The reality is cap rates are going to move in both the upward and downward direction based on primarily interest rates, but also based on the volatility of the underlying index. IUL Design. Theme: Gillian, Minnesota Life & Securian: revised 6/11/20, Family history underwriting guide by company, Alternative Tobacco & Quitting Tobacco Guide, Life insurance that pays for long term care: the hybrids, Life Insurance with Critical Illness Benefits, Accordia Life and Annuity Company Ratings, Protective Life notable products or features. cap of 10.4% over this 11 year period. IUL’s are a medium to long term hold product, so the real question as This chart is a bit different in that does not show the cap history but instead shows the average amount actually credited to their IUL’s to 32,967 policies from March 2006 to Dec. 2016, as a %. View current rates for the Allianz 222 Annuity. annual gross gain would have been 7.73% (with no adjustments for other factors such as bonus, etc. AG 49 look back averages the annualized rates from 25 year rolling periods for the past 65 years of the S&P 500 index returns. Even the top IUL carriers were forced to keep scaling back their fixed-crediting rates as well as the caps on their different indexed crediting strategies. Even bumping the loan rate up to 6% isn’t an honest projection (again, unless there’s a guaranteed max cap of 6%) based off of historical averages. IUL Insurance crediting rates. period. The Loan Provisions are much more important. Powered by WordPress Uncapped Prudential, S&P 500® Uncapped Indexed Account, 4.00% Index Spread, “PruLife® Index Advantage UL” Uncapped – 90% participation rate: Minnesota Life, S&P 500 Low Volatility “Eclipse Accumulator IUL” cash value accumulation in an IUL insurance policy. What you should know about the cap rate changes 1. All information is based on data from all companies obtained as of May 2012. The FFIUL gives you the opportunity to grow your policy value through excess index interest (earnings above the guaranteed minimum rate) that may be credited to your policy based partly on changes in these major stock indexes: S&P 500 ® Index, EURO STOXX 50 ® INDEX, and the Hang Seng Index. An IUL policy is only as good as its design. It's hard to know what illustrated rate is reasonable for an Indexed Universal Life product. In an IUL product, the cap rate is the highest crediting rate possible regardless of the actual index return. North American has the highest performing IUL at the moment. They say they do not have an actual cap history. Max rates use the caps and floors against historical data to determine a reasonable flat rate; however, it is easy to debate the applicability of the interest rate that results from the look back. Penn Mutual also can generate a IUL historical report which shows 20, 30, 40, 50 or 60 years historical index returns and how that translated to their current 13% cap and guaranteed 1% floor. fixed rate gain is … Simply put, if the index gains more than the cap rate, then you only get the increase of the cap rate. which the return is credited to the policy).15 To illustrate how caps and participation rates work, assume that a measured index goes up by 20%. Principal Indexed Universal Life Accumulation Interest Crediting Rate Update S&P 500 ® Price Return Index Account. The 10 year period of 2007-2016 = 6.38%, whereas the 10 year avg. from an independent agent and broker, 22 years of experience, Highest Cap Rates:  S & P 500 Index  One-Year Point-to-Point, Uncapped    Prudential,  S&P 500® Uncapped Indexed Account,  4.00% Index Spread,  “PruLife® Index Advantage UL”, Uncapped  – 90% participation rate: Minnesota Life,  S&P 500 Low Volatility “Eclipse Accumulator IUL”, Uncapped –  50% participation rate:   United of Omaha  “Income Advantage”, Uncapped –  55% participation rate:   United of Omaha  “Life Protection Advantage”, 13.75%    Transamerica  “Transamerica Financial Foundation IUL”, 11.00%    United of  Omaha  “Income Advantage”, 11.00%    Symetra  “Symetra Accumulator IUL”, 11.00%    Accordia  “Lifetime Provider”  “Lifetime Foundation”, 10.50%    American National   “Signature Indexed Universal Life”, 10.00%   American General   “Max Accumulator+ II”    (all states, except NY), 10.00%    John Hancock “Accumulation Index UL 18”, 10.00%    Prudential  “PruLife® Index Advantage UL”, 10.00%     United of Omaha  “Life Protection Advantage”, “IUL Express”, 9.50%   American National  “Signature Performance Indexed Universal Life”, 9.50%    Principal “Indexed Universal Life Flex II”, “Indexed Universal Life Accumulation II”, 9.00%    Penn Mutual  “Accumulation Builder Select IUL”, 9.00%   Minnesota Life  “Eclipse Accumulator Indexed Universal Life”, 8.50%    Lincoln  “Lincoln WealthPreserve® 2 IUL “, “Lincoln WealthAccumulate®2 IUL”, 8.50%   Pacific Life “Pacific Discovery Xelerator IUL”  “Pacific Indexed Accumulator 6”, 8.50%    