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|Subject: Re: Strategy comparison S&P500 vs. IUL [rev 1]||Date: 4/4/2013 1:50 PM|
|Author: Dwdonhoff||Number: 71698 of 74465|
While we're on the topic of fees and due diligence, someone previously mentioned the Allianz IUL. It has a 17% cap which certainly helps returns, but there is also a 5% commission.
That's one-time. How much is that 5% spread out over 20, 30, 40 years?
That's before the expenses, which include a month policy charge, monthly expense charge, and monthly insurance cost and except for the monthly policy charge ($7.50) and except for the policy charge they don't really tell how much those are.
Actually, they do. All expenses, fees & charges are completely detailed & disclosed on the designed illustration. Each different case design changes how the various expenses occur, so there is no 'one-size-fits-all' menu of fees to publish before design.
All considered, the average annual burden of fees is under 1% by year 20 or earlier. Depending on design efficiency, it can drop as low as 30 basis points over the lifetime average by year 30-ish.
On top of that, there are surrender charges. Those are enormously high costs.
An emergency liquidation during a 50% drop in the S&P is a hellova bigger surrender charge... and can happen unscheduled, unannounced, at any time... even 20 years *AFTER* the account was started.
IUL surrender charges are at their max on day one (generally 12-14%, tops,) and decline on a straightline basis to zero by year 10-15. Further, there is no reason to trigger a surrender charge in the vast majority of cases as both principal and gains are are available at a 90% of value basis via policy loans (at interest rates less than average annual gains.)
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