American General’s Value+Proctor III Indexed Universal Life (IUL) is an excellent life insurance product for its guarantees and potential cash value accumulation. For example:
Male 42 years old, preferred plus, $250 per month premium all years, solve for face amount, guarantee face, guarantee age 100, level death benefit, S&P 500 index annual point to point, assuming 5.00% interest crediting all years.
Death Benefit: $289,819
Year 25 Total premium outlay: $75,000
Year 25 Guaranteed Return of Premium: $75,000
Year 25 Non-Guaranteed Cash Surrender Value: $96,051 (5.00% all years)
Year 25 Non-Guaranteed Cash Surrender Value: $89,584 (4.50% all years)
age 100 no-lapse guarantee
Comments: IUL illustrations assume interest crediting each and every year at the the same interest rate, not in any way mirroring real world index fluctuations so results are highly speculative. Value+Protector III has the a year return of premium (ROP) option.
Note: return of premium, The Enhance Surrender Value, is limited to a maximum cap of the specified face amount of 40% for issue age 41 and older. For example for a $1,000,000 face amount the limit is $400,000 return of premium.
One can structure the policy to have a higher death benefit. Here’s the same example but changing the guarantee age from age 100 to age 90.
Male 42 years old, preferred plus, $250 per month premium all years, solve for face amount, guarantee face, guarantee age 90, level death benefit, S&P 500 index annual point to point, assuming 5.00% interest crediting all years.
Death Benefit: $446,269.76
Year 25 Total premium outlay: $75,000
Year 25 Guaranteed Return of Premium: $75,000
Year 25 Non-Guaranteed Cash Surrender Value: $81,533 (5.00% all years)
Year 25 Non-Guaranteed Cash Surrender Value: $78,060 (4.50% all years)
age 90 no-lapse guarantee
Unfortunately life carriers no longer offer Return of Premium (ROP) term, but there is ROP Indexed Universal Life (IUL), and it’s a very worthwhile product. With American General there is a top flight chronic illness benefit rider option as well.