Ask your financial advisor salesman for an “inforce illustration” under these two scenarios.Just checking in again with another question about my current IUL "Flex Life II Indexed Universal Life" policy through National Life. This policy was started in 2010 when I was 28. I am currently 41 and scheduled to retire in 2039 (age 57).
Quick facts:
-$576k death benefit policy w/ health care rider
-Current accumulated value $76k
-Current surrender value $69k
-Surrender charge $7k
-Currently contributions are $200/month ($2,400/year) down from $600/month
-Initially, I was paying $600/month ($7,200/year) for close to 12 years totaling $86k
I asked my FA recently about cashing out the policy and his response was that if I wait 5 years (age 46) then the policy would be valued at $100k. If I wait 19 more years (age 60) then the value is $600k.
For perspective, married with no children, home is paid off, wife is employed full time, and both of our jobs offer pensions upon retirement.
Curious to hear your thoughts about this policy.
Thanks in advance!
If your current surrender value is $69k, and you pay 5 premiums of $2400 each, and then surrender for $100k, that would be an annualized return of about 4.5%. The return is helped by the fact that part of the return is the burn-off of the current surrender charge of $7k. I think that’s within the realm of reason.
But I find the surrender value of $600k after 19 years of $2,400 per year premiums to be wildly implausible. That’s about a 10.5% return. I would 100% guarantee you that your IUL policy will not make 10.5% per year.
A more reasonable return expectation of 4% would leave you with about $210k at age 60.
Once again, get the printed inforce illustration. Post back with details and more questions.
Statistics: Posted by Stinky — Fri Mar 08, 2024 7:15 pm — Replies 12 — Views 1448