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.
Licensed Agent: Sean Drummey
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