How to avoid falling into the trap of IUL insurance scheme? | Must-read for policyholders! 6 military regulations on IUL index insurance policies

LifePro, an IMO agency located in California, has accumulated more than $20 billion in management over the past 10 years. IUL policyPremium.They tracked thousands of copies of theIULPolicy account contract and reviewed theseIUL policyThe original design plan when the account is opened, and try to answer the following questions that the insured are concerned about:

"Are these insurance policy designs implemented or not?"

The conclusion is that if the policyholder andAgent brokerIf the following errors are avoided, these solutions can be implemented to a large extent.In the report of using IUL for financial planning, there are also cases that successfully surpassed the predicted number of the original design plan.

But if they do any of the following things, then the policy will not help policyholders succeed.

American Life Insurance GuideI have compiled 6 empirical interpretations, hoping to help you plan to apply for an American life insurance policy, or plan to useU.S. Index Policy(IUL) Policyholders who do financial planning or supplement retirement income.Through sharing experience in the industry, policyholders can standBrokers and financial advisorsIn the application stage, you can avoid falling into the trap of unprofessional and unreasonable insurance schemes.

#1 Never pay only the IUL minimum required premium

Again, never just pay for the IUL policyMinimum required premium.

Every IUL policy will specify the minimum amount of money you can deposit and the maximum amount of money you can deposit. Between these two numbers, you have almost countless ways to save money.

We believe that to fully and fully enjoy all the advantages provided by IUL products, the only correct way is to save the most money.

Many times, some policyholders will say, "(First open an insurance policy) I will sell the house in half a year and I will have the money to deposit in."

"I'm going to list the house for sale soon," or "My parents will leave me a sum of money in a year."

So the broker issues an insurance policy, then deposits money according to the minimum premium for maintaining the policy, and then waits for the "future" money to come in.

However, the truth is,IUL policyThe account cannot wait for the money, and at the same time, the minimum premium paid to this policy is usually consumed.

Therefore, never just pay the minimum required premium of the IUL policy.

#2 Never use a predicted interest rate exceeding 7%

Once again, when looking at the design plan, the predicted interest rate should never exceed 7%.

虽然从1957至2018成立，美国市场的标准普尔500指数的平均回报率将近8% (7.96%)。但当我们拿到保单账户方案时，7%的利率展现出来的数字已经很吸引眼球了。

Neither brokers nor policyholders need to forecast with higher interest rates.

When an insurance policy design scheme uses an interest rate display scheme of more than 7%, the number expected in the insurance policy may be unreasonable, and to a large extent the reality may not necessarily follow this situation.

However, as an insurance company, in order to win customers, it will use various complicated design interest rate methods, or non-guaranteed bonus strategies, and strategic functions marked as "exclusive" to show a higher policy number plan than 7%.

therefore,weWe do not recommend any forecasting scheme with actual interest rate higher than 7%.

#3 Don’t use IRA money to deposit the IUL policy before the age of 59.5

Before the age of 59.5, don't use the money in your personal retirement account (IRA) to deposit your IUL policy.

The reason for this is that it will bring a 10% tax penalty to the policyholder.

We also have to admit that even after paying a 10% fine and depositing the money in the IUL policy, the displayed plan may look reasonable in a digital sense.

But the problem is that the results of the plan itself are currently unknown.For the external compliance supervision department, the policyholder, the CPA of the policyholder, and the lawyer of the policyholder, doing so involves a lot of complicated relationships.

If there is a way to avoid this fine, it may be reasonable to do so.Otherwise, don't do this.

#4 Don't borrow money from the insurance policy to pay the IRA withdrawal tax

Fourth point, don't borrow money from the insurance policy to pay IRA (Individual Retirement Account) taxes.

This is a bit complicated, and it is usually packaged with some pretty names, such as "IRA Rescue", "Pension Rescue", or "401K rescue".

Some strategies suggest to withdraw money from the individual retirement account, and then deposit all the money in the policy account, and then borrow a portion of the money from the policy to pay the taxes incurred after the money is withdrawn from the individual retirement account.

Such a design scheme, from the perspective of a long-term time span, may be tenable from the point of view of mathematical theory.However, for 95% of people, these strategies will transfer the risk to the insured, which is out of proportion to the degree of risk that the insured is willing to take.

Unfortunately, the brokers and consultants did not understand the extent of the risk, and in this "beautiful" process, it was transferred to the policyholder.

For some truly wealthy people, this may be appropriate.But for the vast majority of policyholders, it is not a good suggestion for brokers and consultants to show such a strategy.

Therefore, we do not recommend this.

#5 Don't borrow money from the insurance policy to pay the premium

Point 5, don’t borrow money from the policy to pay the premium.

This strategy has a more "pretty" name, called "Hyper funding" or "Super funding".For policyholders who are curious, willing to try new things, and are radical, these avant-garde-sounding concepts and strategies are often very moving.

These strategies include: the policyholder borrows a sum of money from the policy and then pays the same policy immediately.You borrowed money from the insurance company, and then immediately paid it to the insurance company.

This is absolutely not allowed.

This was relatively common more than 10 years ago, but it is now banned.in caseBroker or consultantIf you do so, your license will be revoked.

But now we are seeing more and more people start to do this, seeming to forget that it is not allowed to do so.

Don't borrow money from the insurance policy to pay the premium.

If any agency or broker tells you that they have done the above two things, points 4 and 5, please stay away, don't trust them anymore, and find other people for professional advice.

This is a very bad behavior.

#6 Don’t lower the death compensation within 8 years (Max Funded Policy Only)

Point 6 is more complicated.

If your IUL policy has been used to deposit money in full, then do not lower the death benefit within 8 years of the policy’s effective date.

This rule became 7-Pay rules, The policyholder deposits according to the guidelineMaximum limitOf premiums.If you lower the sum assured at this time, this behavior is called "Substantial change"The IRS has made very clear regulations on this.

"Substantial changes" require 7-Pay premium rulesAfter recalculation, the full insurance policy will eventually become an MEC contract.

None of the 99 insurance companies in the industry allow insurance brokers or financial advisors to do this.If this is done, the life insurance policy of the insured will be turned into an "investment nature" contract.

The remaining insurance company may say that based on our interpretation of the rules, you are allowed to do so.

But when the interpretation of the rules changes, insurance companies will also change their words.If you do, when the insurance company changes its stance,insurance broker/The financial adviser and the client bear all the risks together.

Again, this is in direct conflict with the policyholder’s maximization of interest, so this should never be done.

Some insurance agencies or marketing agencies allow this for only one reason, and that is to earn more commissions.

In the end, it directly conflicts with the best interests of policyholders, which is why brokers should never do this.

Article summary

OninsurGuru©️Insurance AcademyWe emphasized thatIUL.Index Universal Life Insurance, Is a very flexible financial insurance tool.The core principle of insurance is: if you have reasonable and practical life insurance needs, then you canIUL productsBring it into your consideration.If you deviate from these basic principles, you may not be able to achieve your financial goals.We recommend that policyholders seek the help and advice of professional brokers and financial advisers before applying for insurance to avoid these traps and minefields.

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