Indexed universal life insurance is the product that can rival participating whole life insurance for cash accumulation and income strategies. It’s risk profile is similar, and it brings even more flexibility to the table than a well-designed blended whole life policy.
Several months ago we dished on what carriers we felt were best bets for whole life insurance when cash accumulation was top of mind. Today we’ll details our picks for indexed universal life insurance.
Shorter List than Last Time
On our whole life list we allowed for seven carriers. This time, we’ve chopped the selection down to five, and to be honest we only used five because it seemed somewhat customary. In truth, there’s a pretty big gap between number four and number five in our eyes.
Just like last time we’re keeping the official list as a rank order to ourselves and we’re releasing the carriers in alphabetical order only. Now on to the list.
Despite the ugly mother-ship that follows American General around, the company truly is a very well-run company with a product that ranks very well for lower internal expenses. The American International Group (aka AIG, yikes!) ownership draws many people to assume it’s the same thing, but in truth American General is simply an asset within AIG’s portfolio (it’s most valuable in fact). Truth is AIG is out of the scary days, and it’s newly established designation as a Systematically Important Financial Institution (SIFI) means AIG is under serious scrutiny regarding risky bets.
The company is currently using relatively low caps on its product, but underwriting is strong and the carrier understands the cash value life insurance as an asset strategy very well.
Lincoln National is owned by Lincoln Financial Group, an extremely large financial services company in the United States. Lincoln National itself is one of the largest US life insurers, and it’s one of the largest issuers of universal life insurance products in the country.
The indexed universal life product is solid, and has existed for quite some time. The use of a 1% credited interest floor helps insure stability of the product in later years to ensure that expenses are covered if the indexing strategy produces no additional interest. This is often times more money than the internal policy expenses.
Lincoln is also a strong carrier when it comes to underwriting. They can make products available when many people have health impairments that often drive insurance costs too high to make the strategy attractive. Lincoln is also well known for its efficiency and customer service.
For all their idiosyncrasies, Pacific Life has maintained a top ranking position of indexed universal life sales among its competitors. In addition to that, the company is crazy tuned into various methods to leverage cash value life insurance as an asset class, we’d suggest often times they go a little overboard on the FOMO stuff, but we appreciate their dedication nonetheless.
The product is pretty basic, and straightforward. And here’s the other thing. We include them for the same reason we included Northwestern Mutual in the whole life list, phenomenal customer service.
Now, whether or not that customer service is truly worth it given the products somewhat lagged performance is up to interpretation and some debate. But the numbers don’t lie; people buy from this company…a lot.
Penn Mutual has taken more than its fair share of criticisms from us regarding the indexed universal life product. It’s no secret that they manufacture a whole life product we happen to love, but indexed universal life insurance is often a different story.
There was a time when we gushed over the product. That was back when it came with a 2% floor on the indexing strategy (Lincoln eat your heart out). But those days are regretfully long gone.
The product underwent a reformation late last year and now we’re stuck with a 1% floor and a premium charge in the first year we’re not thrilled about. Despite this, however, the product works well and places highly on most of our analyses.
The company can also be pretty innovative when it comes to underwriting and make attractive offers when others are unwilling or unable.
We liked the old product better, but this one will do.
All right call it a cop-out if you wish, but we’re tipping our hat to the Sammon’s companies as a collective group rather than listing them individually. We are of course talking about the North American Company for Life and Health and Midland National.
Why group them? Because their respective products are close to identical. Sure there are a few minor variances here and there but they are negligible and we’d contend likely to wash one another long term.
We know North American has the less expensive (internally speaking) product, while Midland has the higher capped product (potentially negating each other). Besides that, the two are close and for that reason we really don’t think that buying from one over the other disadvantages someone. Both companies are well managed, and both companies have really well built indexed universal life insurance products that topped our list for income comparison earlier this year.
And that’s it
At the end of the day it comes down to what companies we have the most confidence in, and this is the list. So for Indexed Universal Life Insurance these are our picks.