LIMRA’s Latest Report: US Life Insurance Sales for 2023 Reported! Total premiums grew by 1% to $15.6 billion, with policy count surging by 4%. Check out the chart below for details:
2023 US Market Share for LifeInsurance by Product Premium
Today, I thought I’d do a comparison between Whole Life and Index Universal Life policies.
Here’s a breakdown based on a 55-year-old male, standard rate, with a $10,000 premium for 10 years. The IUL was calculated at a presumed 5% annual rate of return, while we ran a 10-Pay Whole Life policy.
All values are based on 10 years of premium with no loans or withdraws
The Whole Life policy offers a higher internal guarantee of 3.5% but the dividends are not guaranteed. Whereas on the IUL you have a higher potential index return, but a lower guarantee. The premiums on the IUL provide some flexibility that the whole life does not offer. The IUL has a higher initial death benefit, opting for a level death benefit on the policy ensures lower internal costs and sustains the policy for a longer duration. Consequently, by age 85, the death benefit of the Whole Life policy surpasses that of the IUL.
So, why does Whole Life policies outsell IULs? There are a couple of reasons why. One reason is distribution. The big four Mutuals (Mass, Northwestern, New York, and Guardian) primarily distribute Whole Life through career agency forces, whereas IULs are commonly distributed by independent agents and marketing organizations.
An IUL’s performance is based on index returns. For example, if a client has a longer time horizon the IUL has a better chance of outperforming a whole life policy. If a client is more risk-adverse the higher guarantees offered in whole life might appeal to them.
If you have clients considering a life policy for wealth transfer or cash accumulation purposes, let’s connect to determine the most suitable policy type for their needs.