Nationwide  “Nationwide YourLife® IUL Accumulator”, “Nationwide YourLife® IUL Protector”, 8.50%   Minnesota Life  ” “Eclipse Protector II IUL”, 8.50%   American National  “”Signature Plus Indexed Universal Life”, 8.50%    Protective  “Protective Indexed Choice UL”, 8.25%   Minnesota Life  “Value Protection IUL, 7.75%   American General  “Value+ Protector II IUL” (all states, except NY), 7.50%   Nationwide  “Nationwide Indexed UL Accumulator II” ,  “Nationwide Indexed UL Protector II”, 7.50%   Pacific Life “Pacific Discovery Protector IUL”, 25.00%  Nationwide, 1-Yr High-Cap Multi-Index ” “Nationwide Indexed UL Accumulator II” ,  “Nationwide Indexed UL Protector II”, 15.00%  Transamerica  Global Index Account “Transamerica Financial Foundation IUL”, 14.00%   John Hancock,  High Capped Index Account “”Accumulation Index UL 18”, Please contact me for a free confidential quote, Sean Drummeyemail: spdrummey@gmail.comphone: (910) 328-0447, last update: 12/10/2020   Cap rates are current and accurate to the best of my knowledge; cap rates are subject to change, increase or decrease; cap rates are non-guaranteed elements of Index UL products; incomplete compilation of all available carriers and IUL products, American General: revised 12/10/20Lincoln: revised 11/16/20Nationwide: revised 10/20/20Principal: checked and revised 8/5/20Penn Mutual: revised 8/5/20Pacific Life: revised 7/22/20Minnesota Life & Securian: revised 6/11/20Transamerica: checked 3/3/20Prudential: checked 3/3/20Protective: checked 3/3/20United of Omaha: revised 3/3/20AXA: revised 1/16/20American National: revised 12/2/19Protective Life: revised 10/30/19Symetra: revised 9/17/19John Hancock: revised 4/15/19United of Omaha: revised 4/2/19, Just found out today 3/4/2019 that American National has an 11% Cap rate for its Signature Indexed Universal Life product , FYI Transamerica IUL Cap Rate is 15% on there Global IUL 100% participation as well. It seems like this is an industry wide issue and “carrier chatter” is really heating up across the board. Request lower interest rates for added realism On the flip side, there’s a minimum, often 0%. This chart is a bit different in that does not show the cap history but instead shows the average amount actually credited to their IUL’s to 32,967 policies from March 2006 to Dec. 2016, as a %. Index cap rate: this is the cap on the upside of the performance. if other cap rates: Unfortunately, at this time you are unable to login into the new website while it is still under construction. The maximum allowable illustrated rate for each index is the lesser of the 25-year historical average or 6.86%. say 7% (the historical average of a typical general account), the carrier will have 6.54% of the premium to purchase an option. If the cap rate is 13.5% and the index – the S&P 500 in this case – earns 20% in a year, then your accrual account increases by 13.5%, since the performance of the index hit the cap. The avg. This chart also shows the avg. Obviously, Indexed Universal Life growth caps will have to decrease if prevailing interest rates do, since the IUL carriers would have less of an options budget to buy up a higher S&P cap. Historical Crediting Rates Income AdvantageSM IUL Index Change X Participation Rate Crediting Rate (subject to Cap and Floor) 1 The amount that may be available through loans or withdrawals, as defined in the contract. Cap Rate: The cap rate is the ... Company History. The avg. Highest Cap Rates: S & P 500 Index One-Year Point-to-Point. gross gain is 6.59%. As long as the Cap is above 11%-12% then worry about the Loan rate, not the Caps. It’s conceivable that as interest rates rise again in the future, then the corresponding IUL caps should also rise since the insurance companies would then have a larger options budget to work with. Index Crediting Method Par Rate Cap Rate Spread Rate*Rate Max Illustrated S&P 500® PtP 100% 12.00% None 6.96% S&P 500® Mthly PtP 3.15% None 5.26% S&P 500® PtP W/Spread 100% None 4.25% 6.96% The IUL policy was not … The avg. This is equivalent to an avg. gross gain is 6.59%. Thank you for your patience, Brett Anderson, Author of "Last Chance Retirement" and "Being Your “Own Banker”, Company Information – IUL Benefits & Features. The rate is set by the insurance company and can be anywhere from 25% to more than 100%. Transamerica introduced the first Indexed Universal Life (IUL) insurance in the late 1990s, and since then it has grown to be over 50% of all of the Universal Life insurance premium in force and over 20% of the total premium for individual life insurance. Indexed Universal Life Cap Rates . In PA, the current growth cap is 12% with a 1% guaranteed minimum rate. When presenting a life insurance product to clients, it is important to show the product’s value beyond just permanent death benefit coverage. Different time periods and different indexes will produce higher or lower