Tax Free Income Landscape

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Tax Free Income Landscape

The Insurance Industry has been under a lot of stress lately due to regulation, low interest rates, and high volatility.  These pressures have brought out a new feature in the indexing world called Multipliers.  A multiplier is generally a way to pass some of the expense for Indexing to the consumer and in turn, provide a potentially higher upside to the client’s return.  How this is applied in each product will vary, but it looks something like this; the client takes a lower CAP Rate and is charged additional fee of 1% for a multiplier.  This additional fee buys the client the ability to multiply their index return (up to their cap rate) by whatever multiple the company/product is offering.  This multiplier can have the potential to take a 10% cap rate up to 15% performance or more depending on the company/product.

Here is a look at income potential from many of the most popular Indexed Universal Life Companies and Products, both with and without the use of a multiplier.

Income Solve Without a Multiplier

40M - Colorado - $10,000 Annual to age 65 - Minimum Increasing Face to age 66 - Level Face age 67+ - Overloan Protection Rider - Income Age 67-95 - Company Default Rate
Carrier & ProductInitial Death BenefitInitial Annual PremiumTarget PremiumNon-Gtd. Cash Value Year 27Distributions Year 27
Accordia Life and Annuity Company Global Accumulator IUL$299,129$10,000$4,373$609,829$65,689
Accordia Life and Annuity Company Lifetime Builder Elite 2020$323,189$10,000$4,725$640,637$67,155
AG - American General
Max Accumulator+ IUL (2019)
$313,271$10,000$4,524$562,592$47,031
Allianz Life
Life Pro+ Advantage
$281,602$10,000$3,560$545,071$43,174
John Hancock Accumulation IUL 20$292,875$10,000$4,276$502,438$37,753
Lincoln Financial Group
Lincoln WealthAccumulate IUL (2019)-09/16/19
$272,413$10,000$4,756$457,225$29,284
Nationwide
Nationwide Indexed UL Accumulator II
$309,542$10,000$4,307$518,018$34,804
North American Company for Life and Health Builder Plus IUL2$307,826$10,000$4,134$576,859$50,952
Prudential
PruLife Index Advantage UL (2020)
$293,945$10,000$4,803$434,740$25,822
Securian Financial Eclipse Accumulator IUL$297,688$10,000$3,432$517,597$43,008
Symetra Life Insurance Company Symetra Accumulator IUL 2.0$312,117$10,000$4,342$553,492$46,812
Zurich American Life Insurance Company Zurich Select Index UL$308,635$10,000$2,264$488,496$36,030
Zurich American Life Insurance Company Zurich Wealth Builder IUL$301,202$10,000$3,803$650,620$49,081

 

Income Solve With a Multiplier

40M - Colorado - $10,000 Annual to age 65 - Minimum Increasing Face to age 66 - Level Face age 67+ - Overloan Protection Rider - Income Age 67-95 - Company Default Rate
Carrier & ProductInitial Death BenefitInitial Annual PremiumTarget PremiumNon-Gtd. Cash Value Year 27Distributions Year 27
Accordia Life and Annuity Company Global Accumulator IUL$299,129$10,000$4,373$679,226$83,322
Accordia Life and Annuity Company Lifetime Builder Elite 2020$323,189$10,000$4,725$640,637$67,155
AG - American General
Max Accumulator+ IUL (2019)
$313,271$10,000$4,524$693,793$68,967
Allianz Life
Life Pro+ Advantage
$281,602$10,000$3,560$700,183$79,311
John Hancock Accumulation IUL 20$292,875$10,000$4,276$525,386$39,647
Lincoln Financial Group
Lincoln WealthAccumulate IUL (2019)-09/16/19
$272,413$10,000$4,756$559,312$52,729
Nationwide
Nationwide Indexed UL Accumulator II
$309,542$10,000$4,307$518,018$34,804
North American Company for Life and Health Builder Plus IUL2$307,826$10,000$4,134$576,859$50,952
Prudential
PruLife Index Advantage UL (2020)
$293,945$10,000$4,803$434,740$25,822
Securian Financial Eclipse Accumulator IUL$297,688$10,000$3,432$517,597$43,008
Symetra Life Insurance Company Symetra Accumulator IUL 2.0$312,117$10,000$4,342$553,492$46,812
Zurich American Life Insurance Company Zurich Select Index UL$308,635$10,000$2,264$488,496$36,030
Zurich American Life Insurance Company Zurich Wealth Builder IUL$301,202$10,000$3,803$650,620$49,081

 

Key Things to Remember for IUL Income Solves

  1. AG 49 will be changing the ability to illustrate multipliers.  This includes in-force business.  Be careful how aggressively you illustrate.
  2. If income is the desire along with death benefit you should use and increasing death benefit and switch to level after payment stops (most often).
  3. Comparing Multipliers.  We don’t sell fruit, we sell competitive advantages.  When you try to run an “Apples to Apples” comparison, it does not exist.  One tip to help compare is to run all carriers at 50% – 75% of their max illustrated rate.  This will equally mute the multipliers without removing a company’s competitive advantage.
  4. If possible, consider reducing your income solve to between 6% – 8% of the cash value at the time income begins. This gives you more flexibility when it actually comes to using the money (over deliver).

 

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