Why Doesn’t Every Person Own One of These?

Josh VerHoeve, VP Annuity and Life Distribution

What savings and income investment vehicle exists where you are able to save $1,000 a month for ten years, and have that investment pay you back $1,000 a month in income  for the rest of your life, 100%  tax free?* Fixed Indexed Universal Life (FIUL) is the one product that can do that for you. I ask myself constantly, “Why doesn’t every single person own one of these?”

In addition to tax-free income, FIUL as a savings and income vehicle also provides you with a death benefit which would pass on to your heirs 100% tax-free. It also provides additional tax-free living benefits if you get sick with a chronic or terminal illness.

The average top tax rate in the United States the last 100 years, is nearly 60%**. We’ve had periods of time in history with tax rates over 90%. Yes, you read that correctly…90%!  Government spending and the National Deficit have grown at a rapid rate in the year 2020. Given our national debt and our current historic low tax rates, we would be ignorant to not think about taxes increasing in the near future. However, for same reason, savers in America continue to max out their 401(k) contributions. 401(k)s currently hold over $5.5 trillion in assets and make up almost 20% of retirement assets***. This leads me to believe that we are acting differently than we believe. Yes, 401(k)s allow you to save on taxes today, but by doing so you are taking serious risk on taxes in the future. The only time you know how much of your 401(k) belongs to you is when the government tells you how much belongs to them.

So I circle back to my question, “Why doesn’t every single person own one of these”? First, FIUL is not liquid in the early years. You do need ten years or more to make it work well. But, aren’t 401(k)s generally even longer term investments? A 35 or 40 year old saving in a 401(k) cannot access funds until age 59 ½.  Maybe the other answer is that you have to qualify medically. Yes this is true, but with streamlined and accelerated underwriting, medical requirements have become less of a tedious process for an advisor or client. I think the answer to this question is quite simple…Education. Not enough savers are aware of FIUL. When you start your first job out of college, there is a pretty good chance you are introduced to a 401(k), but a much smaller chance that you know what FIUL is. This means it’s our job to educate prospects and clients on how FIUL can secure their retirement income. And since we find ourselves here in September, which is Life Insurance Awareness Month, if there was ever a good time to educate, now is that time. Finding an IUL prospect is the easiest prospect to find. Ask your client one simple question, “Do you contribute to a 401(k)?”. If that answer is “YES” then you are looking at your next sale.

Don’t forget to ask for a Planning Compass tutorial from one of the Asset Life Team Members, which helps you compare 401(k) benefits to that of an FIUL.

*45 Male Std NT saving $1,000 per month for ten years projected tax-free income of over $1,000 per month from age 56 for the rest of their life. Note that at younger ages, the income benefit can be higher, assumes a 6.00% rate of return during savings years and 5.50% during income years, both less than any 10-15-20-30 year historical.

** TaxFacts.com

*** Source www.ici.org

Allianz FIUL Continues to be a “Stand-Out” on Our List

Josh VerHoeve, Asset VP, Annuity and Life Distribution

If you’ve spoken with anyone on the Asset Life Team over the past twenty years, you will have heard a common message that we’re all big fans of Allianz Life Pro+ Advantage Fixed Indexed Universal Life, along with its previous versions. When choosing an FIUL for your client today, there are so many factors to consider. The product landscape of FIUL has changed so dramatically and so frequently over the past five years that it can be difficult to keep up.  There are many reasons that we put Allianz FIUL at the top of the list, and in this article we’re going to discuss those along with some new enhancements that you may not be aware of.  

The first thing we need to remember when choosing an FIUL carrier is that the company matters. It matters more with FIUL than it does with any other financial product you might offer your client. FIUL sales are lifelong commitments. No one purchases an FIUL without the plan of keeping it for the rest of their life. So which companies can you count on? 

