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IUL vs Whole Life

 

IUL vs Whole Life

 

There is an argument that Indexed Universal Life Insurance (IUL) is the best tool for Confidential Banking. We believe this to not be true. There are a lot of lies out there surrounding IULs and we are going to break them down for you. Most agents don’t understand what they are selling or aren’t educated properly, so we want to clarify four points.


There are 4 lies insurance agents use to sell IUL.


LIE 1: guaranteed column doesn’t matter. People only look at the illustrated rate column, which is based on an assumed growth rate of, say, 6%.
The guarantee shows internal fees and expenses. There are administrative costs inside of the policy, which can be raised. Insurance costs can be increased, market can perform poorly. So the illustrated column is a big misrepresentation of actual performance. We have been in a long bull run, and a lot of people are concerned with where the market is going. Once the market goes into a downturn, the illustrated growth of the policy will be greatly exaggerated as compared to the actual growth.
IUL shifts the responsibilities and guarantees from the insurance company to the actual insured, so the guarantees don’t have to be there.
Insurance companies make more money on IUL than with Whole Life.
Life insurance agents also make up to 30% more to sell IUL. There is a conflict of interest.


LIE 2: The illustrated column will perform as marketed. The only guarantee in an IUL is that the performance won’t match what is illustrated. The illustrated column will show an assumed growth rate of say 6%, but in actuality the markets are going up and down so there is no way to know what it is going to look like. When it becomes time to take a tax free policy loan for real estate, the value could be much much lower than expected. People think that if the market goes down the policy will grow by zero percent. That is not true. There are admin costs and insurance costs that eat into the capital which can increase in down markets. So it is not purely principal protected, which is what they market it as.


LIE 3: Guaranteed income for life. Its 100% based on the money you have in your policy upon retirement age. The only way the lifetime income benefit rider works if the money in the policy has accumulated as illustrated, and the illustrated growth never matches the actual market performance. Volatility is a real issue here. That is why we like the guaranteed growth of the whole life product as opposed to the IUL.


LIE 4: IUL is better for Infinite Banking. Keep in mind agents can sell both IUL and whole life. They usually chose to sell IUL because commissions are higher. The insurance company has the ability to change your expenses in an IUL every year as you get older. IUL insurance costs go up every year as you age no matter what, but they can increase the actual rates of insurance charges in down markets to account for having to pay the guarantees. Your life insurance policy should not be an “investment”.


Whole life insurance is the only product in the market that guarantees what is going to happen will happen no matter what.
In a Whole life, the insurance company bears the risk. In IUL, they pass that risk off to the policy holder.
The fact that fees are never guaranteed in an IUL is a big concern.


All in all, although IULs have their benefits, we prefer whole life insurance as the proper tool for the Infinite Banking Concept.

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Our Financial Expert Advisor will personally reach out to answer all of your questions.

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Our Support and Sales Team is available 24/7 to answer your queries

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