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Am I too old for Indexed Universal Life?

grumpyThe short answer is “probably not.”

I just presented the concept to a 66 year old retired police officer today.  Originally he was shopping term life. As we moved through the fact-finding process we found that his real objective was to leave something to his grandchildren.  I called it “Legacy Building.” He was too modest to use that phrase himself but he agreed that’s what he wanted to do.  He also agreed with me he really didn’t want to roll the dice and outlive a term policy.  The result of an expired term policy would be no financial legacy or inheritance for his grandchildren.

Permanent Life Insurance (including an IUL) is going to be more expensive than Term Life.  But what does it buy you?  A death benefit that someone you love is actually going to get.  The beauty of an IUL is the potential for higher interest crediting makes it much more affordable than other traditional permanent options like whole life.  Its flexible chassis means it can be applied to many different situations. 

 I’ve written an IUL on an 80 year old.  I’ve got a 70 year old that’s working on his 3rd IUL policy.  If the light bulb goes off and a client “get’s it” or “get’s indexing” they don’t see age as a barrier.  They love the safety it offers (no market downside) but much higher caps (& potential for higher interest crediting) than other fixed indexed products like indexed annuities (the traditional “Senior Product”)

 What’s important, particularly with older clients? They need to really understand the mechanics of how it works and that it’s important to properly fund the product.  Younger clients can “screw around” for awhile just paying the minimums.  Not optimal but they got time to play catch-up; an older client not cannot.  Secondly an older client needs to have the financial resources to “fix” an IUL that hasn’t performed as illustrated so financial suitability becomes as bigger deal.  All of this underscores the importance of doing regular annual review s.

 This client was primarily interested in the death benefit.  For another blog post, but as long as it is funded properly older clients looking for accumulation the can also make very efficient use of IULs.  Funding an IUL can be a great option for RMD (Required Minimum Distributions).

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