this is the NEW “Best FIA Your IMO Won’t Tell You About”):

https://advisorshare.com/new-best-fia

2022 Whole Life Dividends Declared…How Does IUL Compare?

I waited on this newsletter to see if a few companies that have not declared a rate would declare, but because they haven’t, it was time to get this newsletter out there.

One of the most contested debates in the industry today is whole life (WL) vs. IUL (Indexed Universal Life). The biggest problem is that most advisors don’t fully understand the pros and cons of both WL and IUL.

I just wrote a “client” newsletter comparing WL to IUL. To read that newsletter, click on the following link:

https://advisorshare.com/whole-life-vs-iul

I am giving permission for ANY advisor to use my article with clients (not just ones who work with our IMO www.advisorshare.com).

Declared dividend rates for WL and IUL—some of the major carriers have come out with their 2022 declared dividend rate. The current dividends are way below what the companies tout as their “average” dividend (typically going back 20 years to a time when interest rates were high). Here are the 2022 declared rates of some popular carriers:

  • Mass Mutual-6.00%
  • Penn Mutual-5.75%
  • Guardian-5.65%   
  • Northwestern Mutual-5.00%

15-year historical returns from WL policies?

  • Mass Mutual-7.24%
  • Guardian-6.65%   
  • Penn Mutual-6.26%
  • Northwestern Mutual-6.51%

The IUL declared dividend = 0.00% Hmm…a 0% declared rate isn’t good? But, of course, the design of IUL is to guarantee zero in down years and provide much more upside growth than WL.

15-year historical return of the “best” IUL with the highest S&P 500-based cap?
9.31%!
(Using today’s low current cap rates & published historical cap rates)

Hmm…IUL had a much higher CAGR than the best WL policy. FYI, the company I used to come up with these numbers actually publishes its renewal history of its caps.

To learn more about the IUL with the highest S&P 500 caps, click here.

Annual Return vs. Borrowing

Why do clients fund cash value life?

Is it to accumulate cash they will never use or is it to borrow from the policy tax-free when needed (mostly likely in retirement)?

People buy cash value life so money can grow tax-free and be removed tax-free.

WL sales agents almost NEVER show borrowing!

This is my biggest beef with WL kool-aid drinkers who are mostly IUL haters, e.g., they don’t show borrowing from the policy.

How can an advisor make a good faith review of WL vs. IUL if you don’t compare the primary reason the client is funding it?  You can’t, but that is the norm in the industry.

I advocate that EVERYONE in the industry learn the pros and cons of WL vs. IUL both from an accumulation standpoint and a borrowing standpoint. Then and only then can advisors truly make an informed decision about what product is best for their clients.

Roccy DeFrancesco, JD, CAPP, CMP
Founder: The Wealth Preservation Institute
Founder: OnPointe Software
Co-Founder: The Asset Protection Society
269-216-9978
roccy@thewpi.org