F&G Dumps EIUL Renewal Caps

F&G Dumps Caps on EIUL Renewals

                I’m going to start doing more education on EIUL (Equity Indexed Universal Life) polices over the next several months, and I thought I’d start with this interesting and important topic (renewal caps).

                Oh, speaking of education on EIUL, if you are looking for the best training in the industry (outside of reading my books), you might want to check out www.EIULTraining.com where you can learn about a very powerful two-day educational seminar.

                Renewal Caps—there are a few very important features that affect how much money grows and can be removed tax free from an EIUL policy. The #1 factor in growing wealth in an EIUL is the annual rate-of-return cap.

                As you may know, EIUL returns are pegged to certain measuring indexes like the S&P 500. Companies typically guarantee no down years when the market goes negative; but due to how the returns are credited, there is typically a cap on the gains. The caps vary per company and range from 10-16% for their first-year caps.

                Annual Cap Adjustments—each EIUL company reserves the right to change the cap at renewal. Many companies contractually can dump their caps down to as low as 3% on renewal.

                Many agents sell an EIUL and then never think of the client again. If this is how you operate, you might want to start looking at your client’s renewal caps. What you will find should upset you.

                F&G Dumps Renewal Cap–the best way to point out the importance/problems with renewal caps is to simply look at what real-life clients have received. I had an agent I work with call out of frustration and then forward me the renewal letter his client received. 

                The policy was issued with a 12% cap (not a great one to start with).

                His last annual renewal cap was 8.5% (this cap reduction is not something unique to F&G).

                If you’ve not downloaded my EIUL Special Rate-of-Return report, I highly recommend you read it (which you can do by clicking on the following link: http://www.strategicmp.net/page/life/eiulrateofreturnreport2014).

                When I did the report, I didn’t even bother showing numbers for an annual point-to-point cap of less than 12%. If a product has a 12% cap going back 20 years, the average rate of return would have been +7.5% (respectable but not great).

                If the product only had an 8.5% annual cap, the average rate of return would have been a measly +5.56%.

                If you’ve ever seen an EIUL policy illustration with a crediting rate less than +7.5%, you’ll know that it doesn’t look very good (or at +5.56% it will look awful, and the client will wish he/she never put money into the policy).

                Retirement Life Company has Stellar Renewal Cap History

                I am hypersensitive to renewal caps which is why the Retirement Life™ sales platform has EIUL policies with good renewal-rate histories.               

                My favorite policy boasts the following statistics: 85% of the current renewal caps/participation rates are the same OR GREATER than the initial cap. 17% of the caps are higher than when the policies were issued. That’s strong and gives you confidence when selling a product to your clients.

                If you were pushing F&G’s EIUL on clients, I’d submit to you that you’d have to research and disclose the renewal history now that you’ve read this newsletter. What do you think your clients would say?

                Conclusion—you owe it to your clients to know the products you are selling and that includes the renewal history when it comes to their caps. It’s my opinion that, when you learn the renewal rates at the company(s) you are selling, you will be surprised. When that happens, feel free to go to http://www.strategicmp.net/page/life/retirementlifesignup where you can sign up to learn about the policies in the Retirement Life™ sales platform.

                The UNIQUE EIUL with a 16% blended cap had a 89% chance of returning 8%. To learn about this UNIQUE EIUL product, please click on the following link: http://www.strategicmp.net/page/life/neweiulbeatsthebest.