Category: Allianz

Trigger Method Fixed Indexed Universal Life (IUL) with Allianz

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May 30, 2013

10:36 AM

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Allianz recently announced enhancements to their Fixed Indexed Universal Life (IUL) product Life Pro+.  Why does Allianz call it fixed?  Well, that’s their terminology.  Known mostly as Indexed Universal Life (IUL) or sometimes as Equity Indexed UL (EIUL), the name may differ, but all these Indexed UL products have interest returns tied to a market index, most commonly the S & P 500 Index, and have a floor guarantee of at least 0% as downside protection against losses. That’s why Allianz presumably uses the word fixed as opposed to Variable UL which does not have a 0% floor.

One noteworthy feature in Allianz’s enhancements is a trigger method of interest crediting. If the S & P 500 Index annual point to point hits anywhere greater or equal to zero, will trigger 9% credited to the policy. This Trigger Interest Rate is subject to change on an annual basis but is guaranteed never to go below 2.50%. In years the S & P goes below zero, the floor crediting rate is 0%, and if the index measures in that annual point to point above 9%, the credit remains at 9%.

Most of the Indexed UL product caps are currently in the 11% to 13% range and in this strong market those higher caps make them a more alluring crediting strategy. Historical data does not show that 0% to 9% range to be as prevalent as 10% or higher. Allianz still offers the higher capped S& P 500 annual point-to-point option. Their trigger method is an added option in times when S & P 500 performance expectations were not very high.

Higher interest assumptions with Allianz and ING Indexed UL (IUL)

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March 20, 2012

5:21 PM

Leave a comment on Higher interest assumptions with Allianz and ING Indexed UL (IUL)

5 year point-to--point, Allianz, Barkleys Capital U.S. Aggregate Bond Index, crediting strategy, Dow Jones Industrial Average, EURO STOXX50, Hang Seng Index, Index Loans, Indexed Universal Life, Lincoln Life, Lincoln National Life Insurance Company, Loans, Russell 2000, S&P 500

Looking closely over the last few days at the Allianz Indexed Uniersal Life (IUL) product “Allianz Life Pro+”  I was impressed by its cash value accumulation and for loans for tax free retirement income.  The index account loan rate of 5.30% is excellent.

But what interest rate should the illustration be shown?  Allianz “Blended Index II” can be illustrated at 8.78%. This percentage reflects a 25 year historical performance Dow Jones Industrial Average 35%, Barkleys Capital U.S. Aggregate Bond Index 35%, EURO STOXX 50® 20%, Russell 2000 ® 10%.  I’m sure agents go right ahead and use the highest allowed 8.78% on an illustration because it makes the non guaranteed assumptions look better.

But when comparing  Allianz 8.78% to Lincoln at 8.22% or for their S & P 500 point-to-point allowed illustrated rates, is that an fair comparison?    Lincoln recently announced that they too would follow a 30 year historical look back.  Given Allianz’s much higher assumption on their 25 year look back, their non guaranteed projections look better.  Carriers provide time frames on historical look backs partially based on what helps produce the highest number and to keep up with their competitor’s assumptions.  When comparing these three products, Allianz does have a different index, but is it superior?  Will any index with a 20% Euro stock element outperform the S & P 500?   The recent history of the European Union doesn’t make that a safe assumption.

ING‘s “Global IUL” can currently be illustrated at 10.00%.  It’s uses three indices: the S&P 500®, the EURO STOXX 50® and the Hang Seng.  The top performing index is weighted 75%, second best 25%, lowest 0% on a 5 year look back.  That 5 year look back has a powerful appeal: the two strongest are credited on past performance.  But really can one expect 10.00%?

Recommendation:  Request illustrations for each carrier at the same rate: 8%, 7%, 5% or lower for direct comparisons and to see how they may perform.