Nationwide has a new IUL product called “Yourlife Indexed UL”. I’ve posted a series of comparisons analyzing the top performers for tax deferred cash accumulation and tax-free retirement distributions, so I plugged in those assumptions to see how Nationwide compared. Granted, it’s not a true apples-for-apples comparison. The index selection for Lincoln and Penn Mutual is the S & P 500, 1 year point-to-point. Lincoln assumes a 8.45% hypothetical return and Penn Mutual a 8.41%. Nationwide uses a weighted average multi-index blended strategy, 1 year monthly average, assuming a 7.6% index crediting.
Only time will tell on upside assumptions. While pondering the unknowns of the future, it’s good to remember the strength of indexed universal life is knowing there is a floor to stand upon.
Below are figures to the same benchmark structure: male, age 44, great health puts in $25,000 a year for 20 years, and at age 65 the takes out tax-free retirement income for the next 20 years in the form of policy loans, with enough left over for a death benefit. $25,000 a year might be above what you’re considering, but showing high premium is like a drag race to see how fast the car will go, fast as in building cash value, and then popping the chute, projecting how the retirement distribution performance.
| Carrier | Cash Value Year 20 |
Death Benefit Year 20 |
Loan amount Yrs 21 -40 |
Cash Value Year 41 |
Death Benefit Year 41 |
| Lincoln | 1,072,791 | 1,611,714 | 146,428 | 831,161 | 1,121,364 |
| Penn Mutual | 1,148,802 | 1,738,802 | 145,609 | 522,606 | 841,829 |
| Nationwide | 933,926 | 1,503,928 | 119,820 | 89,900 | 302,664 |
With the goal being maximum retirement income, knowing the carrier’s options and rules on policy loans is vitally important. Nationwide has a fix loan option “declared rate loan” that showed a $88,236 income distribution on the policy illustration. For potentially better performance, like many other carriers Nationwide has a variable loan option “alternative loans” based on Moody’s Corporate Bond Yield Average, currently Nationwide illustrates at 4.79%, which gave a better $119,820 income distribution figure. But what will that figure be in the future? They have a guaranteed minimum of 3.00% and a guaranteed maximum rate of 8%.
Both Lincoln and Penn Mutual have fixed rate loan options that project better than the variables loan rates of the competition, including Nationwide.
Lincoln National Life Insurance Company: “Lincoln LifeReserve Indexed UL (2011)”
The Penn Insurance and Annuity Company: “Accumulation Builder II IUL”
Nationwide Life and Annuity Insurance Company: “Yourlife Indexed UL”.
Image Source: Wikemedia Commons
Disclaimer: Information and quotes are current and accurate to the best of my knowledge on December 4, 2011. Product features and rates are subject to change. Quotes are non-guaranteed projections based on current interest rates and cost of insurance. Tax information is general information only. Please seek professional tax advice for personal income tax questions and assistance.