Whether or not the additional cap rates justify the additional expenses is part of a fine-tuning process of selecting the best contract for a given situation. We can still control a macro evaluation of expenses if we assume the same credited interest rate. While this may make some intuitive sense, the logical mechanics behind indexed universal life would suggest that, with the exception of some very specific situations, all indexed universal life contracts will yield more or less the same.Īgain, this doesn’t mean we should completely ignore specific variations among carriers when it comes to current cap rates (participation rates are mostly the same). All carriers have a defaulted interest rate for their various indexing strategies, and these are loosely based on the cap and participation rates stipulated in the policy. The problem with most indexed universal life comparisons is that too much variation is allowed across carriers.
Most attempts to compare company products fail to find a solid basis for comparison or are foiled by marketing gimmicks. Indexed Universal Life Insurance is well-known for its ability to generate a retirement income stream, but how can you tell a good product from a bad one?
