Reviews of the Best Indexed Universal Life Insurance Companies
[Update] Our best indexed universal life reviews has shifted from 2 factors forcing change upon best performing IUL products.
- On January 1, 2020, all life insurance companies lowered their IUL fees due to the mandatory adoption of the most recent mortality tables
- Plummeting interest rates and ongoing market index volatility has caused the best performing IUL list to change since even the top IUL carriers must continue lowering cap rates and participation rates.
For this reason, we strongly recommend heavily stress-testing the best indexed universal life companies to see how they perform with below-average index crediting rates, and possibly even check out the best whole life insurance product.
(note: These indexed universal life insurance company reviews will continue fluctuating with ongoing volatility. Keep checking back and note the date at the top.)
At the bottom of the page, you can request a call with us to compare quotes from the best-indexed universal life companies by having us run your particular age, health, and financial parameters through our IUL calculator to see which will be the best-performing IUL for you when stress-tested to simulate lower interest rate environments.
Without further ado below are the top IUL carriers given the current environment:
Our Indexed Universal Life Insurance Reviews and the Top IUL Carriers of 2020:
Minnesota Life (aka Securian)
Minnesota Life proactively revamped their IUL policies to offer one of the leanest and simplest products on our indexed universal life review list. Minnesota Life’s commitment to low costs of insurance really shows on an IUL calculator since their IUL products hold up best when stress-testing ultra-low crediting rates.Minnesota Life has also equipped its IUL products with two robust and realistic indexed crediting strategies that can be sustained during periods of low-interest rates due to their innately low cost to hedge. As downward pressure continues to compress interest rates, these two factors position Minnesota Life to offer some the best performing IUL products whether in any environment
Pros – Why the Securian Eclipse Accumulator IUL is one of the best IUL policies of 2020:
- An uncapped index option tracking S&P Low Volatility Index for big annual returns
- The new “Rainbow” account which gives you the advantage of “lookback” performance by more heavily weighting their best performing IUL strategies retroactively at the end of the year.
- Two participating loan options (a variable loan currently at 3.75% and an indexed loan locked for life at 5%).
- Optional Early Values Agreement for clients needing maximum access to cash value in the early years of the policy.
- Ability to offset costs of insurance by agreeing to have the death benefit broken up and paid to heirs in installments over 10-30 years after you pass.
Cons – Things Minnesota Life can do better to stay on our best indexed universal life reviews page:
- Choosing to offset costs of insurance by breaking up the death benefit into long-term installments erodes its true purchasing power for heirs
- The 1-year capped S&P 500 crediting strategy has a relatively low cap of 9.75%
- If you choose the 5% locked indexed loan option, your loaned money can only track the capped 1-year S&P 500 account (described above)
- You cannot use either of the participating loan options until the second policy year (day 366)
Why you may choose Securian’s Eclipse Accumulator IUL vs. some of the other best performing IUL policies:
For clients looking for a lean and mean low-costs of insurance, this may be one of the best Indexed Universal Life companies for that job. When stress-testing the best performing IUL policies using lower crediting rates on an IUL calculator, Minnesota Life is incredibly resilient due to lower costs of insurance.
Even if you think you are too old or have health concerns which would normally make IUL too expensive, Securian’s Eclipse Accumulator IUL gives you the ability to drive it’s low-costs down even further by electing to have some portion of your death benefit paid to heirs in annual installments.
For clients wanting to use IUL for banking or to supplement 401(k) and other retirement accounts, the Eclipse Accumulator IUL may be one of the best performing IUL policies for the job. Its variable loan (3.75% as of April 2020) gives you a very low hurdle rate for positive arbitrage on loaned money.
If you want the best opportunity for growth, the Uncapped S&P Low Volatility Index would’ve outperformed an IUL with an 11% cap in many years with one of those years even achieving over a 30% annual crediting rate. Since this indexed crediting strategy is tracking a low volatility index, it’s naturally cheaper for the insurance company to offer it since options pricing go down with lower volatility.
On the other hand, the lookback Rainbow crediting (which favorably weights Securian’s best performing index accounts retroactively) would have hit its 10% cap in 17 out of the last 29 calendar years with only six 0% years during the same time period. If you’re afraid of the index hitting the 0% floor rate multiple years in a row, the Rainbow crediting strategy along with low underlying IUL fees makes Minnesota Life’s Eclipse Accumulator one the best performing IUL policies for the most conservative clients.
