Life Insurance Has Weathered the Opinion Storm

Life insurance is a pretty unique financial tool. It’s no secret around here that we’re fans. Our admiration comes from personal observations and a lot of number crunching we’ve done to arrive at the opinion we have.

But not everyone shares in our high opinion of life insurance and the life insurance industry.

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Could Your Loan Rate on Your Indexed Universal Life Insurance Drive Your Cap Rate Down?

Recently there have been some rumblings in the life insurance industry. I know, big surprise. It seems life insurance agents and industry professionals love to disagree.

First, make sure you read last week's post, “Introduction to Indexed Universal Life Policy Loans”.

It's important for you to have context for the discussion below.

The particular disagreement in this instance relates to loans on indexed universal life insurance. What's been circulating is a rumor of sorts. And the rumor is that the fixed rate loan feature of indexed loans is going to be trouble.

For whom, you ask?

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Introduction to Indexed Universal Life Insurance Policy Loans

Indexed universal life insurance policies generally offer two types of policy loans. Though the language can be a bit intimidating to some, by the end of this introduction, you should have a solid understanding of what’s available and how the different loan options work.

Typically, indexed universal life insurance policies have two loan options. The first loan type is the traditional loan (sometimes referred to as the fixed loan option). The second loan type is the indexed loan (sometimes referred to as an “arbitrage” loan).

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Five Year Indexed Universal Life Insurance Company Investment Return Trend: 2014 Edition

Indexed Universal Life Insurance Investment

Indexed universal life insurance investment return on assets is an indicator we use to measure how well an insurer can maintain returns on its cash value products. Just like the whole life insurance investment return trend we published earlier this month, the same general principal applies (i.e. a higher return on assets held at the insurance company gives us indication that the insurer should be able to deliver a higher return on cash value products like cash accumulation focused life insurance products and annuities).

This time we’re looking at life insurance companies that are well known for their indexed universal life insurance offerings, and this time the results are a good bit different.

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Top Indexed Universal Life Insurance Carriers for Cash Accumulation 2014 Edition

Top Indexed Universal Life Insurance

We all know indexed universal life insurance has taken its place at the top of the leader-board as the dominate form of universal life insurance when cash accumulation is a primary consideration. It’s also the #1 growing type of life insurance in the United States and has held this title for several years. There’s a lot to like about it, but there are a lot of different forms of this product offered by several insurance companies. Just as we’ve noted about whole life insurance not all insurance contracts are created equally. So, we’ve put together a guide for best bets among the indexed universal life insurance crowd when cash accumulation is the primary objective.

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7 Reasons to be Wary of Indexed Universal Life Insurance? A Response to Bank on Yourself

Life Insurance Bank on Yourself

Pam and friends over at Bank on Yourself® released a blog post detailing the reasons to be wary of Indexed Universal Life Insurance complete with a video to further emphasize their point.

It comes as little surprise that a marketing program that seeks to help insurance agents sell more whole life insurance would work to demean indexed universal life insurance, but what is surprising is the sheer lack of honesty.

There are a number of over-the-top claims with zero supporting evidence, so we’ll discuss all seven reasons to be wary of indexed universal life insurance.

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Proper Assumptions about Indexed Universal Life Insurance Income

Proper Assumptions

Using indexed universal life insurance for retirement income comes with a certain degree of skill and responsibility that shouldn't be overlooked. The liberty an agent or broker can exercise over assumed interest rates means that we need to seriously test our design and proposed ideas to ensure proper expectations as it relates to policy performance.

Unfortunately, this responsibility sometimes goes unchecked and a few bad eggs have presented and sold policies with lofty expectations that may one day become serious disappointments as it relates to the income producing capabilities of these products.

Remember–many people are looking to use indexed universal life insurance to create tax-free income at some point in the future by making use of policy loans.

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Indexed Universal Life Insurance: The White Coat Investor Responds

Indexed Universal Life Insurance White Coat Investor

Last week we published a critical piece regarding a recent review of indexed universal life insurance that showed up on Jim Dahle’s website The White Coat Investor. Jim took our criticism seriously and on Friday of last week published a lengthy reply.

Based on the time Jim has taken to address this, I felt it was necessary to offer up some additional thoughts, and even a small critique on his attempt to rebut my biggest criticism of his original work.

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Is Indexed Universal Life Insurance Just what the Doctor Ordered?

Is Indexed Universal Life Insurance Just what the Doctor Ordered

Most of our readers and clients are familiar with the White Coat Investor—a web site started a few years ago by Jim Dahle, a physician who practices Emergency Medicine. I’ve talked about Jim’s work before, once quite a while ago when he attempted to malign whole life insurance and again about a year ago when readers wanted me to take on his suggestion that whole life insurance is not like a Roth IRA.

The second time I disappointed some people when I did the exact opposite of what they wanted by pointing out that he wasn’t wrong on that subject.

For the most part, we like to leave him alone in his pursuits. This is due in part to the fact that, believe it or not, we’re not all that different in our main goal—to identify and bring attention to the really dumb things financial professionals of all types do to people (for the White Coat Investor it’s specifically doctors) that leave them in a less than optimal position.

We differ, obviously, on our feelings about life insurance and that’s mostly fine. But Jim’s been on a bit of an indexed universal life insurance rant lately thus we’ve decided to weigh in on his recent work reviewing an indexed universal life insurance illustration that someone sent him.

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