What Is Universal Life Vs. Whole Life?

Universal life was created for living benefits. Whole life is primarily for death. In this video, I'm going to answer the question, "what is universal life vs whole life insurance?". I will teach you some differences that many life insurance agents don't even understand.

To your abundance!
Doug Andrew

Key Moments In This Episode
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00:45 Retirement and resources
02:55 My favorite vehicle
03:38 What are the difference?
06:12 Internal rate of return
08:30 Universal vs Whole life
10:36 In summary

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Video by Nate Woodbury

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[davidphillips]

Doug, I appreciated the presentation even though you have some strong biases and innacurate assumptions.

I own my own firm and have placed over $100Million in term, UL, and Whole Life insurance contracts in the last few years.

Prior to owning my own firm I was an Advanced Planning Attorney at A national bank and also Sr. Advanced Sales Attorney for The brokerage division of a major insurance carrier.

When it comes to cash value accumulation there are planning scenarios calling for both IUL and whole life. It's not a matter of one product being superior to the other, it's a matter of what the scenario calls for.

1. According to the AG-49 guidelines just passed at the beginning of this month you can't illustrate an IUL policy at the 9.2% rate you cited in your example. That industry guideline was specifically created to stop agents from selling IUL with average assumed rates the policy probably will not achieve.

2. Please tell me which IUL contract from an A-rated or better carrier has a GUARANTEED cap of the 15-17% you referenced in May of 2023? If you can't find guaranteed, show me the carrier that had an average cap rate over the last 23 years of 15-17% (the carrier must also have a participation rate of 100%)

3. You speak about WL in general without acknowledging there are whole life contracts engineered $1 under the MEC limit with a minimum of death benefit specifically designed for cash accumulation and distribution.

I just ran 2 illustrations for a client last week who had 50k a year to put towards a life insurance contract for cash accumulation and distribution.

They were the Securian Eclipse Accumulator IUL max funded and illustrated a current AG-49 allowed assumptive rate and the MassMutual 15-pay WL.

Results are that after 15 years IUL illustrates $1, 057, 000
WL illustrates $945, 000

Which reflects that the IUL does have slightly more upside potential if the markets cooperate, but historically the WL policy illustrated at current dividend rates has a higher likelihood of reaching what is illustrated. The IUL carriers can and have manipulated their participation rates, their cap rates, and mortality charges such that there is not very much certainty.

So if I have a client who is willing to accept market risk and the risk that cap rates are lowered and has a horizon greater than 5 years the IUL is a good choice.

For clients who like the predictability of dividends and guarantees that cash value will always grow every year (No zero is your hero) the Whole Life would be the better option.

I also noticed that you've manipulated your challenge to start historical market returns in 1995 when there were 3 straight years of double-digit growth rather than 2000 where there was 3 straight years of negative market returns or zero growth in the IUL. Start your challenge in 2000 and see how the IUL holds up historically.

Whole life is also nice to access funds in retirement if you're using it instead of an IRA or brokerage account for cash flow when markets are performing negatively. (Like last year and this year) because whole Life cash value accumulations are non-correlated to equity markets, they provide an excellent tax advantaged source of funds when you don't want to realize losses by taking equity distributions when the market is down.

It's not a linear question of which type of policy is better, it's which is better for a given fact pattern considering client's goals and risk tolerance?

At any rate, enjoyed the content and discussion. I'm sure only the hardiest of insurance nerds made it this far😊

Best,
David C. Phillips J.D., CLU

[kile]

Do you have policies that are 20 years in and performing as well as illustrated or better?

[shantoriareaves]

Thanx. You really explained that to me well.

[mgallegos]

Where is EF Hutton now? VUL and IUL have only been around for 30-40 years compared to WL 200 years. I find IULs to be complex high maintenance and not for the average Joe. Most people don’t want insurance that shifts the risk away from the insurance company to the client. That’s what 401ks and the stock market do. Insurance needs to remove risk not expose you to risk.

[donyemonroe]

Are you using Cash flow banking method ??

[lordkingyeshua]

So, we can use universal life insurance for living income? We can take from it?

[TheWealthyIdiots]

Watching your own playlists showing examples of gains, you aren’t showing the “internal rate of return”. Why is that?

[brightgodwin]

thank u for the beautify info. How much are you netting in the first 5-10 years?

[indalecioalcaraz]

VERY GOOD & INTERESTING INFORMATION VIDEO MR. ANDREW

[JonTheGamerJones]

Im so glad I watched this before I got a whole life policy now I am getting a universal policy and I can put into it as much as i need or as little better than a 401k thats for sure

[asesoriacontableaudicontac]

I am trying to contract index what do you recommend me .

[oliviasummers]

Thank you so much god made this for us 💕🙌🙏🙌🙏🙌🙏

[dushaunhale]

What are the companies offer 1 percent or less in taxes if I want to take some money out? Just like when you said if I have 8 and I will get 7 out.. I’m sorry if I sound confusing…

[robertramos]

I replace 100% of every IUL I come across!! Absolutely one of the worst products for the consumer!!

[joiathegreat]

I'm confused. How were they calculating the rate of return at 8% originally?

[santiagovillegas]

What if the individual doesn't qualify for an IUL because of medical conditions?

[strongmindtransportllc]

Good day sir, and thank you for the wonderful information.

I’m 33 years. Owner operator/. Truck driver
What the best policy to get to retire in 5-10 years
And take the funds and Start investing it into real estate in 3-5 years from now ??

Any suggestions please and thank you.
Single no kids no bills. Live in the truck. Goal to retire my parents in 10 years or sooner.

[chaztonboutte]

Northwest mutual is trying to get me to open an account for VULP is it worth it. Im 30, or is it not worth it.

[Moon_Finance]

These products are always illustrated criminally and don't accurately represent the rising cost of insurance or negative market returns.

[dq]

Can you compare fees / guarantees / risk in an IUL vs WL insurance policy?