Columbus Life Indexed Explorer Plus is ideal for those looking to make the most market performance while avoiding market risk to supplement their retirement accounts and hedge against chronic illness with built-in living benefits.
Pros – Why Columbus Life Indexed Explorer Plus is on our best indexed universal life reviews list:
A unique pure S&P 500 uncapped crediting strategy for maximum market performance
- An above-average 11% cap on the 1-year S&P 500 crediting strategy
- A very high fixed crediting rate (4.4% as of March 2020)
- Built-in chronic/critical illness provisions for no up-front cost
Cons – Things we’d like to see improve with Columbus Life’s Indexed Explorer Plus:
- Columbus Life no longer offers an enhanced cash value rider boosting early values
- Although their participating loan is capped at 6%, its current rate of 5.5% is on the high side
- If you ever elect to use Columbus Life’s fixed loan, you cannot switch back to their participating loan
- Due to recent market volatility, Columbus recently increased the spread for their uncapped option where its basically in-actionable
Why you may choose Columbus Life over the other best performing IUL policies:
For clients looking for pure market performance tied directly the S&P 500 index still with a 0% floor rate, the Indexed Explorer Plus does just that. Some of the other best performing IUL policies take a spread (a fee that erases gains, but not to go below 0%) against the first 5% of gains and allow uncapped market performance after that (as of March 2020). Columbus Life, however, allows you to earn that first 5%, and then levies a 6% spread (erasing gains between 5%-11%), but allowing pure uncapped participation in S&P 500 index gains after that.
Many clients are looking to use IUL for tax-exempt retirement loans. This allows them to swing for the fences not only with the traditional 0% floor rate, but also with the ability to earn that first 5% to offset any accruing loan interest.
Also, among the best performing IUL policies, Columbus Life offers some of the most solid built-in living benefits protecting against chronic illness for no up-front cost. However, the client must not be concerned with maximum access to early cash value in the first 5 policy years since Columbus Life did away with their Enhanced Cash Value rider.
Depending on your age/health and desired premium payments, Columbus Life’s Indexed Explorer Plus may be one the best performing IUL policies for long-term performance with a built-in hedge against chronic illness before and during retirement.
Penn Mutual can boast that it is the 2nd oldest life insurance company in America behind only New York Life (who doesn’t offer an IUL policy). In spite of being one of the oldest mutual insurance companies offering indexed universal life, Penn is also one of the most advanced technology-wise with its new ACE underwriting program. When applying for a policy through this new electronic platform, Penn will search medical databases and often waive any paramedical exam and have a policy ready for you within days (sometimes even hours).Penn Mutual is known for having the best whole life insurance product, so it’s no surprise that their IUL products put a strong focus on guarantees, transparency, and predictability. Unlike the other best indexed universal life companies, Penn offers both a single life IUL as well as a survivorship IUL product that pays out only after two people pass away.
Pros – The factors why Penn Mutual has some of the best performing IUL products
- A guaranteed 1% floor instead of the traditional 0% floor from the other top IUL carriers
- A guaranteed 10% multiplier on any growth including the 1% floor (so 1%=1.1% and 9%=9.9%)
- Lower cost of insurance on the same amount of death benefit when using their Survivorship IUL
- A unique 5-year crediting strategy allowing you more potential growth over a 5-year period, while still locking in partial crediting along the way if the market tanks (on Survivorship IUL only).
Cons – Traits that hurts Penn Mutuals standing on our best indexed universal life reviews list:
- Penn’s locked loan rate of 6% is higher than some of the other best IUL products (although it’s technically less than a 5% spread since any Penn IUL will guarantee you 1.1% every year)
- Although Penn’s Survivorship IUL offers lower IUL fees, the death benefit will obviously be more difficult to receive since 2 people need to pass away rather than 1
- Difficult to illustrate strong upside performance on an IUL calculator since the maximum illustrated crediting rate is tied to the raw 1-year S&P 500 (w/o Penn’s guaranteed multiplier)
Why you may choose Penn Mutual over the other best indexed universal life companies:
Although the Penn Mutual’s IUL products will often lose the illustration beauty contest to some of the other top IUL carriers, we’ve found them to be one of the best performing IUL products for those concerned about the long-term cost of insurance with IUL products.
