by steve_4 » Mon Jul 18, 2011 04:37 am
It seems to be to good to be true.
What type of hidden fees should I inquire about before making the final step?
What type of hidden fees should I inquire about before making the final step?
Posted: Mon Jul 18, 2011 08:57 am Post Subject:
Pacific Life is a highly reputable company.
What do you consider "hidden fees"? Everything in disclosed in the contract.
Posted: Mon Jul 18, 2011 04:19 pm Post Subject: Pacific LIFE EIUL?
My agent is stating that the product has 0% floor and no cap which he recomends. And said pac life has an awesome track record of 10% average returns per year. Is this true?
Posted: Mon Jul 18, 2011 11:45 pm Post Subject:
I can't speak to the returns, but Pac Life is one of the companies in the IUL market right now.
It's a product I should probably spend more time looking at. Need more time in the day.
Fees are traditionally disclosed in the policy illustration which you need to sign before everything can be finalized.
Posted: Tue Jul 19, 2011 10:39 am Post Subject:
Yes, PL has some of the best EIUL products currently available.
Unlike Variable Universal Life, UL and IUL products do not have "sales loads" or "hidden" fees. There is an annual policy fee (all companies charge these) on top of cost of insurance and the fees for any riders (spouse, child, waiver of monthly deductions, LTC, etc) that have been added. But 100% of each premium payment goes directly into the cash accumulation, after which the monthly interest credits are added and the monthly deductions are taken. After all that math is applied, the cash value should be on the increase.
While a 100% participation rate means that the policy would be credited with the full increase in the associated Index, and a 0% "floor" (the guaranteed minimum interest rate) means that your cash value will be unaffected by negative Index performance, there is a rate cap and/or spread that may limit the upside interest credits. Most insurance companies currently have upper limits between 12 and 24 percent (annual increase). So you may or may not get 100% of the "upside".
But even when you get none of the "downside" in a declining market, you can still lose cash value if your premiums are insufficient to cover the cost of insurance.
This is the same hazard that exists in all Universal Life policies. It has been "overcome" by the so-called 'secondary guarantees", but to maintain those guarantees, you must not fail to pay 100% of your scheduled premiums. Missing just one premium payment along the way can eliminate the guarantees.
Posted: Tue Jul 19, 2011 02:30 pm Post Subject:
Unlike Variable Universal Life, UL and IUL products do not have "sales loads" or "hidden" fees.
They have "premium loads" so 100% of the premium payment doesn't go into the cash value. They do not have 12b-1 fees like VUL.
Posted: Tue Jul 19, 2011 04:21 pm Post Subject: EIUL
I really appreciate ALL of your help.
Posted: Tue Jul 19, 2011 11:22 pm Post Subject:
They have "premium loads"
My bad. Some companies do charge "premium expense fees" of up to 8% before the money goes to the general account.
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