Whole Life Insurance vs Indexed Universal Life which is better

When it comes to comparing whole life vs Indexed Universal Life many people get it wrong! The products are designed to do completely different things. Whole life insurance is best suited for a bond or CD alternative. Whole life is expensive! It is the most expensive form of insurance you can buy, outside of some variable policies.

Indexed Universal life is best suited for max cash and income. It takes on a bit more risk than the whole life policy but aims to generate a higher rate of return.

By comparing the indexed universal life insurance policy to a whole life policy using simply the fixed crediting rate, we get a clearer picture of why the IUL has the higher upside and has the potential for much higher cash accumulation and incomes.

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[Seccheus]

The IUL community needs to come together and weed out the Bad agents and Bad policies as well as those companies that have a highest cost of insurance and fees.

[briancroston]

would be great if you would do a review on the Allianz Pro + Elite. You seem to favor it and the NA Builder Plus in most of your 'positive' illustration examples.

[trevormaxwell]

One of the better “Whole Life vs. IUL” breakdowns I’ve seen!

[vanskyboy]

With the same input, I noticed the allianz policy is assuming 4.75% return for all years, may i ask what is your assumption on the rate of return on the Penn WL illustration? I am thinking if we force these two policies to have the same return of 4.7%, essentially, we are comparing their cost without considering the upside of index strategy without risk of losing money that IUL offers. Likewise, with everything gurantee in whole life, it definitely worth sth too.... So, the real question become "do you prefer potential upside or everything gurantee"? that is the real question, am I right? does IUL and whole life contract provide the maximum charge they can charge on the Cost side (cost of insurance and others)?

[TheOpinionSports]

Can the fixed rate on whole life change or just the dividend rate?

[feliprea]

Historically, you mean 24 years vs. 100+ years of other policies? I noticed the history total was 24 years, thats why i was wandering if this IUL policies have enought history to really perform as they say. Could you elaborate on the moving parts of an IUL such as Cap rates, Participating rate, the spread change, General fund %, rate of return, options budget and call options, cost and how this inside moving parts work? Thank you.

[LeadsForLocals]

Great video. I appreciate the comparison of the two instead of bashing one or the other. My concern about using IUL for income though, even if you opt to select the fixed interest rate, is the rising cost of insurance later in the policy because of the ART. Couldn't this potentially put the policy at risk of lapsing, especially since income is being pulled from it at the same time the costs are going up? If you have a video on this, please share. Thanks!

[WillChaseIV]

Good video. But it should have been pretty trivial to run an apples to apples comparison on the MassMutual illustration. Not sure why the software gave you so much trouble.

[phuhuynh]

1. 1st illustration was a MEC. This will have tax and penalty implications when withdrawing money. Lose the tax-free benefit if taking income. 1st illustration also has a premium outlay ~3200 when you’re withdrawing money.
2. Penn, Mass, and Allianz were done on nonguaranteed values - so unfair comparison to first
3. Looks like the policies are adequately funded so lapse may not be a problem but would be interesting to see the guaranteed values from the 4 policies for comparison.
If designed correctly IUL could have good growth when market returns are good and will not lapse. What I commonly see are IULs where only mínimums are paid. Cost of yearly term insurance gets high and the policy lapse before life expectancy.

[straitjacketstudios]

Great Vid!! So how does one navigate all of this complexity to choose the best product when they are seem to be the exact same thing??

[Optimalcoverage]

Great video. Very balanced for someone who is new to this.

[TheJARLATH]

One thing that you must consider with any universal life policy, such as an IUL, is that the cost of insurance goes up every year based on your age. So, it is like an annually renewable term, which gets very expensive later on in life. And, the cost of insurance is not guaranteed. Also, the fixed rate can change as he mentioned. But, whole life does have a fixed rate, which is guaranteed. Yes, the dividend rate is not guaranteed but most mutual companies consistently have paid very good dividends even with market downturns and low interest rates. And, you never base any cash value accumulation on an average rate, as that is unrealistic. If there is a market downturn, yes your floor may be zero. But, they will still take out their fees and cost of insurance, all of which can go up as much as the insurance company wants.

[gegaoli]

How do withdrawal options differ between whole life and IUL policies? What are IUL advantages if goal is retirement income?

[calebcano]

Would you be able to settle all of the attacks IUL gets on imploding or not performing as illustrated by showing a client that's had an IUL for the last 20 years and the performance of it?

[Htownrebb]

Great video. I’m research the topic currently to make a decision for myself between WL and IUL. One difference I see between The Penn policy and the Aliance policy is the death benefit. For instance, at age 93 in both policies, the WL appears to be almost double that of the IUL. $657k vs $381k. At age 93 it’s likely going to be more important to have DB for the same amount of money. Am I missing something?

[chrisrobbins]

Hi, can we connect? I really appreciate your content. I’m a LI agent myself, and I think you are providing a lot of value and I’m in agreement about many points you make.

[trinhtran]

My friend introduce me The IUL product from American National which is best because they have uncap option with 0% floor. What do you think about this IUL compared to other companies?
Thank you very much.

[chriskeller]

As I understand IUL, it still has the annually renewable term component which, as the insured ages causes the COI to consume the gains. I often do a Life Settlement for clients who bought IUL's because the policy is about to cave in on itself unless they ante up a lot more premium.

[sC-hoxx]

What is considered “max funded” for an IUL? Is it a certain percentage of your income? Or is it a subjective amount?