With Penn Mutual’s 1.1% guaranteed growth every year and the ability to ratchet down the costs of insurance substantially using their survivorship IUL product, clients concerned about IUL fees can often get comfortable with this type of model. That said, if you choose the survivorship policy, Penn Mutual’s free chronic illness rider will only become active for the 2nd insured after the 1st insured passes away.
In spite of strong guarantees, Penn Mutual still offers an array of crediting strategies that call allow you to achieve solid growth. Penn offers an uncapped 1-year S&P 500 with a 6% spread (a fee that erases the first 6% of gains, but never goes below the guaranteed floor rate). Even though Penn has a slightly higher spread than most at 6%, remember that you earn 1.1% no matter what. If the uncapped strategy has an annual return of say 20%, you would actually get 22% with Penn Mutual’s guaranteed 10% multiplier.
Penn also has their unique 5&1 Year Blend S&P 500 Option on their survivorship product that allows you to capture between 1.1%-5.5% in the first 4 years after choosing this index, and they will true your account up to a full 71.5% in year 5 as long as the S&P 500 has gained at least a cumulative 65% over the prior 5-years.
Penn Mutual’s unique and robust growth options give you the strong potential for upside performance with the strongest guarantee on the market of a steadily compounding 1.1% every year regardless of market index performance.
Pacific Life has consistently been one of the top IUL companies in terms of sales volume every since it developed its very first indexed universal life product. The PDX, the original version of Pacific Life’s multiplier product, was quite controversial as one of the best performing IUL products of 2018 because the additional multiplier policy charges were more than triple that of the other best performing IUL products. Also, Pacific Life’s mysterious multiplier methodology was like a black box that couldn’t be easily explained or understood.
In spite of the controversy surrounding these issues, Pacific Life dominated the IUL space as the top-selling IUL company by far in 2018. Since then, they have even revamped their black box multiplier formula to be more transparent as well as making the multiplier an optional rider you can toggle on or off in any given year.
You can choose each year to have no multiplier, the standard “performance” multiplier for 5% of additional voluntary IUL fees, or the “performance plus” multiplier for 7.5% of additional charges levied upon your cash value in hopes of multiplying your crediting way above Pacific Life’s stated IUL cap rates. You can even multiply performance on the uncapped option.
Pacific Life actually has two of the best performing IUL products. You can have their performance factor rider installed onto either their new next-gen PDX2 or their PIA 6 product. The PDX2 lags somewhat in early years favoring better long-term performance with an embedded bonus structure. PIA6 favors better early cash and a stripped-down transparent structure throughout the life of the policy.
Pros – Traits that make Pacific Life’s products some of the best performing IUL policies:
- You can toggle the performance factor rider each year depending on if you want to pay additional IUL fees in hopes of multiplying the crediting you can earn from any index option they offer.
- The new transparent Performance-Factor multiplier allows you to earn up to 2.76 times the normal crediting from any indexed crediting strategy and now has guaranteed parameters so you know you will at least get some multiplier effect.
- Pacific Life has two uncapped options (a 1-year, as well as a 5-year uncapped S&P 500 option)
- Pac’s Alternate Accumulation Value gives you an underlying guarantee that recalculates your cash surrender as if there were no additional multiplier charges and at least 2% crediting every single year. (Similar to AMT-tax, if this secondary phantom calculation is bigger than your actual cash surrender value due to poor performance, you would be entitled to this alternate surrender value instead).
- Ability to offset costs of insurance by agreeing to have the death benefit paid to heirs in installments
Cons – Traits we’re not thrilled about in spite of Pacific Life’s position on our best indexed universal life reviews list:
- Choosing to offset costs of insurance by breaking up the death benefit into long-term installments erodes its true purchasing power for heirs
- Exercising your option to use the performance factor in any given year will result in an addition 5%-7.5% charge levied against your cash value over and above the normal costs of insurance
- Pacific Life’s cap rates tend to be below industry averages, although the multiplier can push actual crediting well over the stated cap rates.