As we look back on policies sold 10, 15, and even 20 years ago, we see that no carrier has treated clients better than Allianz.  About a year ago, Allianz began publishing actual policyholder credits on their FIUL policies. This was in response to the common objection that “you’re illustrating your FIUL too high”. Well if you take a look at the Allianz FIUL Credits you’ll see over 30,000 in-force Allianz FIUL policies were surveyed with an actual client rate of return at 7.19%. I will also note that this 7.19% has only increased over the last year. The PIMCO and the BUDBI II ER Index returns have rarely been less than 10% on anniversaries in the year 2020. We depend on these carriers to realistically project clients’ retirement incomes, and we depend on their renewal rates. Allianz has done it the best. 

You may be aware of a feature that Allianz rolled out almost a year ago called “Index Lock”. Index Lock gives you and your client the opportunity to lock in a gain on their FULL accumulation value before the anniversary date. This means that if you hit 10% three months into the year, you can lock in that 10% on all premium and values. In fact, you can lock in any gain at any time if you wanted to. If you have sold Allianz FIUL policies in the past, log-in to their website and take a look at where your clients are right now.

Click here to view the INDEX LOCK REPORT

The amazing thing about the Allianz BUDBI II ER Index (most chosen allocation), is they have been crediting between 8-16% returns all year long. Even at the end of March when many of us thought the economy may just continue to decline, we saw some double digit returns, not just from the BUDBI Index, but also from the PIMCO Index. Not only did those policies who had anniversary dates in March have double digit returns, but some of those same policies today are already up double digits from March through August of 2020. 

Allianz has one of the best Agent and FMO support systems. If you want a visit from them to better understand their product, let us know and they will be in your office. If you want to set up a Zoom call to help explain something to a client, they will be there. Internal Sales and In-force Support are so important when it comes to FIUL, and Allianz has continued to impress us. 

It’s time to take a look at your book of business with Allianz, and if you haven’t written with them it’s time to start! If you’re curious whether you have a policy that’s in this category, you can check the website, but also know that an Asset Team Member will be reaching out to you soon to have that discussion. Allocations to the PIMCO or the BUDBI ER are in excess of double digit returns over the last six months and this is something to talk to your clients about.  It may not mean that it’s time to lock in every single gain, but it’s certainly time to take a look to see if it makes sense. 

The Asset Life Team is here to answer any questions, run a quote, or just discuss how life policies fit into your clients’ overall plan.  Contact us at 888-303-8755 today!

Are Your Clients Gambling With Their Retirement?

Josh Ver Hoeve, V.P. Annuity and Life Distribution
(Asset Marketing Systems)

January is Financial Wellness Month.

In 2019, each person in the United States spent about $1,000 on the holidays, which was up from the $885 average we saw in 2018. This means that there was more than $1 trillion spent on the holidays just in the U.S. alone. Included in that spending, 33% of people spent over $1,000.  The U.S. economy is doing well!  The market continues to soar to new highs over and over again, however the question remains for you and your clients – when will we see a correction or even a slowdown?  

Many experts are saying that in the next decade we can expect U.S. equities to be somewhere between a -5% to a +5%.  Perhaps more important, the last decade is highly unlikely or nearly impossible to repeat.  So the next question to ask is, when is a good time to take your winnings off the table and protect them?  I would take a guess and say that right now is about as good as a time as ever.  

Many Americans looking to retire in the next five to ten years don’t have to take the market risk to achieve their retirement goals.  So why take risk when it’s unnecessary?  Even in this low interest rate environment we still have Fixed Indexed Annuities with incredible accumulation potential, all while protecting your clients from another market downturn.  Take this first month of 2020 to plan for the future and your clients’ future. Let’s make sure our clients are financially well and not taking risk that is unnecessary.  

You may be wondering about which products are best for safety and accumulation, or perhaps have the best income riders on the market?  Maybe you’re looking to leverage assets for death benefit.  We have you covered, CLICK HERE to view our January 2020 top picks page for Annuities and CLICK HERE for life insurance.  Be sure to give our product team a call to discuss your cases, answer questions, or run illustrations.  Our number is 888-303-8755. 

Source USA Today Article November 29, 2019.