Hi friends, I've heard that Equity index

by Guest » Fri Sep 07, 2007 09:20 am

Hi friends, I've heard that Equity indexed universal life insurance can be a very good investment option. I want to purchase a policy that will give me some investment benefits along with life coverage. Shall I consider buying EIUL or something else? Pls. suggest.

Total Comments: 431

Posted: Thu Apr 07, 2011 04:50 pm Post Subject: Is 1650 calories too low for a man ?

im a 19 years old student , i weigh 102 pounds and 5.4 ,, im on 1650 calories which is the calories i need to maintain my weight ,but i started eating 1600 to 1650 and still feel kinda tired , and im doing it by eating only indomie , or instant noodles each back has 350 , and i think they have no vitamins , so whats a better way to eat but still eat 1650 calories ,not more

Posted: Fri Apr 15, 2011 12:19 pm Post Subject:

Ask a dietician, not an insurance agent. Or join Weight Watchers.

Posted: Fri Jun 10, 2011 12:53 pm Post Subject: IUL vs EIUL

What about IUL vs EIUL? Which is better?

Posted: Fri Jun 10, 2011 04:09 pm Post Subject:

"Better" is in the eye of the beholder.

There really is no difference in the product design other than the index used to measure or set the "current" interest rate, and the resulting current interest rate. Some indexes are more conservative than others.

The index could be the Consumer Price Index (CPI) which is not based on stocks (and also excludes food and energy costs), or the LIBOR (a measure of bank interest rates compiled in London, UK), or any of the Federal Reserve Bank "cost of funds" interest rates. There are dozens of such non-equity indexes. Almost all would be considered more conservative (lower potential returns and little chance of negative returns, if any) than any of the equity indexes. To make up for the lower potential gains, an insurance company could base the crediting rate on the index rate "plus" a few percentage points. I don't know of any specific insurance companies using any of these indexes for their IUL products, but that doesn't mean they aren't being made available.

By definition, and in contrast, the "E" in EIUL stands for "equity" (stock) index, such as the S&P 500, or the Dow 30, or the Russell 2000. But any stock market-based index could be used, such as a bond index, or even an ETF index. Because the indexes are tied to stocks and stock markets around the world, there is potential for large gains and large losses. The S&P 500 is the most common index, but insurance companies are increasingly offering a choice of indexes to their policyowners.

Each index offers its own advantages and disadvantages. Some are domestic, some are foreign, some are international, some are global. As far as I know, if a choice of index is available, once selected, it cannot be changed after the contract is issued.

It's up to the insurance company to decide which index(es) it wants to associate with its products. It really doesn't matter, however, since there is no money actually being invested in any stock, or bond, or index, or index fund. The index performance is simply the benchmark against which the current interest rate increases, decreases, or remains unchanged from one contract year to the next (most often, crediting rates change on January 1 or on the policy anniversary date, but could even change on a quarterly basis -- the contract will disclose this).

This is what genuinely distinguishes IUL/EIUL from Variable Universal Life (VUL). In a VUL policy, there is a direct investment of the policyowner's cash accumulation account in stocks and bonds through the insurance company's separate account. Fortunes rise and fall on a daily basis, and there are absolutely no guarantees to the policyowner in the basic nuts and bolts of the contract. Riders and other contract "enhancements" can provide certain limited ("secondary") guarantees, but those are always based on paying 100% of the scheduled premiums, and missing one premium payment could mean the permanent loss of the secondary guarantee(s).

In IUL/EIUL policies, the insurance company is at risk of being forced to credit higher interest rates (than it would credit on its own, as in a traditional UL policy) to the contracts it issues when the indexes have very large performance gains. The policyowner is at risk of not earning enough interest to cover the increasing cost of insurance from year to year in the UL contract.

The insurance company mitigates its risk of having to provide high interest crediting rates (an advantage to a policyowner) by limiting current interest crediting rates via a a "participation rate" (70% - 100% of the index performance as the crediting rate), a "rate cap" (such as 12% or 13% -- the maximum allowed in the contract), and/or "rate spread" (the difference between the index performance and a stated base rate in the contract). It mitigates the risk to the policyowner of negative index performance to a policyholder (one of the disadvantages in an IUL contract) with the inclusion of a "minimum guaranteed interest rate" (usually 2% or 3% -- almost always less than the guaranteed rate on traditional UL policies).

It's up to the policyowner to determine what advantages and disadvantages in the contract are in his/her best interest over the long term of the contract compared to other life insurance contracts, and choose the product that is most suitable for their needs.

The problem that may face the policyowner is not being presented with alternatives by the agent. There is no "one size fits all" insurance product, but some agents only market one product to all of their clients. That one product may or may not be the most suitable for the client, and it is usually not the only product the agent has to offer.

Posted: Mon Jun 13, 2011 05:04 pm Post Subject:

Max, that was a great attempt at a wrong answer.

The correct answer is that the terms IUL and EIUL are used interchangeably by the insurance carriers so one can't be better than the other.

Posted: Mon Jun 13, 2011 06:06 pm Post Subject:

What's wrong with anything above other than you fail to read? You spend all your time complaining and when confronted with facts, you say things like, "Well, I really don't know . . . "

The fact is the opening (2nd) paragraph of my post says exactly that same thing -- there is no difference.

There really is no difference in the product design other than the index used to measure or set the "current" interest rate, and the resulting current interest rate. Some indexes are more conservative than others.

Got off your high horse and don't post unless you have something to add to the discussion.[/quote]

Posted: Tue Jun 14, 2011 11:02 am Post Subject:

Max, it is just funny that you wrote a 3 page essay when the question called for 4 word answer. "They are the same."

Posted: Wed Jun 15, 2011 03:44 pm Post Subject:

People deserve better than four measly words. But if that's all you can come up with, go ahead and post it three times.

Posted: Wed Sep 07, 2011 10:23 pm Post Subject: EIUL

I absolutely agree with Xoseph and SweetN Sourboi.
Insurance is just for the pure protection. All that growth and good stuff is all future assumption.

Posted: Wed Dec 07, 2011 07:51 pm Post Subject: IUL / EIUL

I was trying to research for IUL and stumbled on this site.....thanks to you Max i've learned a lot. i knew it IUL was just too good to be true. now i can tell my wife to cancel her policy with WRL.

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