- Pacific Life’s participating variable loan rate is capped on the high side at 7.5% (although currently at 4.65%)
Why you may choose Pacific Life over the other top IUL carriers:
Although Pacific Life has some of the best performing IUL products with the performance factor multiplier, they won’t be for everyone. Those already concerned about the potentially escalating cost of insurance inside Indexed Universal Life will most likely be concerned about the multiplier charges that could amount to more than triple or quadruple that of other companies on our best indexed universal life reviews list.
If you like the traditional guaranteed 0% IUL floor rate with a chance for double-digit upsides in bullish years inside a traditional IUL product, then losing an additional 5%-7.5% on top of the normal IUL fees may not be appealing. However, for clients willing to a accept a negative floor rate in down years for the opportunity to more than double their IUL crediting in positive years, then Pacific Life is one of the best IUL companies offering this type of product with a strong history of backing their promises and treating all policyholders fairly.
The Growth Index IUL by Ameritas is a solid IUL offering with a blend of features for clients primarily concerned with using IUL for retirement and a hedge against chronic illness.
Pros – Why the Growth Index IUL by Ameritas is one of the best performing IUL policies of 2020:
- Ameritas offers a diverse set of crediting strategies to choose from
- The Growth Index IUL has the lowest participating loan option (3.4% as of March 2020)
- A robust chronic/critical illness rider offered with no up-front cost
- An enhanced cash value rider for clients needing maximum early access to their cash
- If the 1st ten policy years were rough, Ameritas will automatically true up your cash value as if it had earned a 4% compound crediting rate every year if your cash value is below that level.
- The Lifetime Income Rider which guarantees annual tax-exempt distributions for life (similar to an annuity)
Cons – Things we’d like to see change for Ameritas to stay on our best indexed universal life reviews list:
- The guaranteed annual distributions from the Lifetime Income Rider are noticeably smaller than simply taking retirement loans
- Ameritas has no uncapped option (although it does have a 2-year S&P 500 index with a 30% cap)
- The participating variable loan does fluctuate and is capped to go as high as 8% in the future.
- You cannot use the participating variable loan until policy year 3
Why you may choose the Growth Index IUL by Ameritas vs. the other best performing IUL policies:
For clients with a long-term retirement focus rather than an immediate banking focus, Ameritas may be one of the best IUL companies. They have a diverse array of crediting strategies tracking the S&P 500 with above average caps and even high participation rates as well as an international index tracking the MSCI-EAFE index.
Ameritas’ participating loan is currently at 3.4% and is the lowest of all the best performing IUL policies, but that loan rate can go as high as 8% in the future. That said, if interest rates do get that high, Ameritas would most likely offer higher caps as well. In addition to the variable loan, they also offer a very low fixed IUL loan of 2.5% after five years while paying you equal crediting of 2.5% on loaned money. There is a guarantee that when using this fixed 2.5% loan you will receive at least 2% crediting.
Of course, for those concerned about longevity, you can always trigger guaranteed ongoing retirement distributions using the Lifetime Income Rider. This rider essentially turns your IUL policy into a Roth-like annuity with some residual death benefit attached, but we have noticed that this guaranteed payment option is less than if you simply managed your own ongoing retirement loans with the overloan protection rider (a feature on all these best performing IUL policies which ensures your policy will not lapse as long as certain borrowing criteria is met).
The ability to get a healthy tax-free advance of your death benefit for chronic illnesses and even certain critical illnesses or injuries makes Ameritas one of the best indexed universal life companies for hedging on the way to retirement and beyond. Qualifying chronic illness triggers a 50% advance on your death benefit, but even critical illness triggers up to 25% of your death benefit (with a max of $250,000 total advance) for things like stroke, heart attack, Aneurysm, coma, etc…
The extremely low participating loan rate of Ameritas, plus their unique retirement features like the Lifetime Income Rider, along with the critical and chronic illness hedge solidified Ameritas their spot on the best indexed universal life reviews page.
Allianz is our only stock company in our best IUL companies list, and is a foreign stock company at that. Although some clients get concerned that this may translate to a lack of allegiance to American policyholders, others enjoy the idea of having a huge German parent company with diverse revenue streams from all over the world.
