129 Leave the Annuities Alone

There is a worrying trend that we are seeing in the financial services industry recently. That trend involves selling indexed universal life insurance to people that have previously purchased fixed indexed annuities with some sort of guaranteed minimum withdrawal benefit (GMWB) or lifetime income rider.

Now that isn't necessarily a problem as one could certainly own an annuity with this sort of benefit and an IUL policy for distinct reasons. 

However, what worries us a bit is that there seems to be certain marketing organizations, life insurance companies and agents who are recommending that people ditch their existing guaranteed benefits provided under these annuity contracts in favor of creating a potentially higher income by using indexed universal life insurance to generate retirement income.

If you've followed us for any length of time, you will know that we are advocates of using IUL to create retirement income. However, doing it and doing it correctly are two different things.

And from what we've seen thus far, those who are promoting the strategy of ditching the annuity to move the money over to an indexed universal life insurance policy are creating unrealistic projected expectations for their clients.

This could be taking certainty away from people who don't have enough money to live with uncertainty. What's more, from what we can ascertain so far–the companies and marketing organizations who are promoting this strategy don't even have a firm grasp as to how IUL really works.

Let me give you a hint: it is not a “set it and forget it” sort of strategy. It will need to be managed by people who..

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