If interest rates remain consistently higher than crediting rates for an extended period of time, I predict a significant increase in lawsuits related to premium-financed life insurance sales. This will be particularly true for deals marketed as offering perpetual arbitrage or “free insurance.”
Indexed Universal Life Insurance (IUL) Deceptions
If a life insurance carrier earns a 4% return on their general account but illustrates a 6% crediting rate in their Indexed Universal Life (IUL) index allocations, they are effectively projecting a 50% annual profit on their options purchasing. This is obviously a fantasy and does not represent how the indexing features of the policy […]
IUL Illustrations Are Fantasy!
Claims that Indexed Universal Life policies offer a sustainable performance advantage without equivalent risk are misguided because the options purchased are a wash over the long term.