The Numbers
How Does the EIUL Actually Work?
Tax Deferment
You Can’t Defer Your Income Tax with an Eiul?
Fees
Aren’t the Fees Higher in a Cash Value Policy?
The Match
What About No Matching Contributions?
Hear what Others Think
Grant & Heather Moulden
Is Investing in Life insurance, a bad idea?
Indexed Products and How They Work
The 3 Main Factors Behind IUL Crediting:
The three main factors that make the indexed crediting inside an Indexed Universal Life policy so unique and powerful are as follows:
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S&P Index Fact #1:
The market has experienced annual gains more than three times as often as it sustained annual losses. Put another way, the S&P Index has gone up annually 76% of the time in the last 80 years. I’m referring specifically to a 80-year study period from 1937-2016 where the S&P Index has experienced 61 up-years and only 19 down-years.**
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S&P Index Fact #2:
Those up-years in the S&P were 3x as likely to give you double-digit crediting than single-digit crediting. If we look at those 61 distinct positive years referenced above, the market gained more than 10% in 47 of those years and less than 9% (but greater than 0%) in the other 14 years.**
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S&P Index Fact #3:
Fact #3: there were only two instances where the market had three consecutive negative years during that entire 81-year time period. The S&P Index had three losing years in a row from 1939-1941 and not again until 2000-2002.
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S&P Index Fact #4:
Fact #4: there was only one other instance where the S&P Index even had two consecutive negative years from 1973-1974.*
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S&P Index Fact #5:
- Fact #5Fact #5: What’s interesting is that all three of these time periods were immediately followed up by a rebound year that produced at least a double-digit advance from the new lower starting value. Although your investment portfolio may not have gotten even after this first bounce, there’s a good chance that your IUL’s cash value may pull way ahead after that first double-digit rebound (since it only paid policy charges during the consecutive 0% years).
- ** Click here to see the 80-year study on the S&P Index.
Ever heard the term “fail fast?” That’s what the stock market seems to do. When it has a significant correction, it plummets quickly. Whereas when the market rallies, it is usually a steady ascent over a prolonged period of time. One of my favorite sayings about the market is that “Stocks tend to take the stairs up, but they take the window down.”
2 Questions for You
- Do you believe that the stock market will continue to have corrections and recessions, but still produce more up-years than down-years over the next 30-60 years of your life?
- Do you believe that the majority of those up-years will continue to produce gains in excess of 10% (even if they happen to follow some harsh down-years)?
If you answered yes, then how is the unique crediting methodology of IUL a bad thing? Where else can you confidently channel the volatility of the stock market in this manner?
Questions You Should Ask Yourself
- What better way is there to protect my account value, lock-in the lion’s share of my past gains, while still staying confidently invested without worrying about when the next crash will happen?
- Other than hiding money under my bed while waiting for a crash, how can I truly take advantage of the great buying opportunities that economic corrections provide? How else can I do this when all of the investment strategies available are in some way exposed to major market’s losses?
- What portion of my assets would I be willing to forgo any upside above 11%-13% annual crediting so that I can completely erase the possibility of downside market risk?
CHOOSE SYMMETRY FOR and Eiul or Personal Pension Program?
At Symmetry Financial Group, we understand that everyone has different needs for insurance coverage, including final expense coverage. That’s why we don’t offer “cookie cutter” solutions. We will work with you to learn more about your needs and goals for insurance protection. Then, we’ll find solutions that meet those needs.
We don’t push proprietary products on our clients – we are truly an independent organization, representing multiple insurance carriers. That means you can be confident that your insurance coverage is in your best interest, not ours.
Advanced Explanations of an Eiul or PPP
Now that you have a basic understanding of how Indexed Crediting works, let’s dissect the common crediting criticisms and see if they indeed have any validity. This way you can understand the real pros or cons of IUL’s cost structure and see how you feel about using Indexed Universal Life for your retirement and pre-retirement wealth-building goals.