This Shocking IUL Solve Beats Fixed Indexed Annuities

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This Shocking IUL Solve Beats Fixed Indexed Annuities

With the Life Industry and Annuity Industry facing pressures due to the interest rate environment and regulation, it’s important to think “outside the box” when delivering solutions to your clients.  This one IUL solve is doing just that, and beats fixed indexed annuities.

Here is what this solve offers:

  1. A Death Benefit 3-4x your original deposit day 1.
  2. Strong Accumulation due to higher cap rates.
  3. Living Benefits that cover Chronic and or Critical Illness.
  4. A death benefit that Guarantees to 121.
  5. Potentially No Medical Exam.
  6. Strong Compensation.

What is a Modified Endowment Contract (MEC)? 

  1. a MEC is life insurance policy funded beyond the 7-pay or Guideline Premium limits.
  2. a MEC assumes annuity rules from a taxation standpoint.  (you will withdraw gains before basis and pay tax on the gain)
  3. a MEC has a generally tax-free death benefit just like a non-MEC policy, which includes the use of accelerated death benefits for Chronic or Critical Illness.
    1. a Life Insurance Policy, MEC or non-MEC, can be exchanged into an annuity if the future desire turns towards lifetime income or other annuity opportunities.

Is a MEC a Bad Thing?

No.  A Modified Endowment Contract is not a bad thing when it is intentional.  In this solve specifically we are comparing an Intentional MEC to an Fixed Indexed Annuity.  This intentional focus does not change the tax nature between the two products as it relates to accumulation, but it does improve the tax nature of the death benefit and other related benefits beyond the accumulation.

Here Are the Numbers:

IUL Solve

50yr Old Male - Colorado - Standard Non Tobacco - Lump Sum plus 10pay Monthly Pay
   Guaranteed Current Assumption 
End of YearAgeAnnual OutlayCash ValueDeath BenefitCash ValueDeath Benefit
151$37,000.00$31,218.00$107,520.00$32,389.00$111,213.00
252$12,000.00$42,161.00$136,861.00$45,027.00$145,607.00
353$12,000.00$53,245.00$164,622.00$58,375.00$179,774.00
454$12,000.00$64,468.00$190,865.00$72,466.00$213,728.00
555$12,000.00$76,555.00$217,670.00$88,360.00$250,338.00
656$12,000.00$88,902.00$243,303.00$105,114.00$286,737.00
757$12,000.00$101,508.00$267,808.00$123,268.00$324,259.00
858$12,000.00$114,371.00$291,232.00$142,678.00$362,358.00
959$12,000.00$127,488.00$313,618.00$163,431.00$401,118.00
1060$12,000.00$140,849.00$335,009.00$185,617.00$440,627.00
1161$0.00$143,036.00$329,346.00$198,771.00$456,824.00
1262$0.00$145,207.00$323,815.00$212,785.00$473,723.00
1363$0.00$147,358.00$318,411.00$227,696.00$491,330.00
1464$0.00$149,482.00$313,129.00$243,553.00$509,684.00
1565$0.00$151,574.00$307,967.00$260,408.00$528,817.00
1666$0.00$153,638.00$302,920.00$278,390.00$548,889.00
1767$0.00$155,483.00$297,985.00$297,350.00$569,875.00
1868$0.00$157,305.00$293,157.00$317,583.00$591,855.00
1969$0.00$159,103.00$288,433.00$339,143.00$614,820.00
2070$0.00$160,874.00$283,809.00$362,051.00$638,722.00
2171$0.00$162,598.00$279,275.00$386,306.00$663,510.00
2272$0.00$164,258.00$274,825.00$411,943.00$689,232.00
2373$0.00$165,838.00$270,456.00$439,031.00$715,991.00
2474$0.00$167,321.00$266,164.00$467,655.00$743,915.00
2575$0.00$168,700.00$261,946.00$497,947.00$773,178.00
2676$0.00$169,972.00$257,798.00$529,929.00$803,745.00
2777$0.00$171,142.00$253,715.00$563,762.00$835,768.00
2878$0.00$172,214.00$249,694.00$599,503.00$869,222.00
2979$0.00$173,193.00$245,731.00$637,199.00$904,077.00
3080$0.00$174,072.00$241,823.00$676,819.00$940,242.00
3181$0.00$174,843.00$237,965.00$718,442.00$977,811.00
3282$0.00$175,492.00$234,153.00$762,104.00$1,016,853.00
3383$0.00$176,021.00$230,384.00$807,943.00$1,057,470.00
3484$0.00$176,387.00$226,653.00$856,070.00$1,100,029.00
3585$0.00$176,575.00$222,956.00$906,436.00$1,144,530.00
3686$0.00$176,565.00$219,287.00$959,064.00$1,191,123.00
3787$0.00$176,338.00$215,642.00$1,013,977.00$1,239,983.00
3888$0.00$175,881.00$212,017.00$1,071,202.00$1,291,290.00
3989$0.00$175,183.00$208,407.00$1,130,784.00$1,345,243.00
4090$0.00$174,256.00$204,809.00$1,192,774.00$1,401,910.00
4191$0.00$173,118.00$201,219.00$1,257,239.00$1,461,318.00
4292$0.00$171,805.00$197,633.00$1,324,472.00$1,523,581.00
4393$0.00$170,367.00$194,043.00$1,394,581.00$1,588,390.00
4494$0.00$168,863.00$190,443.00$1,467,707.00$1,655,275.00
4595$0.00$167,387.00$186,820.00$1,544,100.00$1,723,359.00
4696$0.00$166,072.00$183,152.00$1,624,259.00$1,791,304.00
4797$0.00$164,961.00$179,409.00$1,709,484.00$1,859,205.00
4898$0.00$164,224.00$175,541.00$1,801,205.00$1,925,328.00
4999$0.00$164,144.00$171,462.00$1,901,879.00$1,986,672.00
50100$0.00$165,238.00$172,605.00$2,015,851.00$2,105,725.00
51101$0.00$166,091.00$173,496.00$2,134,085.00$2,229,231.00
52102$0.00$166,703.00$174,135.00$2,255,962.00$2,356,541.00
53103$0.00$167,061.00$174,509.00$2,380,258.00$2,486,379.00
54104$0.00$167,155.00$174,607.00$2,506,163.00$2,617,897.00
55105$0.00$166,984.00$174,429.00$2,634,127.00$2,751,566.00
56106$0.00$166,554.00$173,979.00$2,765,315.00$2,888,602.00
57107$0.00$165,876.00$173,272.00$2,899,346.00$3,028,609.00
58108$0.00$164,831.00$172,179.00$3,036,268.00$3,171,636.00
59109$0.00$163,379.00$170,663.00$3,177,199.00$3,318,850.00
60110$0.00$161,479.00$168,678.00$3,320,454.00$3,468,492.00
61111$0.00$159,083.00$166,176.00$3,460,779.00$3,615,073.00
62112$0.00$156,220.00$163,185.00$3,604,816.00$3,765,532.00
63113$0.00$153,388.00$160,227.00$3,750,483.00$3,917,693.00
64114$0.00$150,587.00$157,301.00$3,893,017.00$4,066,582.00
65115$0.00$147,816.00$154,407.00$4,032,791.00$4,212,587.00
66116$0.00$145,076.00$151,544.00$4,162,381.00$4,347,955.00
67117$0.00$142,365.00$148,712.00$4,293,783.00$4,485,216.00
68118$0.00$139,684.00$145,912.00$4,415,968.00$4,612,848.00
69119$0.00$137,032.00$143,141.00$4,533,160.00$4,735,264.00
70120$0.00$134,409.00$140,401.00$4,647,244.00$4,854,435.00
71121$0.00$131,814.00$137,691.00$4,733,985.00$4,945,044.00

Fixed Indexed Annuity Solve

50 Yr Old Male - Colorado - $37,000 Lump Sum then $1,000 per Month for 10 years
  Guaranteed Most Recent 10 Years 
EOY AgePremiumSurrender ValueDeath BenefitSurrender ValueDeath Benefit
51$37,000.00$32,699$37,000$33,572$38,084
52$12,000.00$43,631$49,000$44,448$50,580
53$12,000.00$54,672$61,000$55,195$64,501
54$12,000.00$65,824$73,000$68,634$83,700
55$12,000.00$77,087$85,000$84,134$100,399
56$12,000.00$88,463$97,000$96,213$112,399
57$12,000.00$99,953$109,000$115,863$127,322
58$12,000.00$121,000$121,000$155,818$155,818
59$12,000.00$133,000$133,000$167,818$167,818
60$12,000.00$145,000$145,000$198,339$198,339
61$145,000$145,000$207,264$207,264
62$145,000$145,000$216,591$216,591
63$145,000$145,000$226,338$226,338
64$145,000$145,000$236,523$236,523
65$145,000$145,000$247,167$247,167
66$145,000$145,000$258,289$258,289
67$145,000$145,000$269,912$269,912
68$146,311$145,000$282,058$282,058
69$147,774$145,000$294,751$294,751
70$149,251$145,000$308,015$308,015
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