One thing is for sure, Allianz scale can’t be denied with over $15 Billion of annuity revenue. This has allowed them to buy companies like PIMCO and do a lot of their index hedging internally, which provides for some unique features on their IUL product.
Pros – Features that puts Allianz on our best indexed universal life company reviews list:
- Enhanced Cash Value rider available when maximum access to early cash value is needed
- Low 5% locked loan rate allowing you to participate in any index crediting strategy
- A diverse set of crediting strategies available for different market environments
- Unique new “rate-lock” feature allows you to lock in positive crediting anytime during the yearly segment if you fear a market drop (available only on certain crediting strategies).
Cons – Things we’d like to see Allianz do better to stay on the best indexed universal life company reviews list:
- The “rate-lock” feature is only available for Allianz’s volatility-controlled index crediting strategies, which are less likely to be knocking the cover off the ball.
- Allianz offers no uncapped options other than the volatility-controlled indexes which are unlikely to measure up to the pure S&P 500 index during bullish years
- Multiple groups of crediting strategies have different caps, pars, and internal multipliers making it sometimes difficult to decipher which would be best.
- Allianz has a history of lowering cap rates and participation rates on existing policyholders far below what they offer for newly-issued policies (although Allianz claims this is because of the difference in how those IUL fees were levied).
No one can deny that Allianz has one of the best performing IUL policies on the market with a competitive policy in terms of IUL fees, a low locked loan rate, and multiple crediting strategies to choose from. The new products illustrate quite well, but the caps and participation rates on these new policies differ greatly from their older IUL policies in their in-force block of business.
The solid backing from a huge multi-national juggernaut company with diverse revenue streams is nice but leads many to wonder if their allegiance to American policyholders will be as strong as it would be with American mutual companies, especially if the global economy sours in the future.
Here are the different criteria we look for from the top IUL companies to be on our indexed universal life reviews list. These criteria are ranked below in order of importance to us.
That said, we sometimes will look outside this small subset of companies if a client has extenuating health circumstances, and other companies (not on our indexed universal life reviews list) will be more forgiving with a particular underwriting issue than our favorites will.
Below are the specific criteria we filtered the best performing IUL products through to be on our indexed universal life reviews list. If you would like a more top-level understanding of indexed universal life pros and cons you can visit our extensive article here.
Otherwise, here are the main criteria we used in selecting the top IUL carriers of 2020 (you can click to expand each one below for more info):
The insurance companies listed on our indexed universal life reviews are highly-rated relative to their peers, and do they maintain a healthy balance sheet surplus.
Everyone obviously wants strong financial backing for these financial promises that last a lifetime. Most people looking at indexed universal life companies don’t realize that being “A-rated” is rather ambiguous.Did you know that an “A-rating” actually means something different for each independent rating agency? All five rating agencies have different coding using the letter A for their specific rating scale. For some of them, an A-rating pales in comparison to AAA or A++.
That’s why we prefer a ratings metric called the Comdex Score, which is essentially like grading all insurance companies on a curve. The Comdex score is a percentile ranking between 1-100 for every type of insurance company in existence, not just companies offering indexed universal life.
So, if you see a Comdex score of 91, you know that IUL company is in the top 10% of all insurance companies out there in terms of ratings from the various ratings agency.
Also, when looking at the size of the company, we actually value the size of its surplus. Just because a company is big is not enough, especially if they have huge embedded liabilities they must meet. The top IUL carriers all have a strong surplus on their balance sheet, which can provide a cushion during lean economic times.
The best indexed universal life insurance companies have maintained competitive IUL cap rates and participation rates as interest rates have declined.
As interest rates continue to decline, all the top IUL carriers have had to lower the cap rates on their indexed crediting strategies.
It is nothing malicious or “bait and switchy.” In fact, it makes perfectly logical sense as to why they must make these adjustments.
Insurance companies offering indexed universal life invest mostly in bonds and offer index crediting by buying options on market indexes. The new bonds they’re buying with incoming premiums are paying lower yields than older bonds. Before long, all insurance companies offering indexed universal life have less of an options budget to buy as high of a cap on the S&P 500 compared to when interest rates were higher.