averages, and actual credited rates will vary from year to year. You may have seen some pretty large industry movement in decreasing cap rates at carriers, especially in regards to Indexed Universal Life insurance (IUL). However, if you need any assistance at all please email me I’m always here and happy to assist you. Its not all about the highest Cap. The interest rate credited to the policy’s index account value is linked to the performance of the index or indices chosen and will never be less than zero percent – guaranteed! Rates are guaranteed for the length of the crediting period. In an IUL product, the cap rate is the highest crediting rate possible regardless of the actual index return. fixed rate gain is 4.37%. If the cap was 14% every year, the avg. The interest credited is also subject to a cap rate and cannot exceed the cap rate. All things being equal, this allows a higher cap/ participation rate. The monthly percentage change can be positive or negative and is subject to a monthly index cap rate. IUL products do not directly participate in any stock or equity investments. If you would like an illustration just let me know. As described in the text of the flowchart above, the historical average “compound” return on the S&P 500 Index with a 1 percent floor and a 13 percent cap is 7.5 percent. Caused by Option Costs . 2 The accumulation value is, however, … 2020 Life Insurance Recommendations Next, the agent was sharing past rates of return that are higher than currently possible due to falling cap rates. Another chart shows what the average gross gain was since 1945 (including 0% gain years) for each cap rate from 4.5% to NO Cap. and has the potential to be credited with Excess Index Interest up to the current cap. If a policy had a participation cap of 50%, only 10% would be credited to the policy. The avg. This report shows how 10 of these years compare to all the 10 year periods since 1945. Number of Years 0% was credited to the Indexed Accounts (Negative S&P Performance) 8 years 10 years In New York, the current Cap Rate is 12% and the current Threshold Rate is 6%. At the end of the index period, those values are added together to find the interest crediting rate. Given the importance of cap and participation rates to the performance of an IUL, analyzing IUL carriers to see not only their current floor, cap, and participation rates, but also how they have adjusted those rates in the … Below is a summary of the interest rates that have been credited to actual Life Protection Advantage IUL policies based on the performance of the S&P 500. © The index-linked interest crediting results shown represent historical returns for the S&P 500 ® Price Return Account of the Principal Indexed Universal Life Accumulation SM product. This is equivalent to an avg. *Maximum illustrated rate reflects the requirements of AG49. If a policy had a cap rate of 12%, only 12% would be credited to the policy. ). cap of 10.4% over this 11 year period. These decreasing cap rates are 100% due to option costs. In contrast, other IUL companies offer 100% participation rates but with cap rates ranging from 9% to 17%. since 1945 = 6.16% (with a 10.4% cap), so this measuring period for Allianz is about average. Indexed universal life insurance has the potential to accumulate cash value based on the changes in an underlying market index (or even in more than one index), such as the Dow Jones Industrial Average (DJIA) or the S&P 500. Indexed universal life insurance (IUL) offers the growth potential of index-based interest crediting rates and the protection of guaranteed minimum interest crediting floors. Monthly point-to-point is available with the S&P 500® only. Our cap rate will decrease by 1.00% on four of our six IUL indexed interest strategies. Therefore, you will find a direct relationship between prevailing bond yields and IUL caps. IUL’s caps are created with S&P 500 Index options purchased by the insurance company’s bond yield. Past performance is not a prediction of future results. Although IUL crediting rates are based on well-known published index funds (for example the S&P 500 Index), in most cases the IUL crediting rates vary dramatically from the actual equity returns of the underlying index fund. Your email address will not be published. On the flip side, there’s a minimum, often 0%. Builder IUL® Gen. 8 Effective for Index Periods that start on/after April 16, 2018. This will be our first cap rate decrease since entering the IUL market in 2011. It also includes the renewal participation and cap rates. AG 49 is the federal regulation that was fully implemented on March 1, 2016 that mandated a uniform methodology based on the historical performance for interest rates that are shown on IUL illustrations. The interest crediting rate can never be less than the index floor rate (0%). 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