So, lowering caps has been a necessary evil for all of the best indexed universal life companies. That on its own does not bother us. What is upsetting, is when a company offering indexed universal life lowers their cap rates well below what we are seeing from the best performing IUL products.
Something else we look for is if a company offering indexed universal life has extremely high caps or participation rates on its brand-new best-performing IUL product, while they simultaneously squash the cap rates on previous policyholders with a similar but older IUL product. Here’s what we’re seeing from good to ok to bad to just plain wrong:
- Some of the best indexed universal life companies refuse to punish prior policyholders and offer the exact same caps and participation rates for old and new policies
- Others from our best indexed universal life reviews offer slightly lower caps and participation rates for older policyholders because the internal pricing of the two products are materially different (therefore justifying the change).
- Some companies offering indexed universal life drastically squash cap rates on prior policyholders, while offering incredible indexed crediting options on their newest bright and shiny offering
- Certain stock insurance companies that acquired other smaller stock insurance companies radically squash caps on these acquired blocks of business since there is not much brand loyalty anyway.
We’ve found that mutual insurance companies have been less likely to fall into the latter two categories since they have a natural allegiance to the long term obligations of their policyholders.
The best performing IUL products offer diverse growth opportunities, and are there uncapped crediting strategies for maximum arbitrage.
Most of the time, people erroneously assume that the best performing IUL policy is the one with the highest capped 1-year S&P 500 strategy. Let’s face it, that’s a simple question to ask, “how high is their cap?” Regulators further reinforced this fallacy by mandating that only an average of the capped 1-year S&P 500 index can be used when determining the maximum crediting rate to be illustrated on an IUL calculator.So, several of our indexed universal life reviews include IUL companies that may have a relatively low cap on their 1-year S&P 500 crediting strategy (since it’s often the most expensive to hedge in this environment). Yet these same insurance companies offer other diverse or uncapped strategies with much stronger historical averages that cannot be illustrated.
As badly as people want to quantify things simply by trusting an IUL calculator and pretending that comparing illustrations is as simple as comparing mortgage rates, you must look at these intangible factors and think critically.
Many of the top IUL carriers in our best indexed universal life reviews offer unique indexed growth strategies that still give you the full downside protection of a 0% floor rate, while giving you a better shot at double-digit growth (even though it cannot be illustrated on an IUL calculator).
Some of the best indexed universal life companies offer crediting strategies like:
- Uncapped S&P 500 index crediting options by subtracting a 5%-6% spread
- 2-year and 5-year index strategies with significantly higher caps or no cap at all
- Unique international growth index options to diversify your global exposure
- Uncapped managed strategies: often a big-named 3rd party manager using an algorithm to rotate asset classes (still with a 0% floor rate and some kind of participation rate)
It’s important that you take this into an account when considering which will be the best performing IUL for you.
The companies included in our indexed universal life reviews have a participating loan rate that is locked or at least has a cap against future rate increases.
Even though this is 4th on the list, I can’t emphasize enough why this is so important for the best performing IUL policies. Imagine having a private and contractually locked line of credit at competitive rates that you can access at any time for any reason with the most flexible payback terms available.
As long as your cash value and indexed crediting stays higher than your loan amount, no principal or interest payments would ever be due… ever. Keep in mind that we don’t recommend encumbering your IUL cash value like this, but it is possible. When our clients take a loan, we recommend scheduling at least interest-only payments on the loan. That way, they are essentially paying simple interest on a flat balance, while earning compound interest on an increasing balance.
Albert Einstein and Ben Franklin, who were both obsessed with compound interest, knew that this kind of formula is ripe for success.
Regardless of how much you borrowed, your entire cash value balance continues to earn indexed crediting with these participating loans as if you had never borrowed a dime.
Needless to say, having a loan rate that is contractually locked or capped at a reasonable rate once you initiate the policy is a huge advantage offered by the best indexed universal life companies. Most of the best performing IUL policies on our list offer loan rates locked for your entire life in the 5% to 6% range. Some start lower but have some kind of cap, never to go above 7.5% or 8%.
These locked loan rates may not seem especially low at the moment, but inflation will most certainly rear its ugly head at some point in the future. If so, a locked-loan from an IUL policy used for retirement for banking to scoop up real estate can be a crown jewel in your portfolio.
Indexed Universal Life is most often the premium financed life insurance product of choice when clients choose to take loans from third-party loans from outside lenders. You can all about how premium financing works as well as the pros and cons of premium financed life insurance here.
The best performing IUL policies often offer special riders or policy provisions that make this IUL company particularly desirable.
Of all the different companies that offer indexed universal life, you’ll find a range of different riders being offered. Some are free riders and some cost an additional cost of insurance. There a slew of other riders, many of which come at a cost so don’t necessarily benefit the best performing IUL policies. We tend to focus on the ones that tend to enhance cash value access for liquidity needs and/or the net effect of IUL in retirement.
Here are some of the most appealing riders or policy add-ons on the best performing IUL policies in our indexed universal life reviews list:
- Enhanced Cash Value (ECV) Rider – the best indexed universal life carriers may call this rider something different, but basically an ECV rider will either remove any early surrender charges or somehow inflate the amount of early cash value you would normally have access to. These ECV riders normally come with some sort of charge, so unless you absolutely need access to every penny over the first few years of the policy, it may not be necessary, especially if you are primarily using IUL for retirement.
- Overloan Protection Rider – all of the best indexed universal life companies offer some version of an overloan protection rider these days. When a mature insurance policy implodes due to excessive retirement loans, the policyowner receives a tax bill for any amount withdrawn or borrowed over and above premiums paid. This phenomenon has put egg on the face of all life insurance companies. So thankfully, they devised a way to preserve the tax sanctuary of life insurance by freezing any further tax-free income from being taken and guaranteeing a minimal death benefit to heirs.
- Chronic Illness Rider and/or Critical Illness Riders – The riders and policy provisions which would essentially turn some of the best performing IUL policies into a hybrid life insurance policy with payouts available on a long-term care policy. The entire next bullet is devoted to chronic illness riders and the like, so keep reading below.
Many of the best indexed universal life companies have hybrid life insurance provisions for chronically illness or even less severe critical illnesses.
These days, many of the best indexed universal life companies offer chronic illness riders or provisions allowing for some sort of access to the death benefit if the insured experiences chronic illness.Oftentimes the definition of chronic illness will be defined by their inability to perform 2 ADLs or activities of daily living (bathing, eating, dressing, toileting, transferring). If the issue is mental continence, then you only need one.
Some of the top IUL carriers in our indexed universal life reviews even have provisions for critical illness which doesn’t demand the loss of 2 ADLs. Some of the issues that make up critical illness include things like a stroke, heart attack, aneurysm, or even certain types of cancer.
Keep in mind that some of these defensive provisions are better than others. One thing to consider is a saying I often share with my clients, “There are rarely deals in insurance.”
That means that the insurance companies offering the chronic illness riders are oftentimes not the best performing IUL policies.
That said, many of the best IUL carriers on our list offer some level of chronic illness protection, while a couple of them really excel in this area while also having strong performance. So, if having funds available for chronic illness and critical illness is important to you, you’ll want to pay close attention to how the best indexed universal life companies offer these provisions.
Also, if you are a partner in a business, this may be an ideal component to solidify your buy-sell agreement or key-employee protection plan. Dying is less likely than getting seriously sick or hurt, but any of the above can impact the bottom line of your business.
Most insurance companies on our best indexed universal life reviews list are a mutual insurance company while one is a stock insurance company.
Mutual insurance companies are owned by policyholders and their financial decision-making is primarily geared towards satisfying the long-term obligations to their policyholders. Stock insurance companies traded on public exchanges will naturally be more concerned with the shorter timeframes. Satisfying outside investors and the constant scrutiny of Wall Street with quarterly earnings reports will often be the most dominant force in financial decision-making. Potential conflicts of interest may also arise because key executives are bonused primarily with stock options, and will naturally be concerned with their value as they vest.
We’ve noticed in general that the mutual companies are more likely to treat their in-force block of business more fairly when making decisions about caps, participation rates, or raising the cost of insurance. Not all stock companies have been guilty of poor treatment to seasoned policyholders, but we have noticed that the most egregious cases often are not mutual companies.
All that said, there are some stock companies out there with some of the best looking IUL policies when ran on an IUL calculator.