There are a lot of IUL companies available to choose from. Making sure you pick the best IUL company is important. Let’s talk about the important features that are needed to ensure the IUL you pick is going to live up to the test of time.
First off, indexed universal life insurance was created back in 1997. We now have more than 25 years of IUL history to draw from. We are still excited about using indexed universal life insurance as a way to accumulate cash on a tax-deferred basis and take an income stream on a tax-free basis. The process often referred to as a LIRP.
We have clients from many different occupations, income levels and ages that use indexed universal life insurance not only as life insurance but also as a retirement income tool.
We purchase life insurance to pay off our debts and replace our income due to premature death. We purchase life insurance to take care of our family or business partners if we die too soon.
The death benefit of life insurance can help your family get through a difficult time by providing cash when it is needed the most.
Our clients will typically purchase IUL for the ability to build up cash value to use as a supplemental tax free retirement income.
But what about you?
In addition to the death benefit, a great reason to own Indexed universal life insurance is for the potential tax-free income that can be generated during retirement. Which are the best IUL companies? This is a very important question since these purchases are very long term and need to perform well in order to reap the most benefit. Certainly, it makes good sense to find the top rated life insurance companies because they will live up to their promises.
We offer indexed universal life from many of the top carriers and if you would like to receive a personalized quote you should click on the quote box to the right of this page.
There are over 40 carriers in the indexed universal life market place today. Each of those carriers may have several different policies that they offer. We feel like we can only recommend a handful of these carriers which we consider to be the best rated life insurance companies for IUL
How Do You Know Which Companies Offer The Best Indexed Universal Life?
Let’s look at the 9 areas that I see are most important in choosing an indexed universal life policy.
- Ratings – Each year insurance companies are rated by 4 major rating agencies for their financial strength and ability to pay claims. AM Best and Comdex ranking is what we pay the most attention to. The higher the AM Best and Comdex rating the better. AM Best top is A++ and Comdex best is 100 so let’s make sure we use the top rated life insurance companies for your IUL.
- Index Caps – Index caps are important to the performance opportunity in the policy. The higher the cap the more interest can earn. The most used and simplest to understand S&P 500 index allocation. The range of these caps are currently around9%. These caps can change so it is important to use a carrier that has historically held caps steady. It is also important to use a carrier that has many index options including uncapped options.
- Money Sweep Policy – It is very important to have your premium dollars go to work for you as soon as possible. The sweep options are daily, monthly, quarterly and yearly. We prefer daily sweeps so that no matter when you send your premium your money goes to the indexing account The only carriers that do this is North American and Midland (Sister Companies both owned by Sammons)
- Low Policy Expenses – Over the course of 20 – 40 years, policy expenses can really add up. A recent comparison by Brett Anderson of IULDIGEST of policy expensive for a 50-year-old male preferred non-smoker showed a range of $31,000 to $81,000 over a 20 year period. That is a $50,000 difference from the cheapest to the most expensive. The companies we have listed are in the low expense category.
- Accelerated Benefits – These are chronic, critical and terminal illness benefits and allow the owner of the policy to accelerate a portion of the death benefit should they experience any of the above. Again, these carriers all have strong accelerated benefits.
- Loan options – This is a very important feature to look for in an Indexed Universal Life policy if you intend on using your policy as an income supplement. Policies basically have 3 types of loans, fixed, fixed participating and variable. When you borrow money against your policy, variable rate loans allow your funds to stay allocated to the index options of your choosing thereby continuing to earn interest credits. With fixed rate loans, the portion of your money that you are borrowing against is moved to the fixed interest allocation within your policy. Being able to switch between these two loan types is important because things change over 20 to 40 year periods and you need flexibility. You will also want to make sure that your variable loan rate is capped. We see most of these loan rates capped at 5% to 6%. This means that the interest rate that your loan is charged will never be above the cap. Historically the rates charged have been close to 8% so being capped at 6% is important.
- Interest Bonus – Some policies offer an interest rate bonus after a certain number of years. Some carriers guarantee an additional bonus interest rate on top of what your policy earns each year. Most start in year 11 and can be as much as 1%. Go for the guarantee and make sure that this bonus is paid on all values in the policy. Most companies do not pay this bonus on funds that have been borrowed against. The only carriers that pay the bonus even on the funds borrowed against are North American and Midland National.
- Interest Multipliers – Interest multipliers are game-changers. This new feature adds an additional interest rate bonus of 10% to your policy based on the index growth for the year. The best we have found begins in year 6. Again the company is North American.
- Overloan Protection – The last thing you want to happen to your policy is to lapse while you have a loan against it. At that point, the loans would be taxable to you. Make sure that you choose a carrier that offers an overloan protection rider. All of the carriers listed have one so rest assured that your policy will not lapse due to borrowing too much money.
Best IUL Company Ratings for 2023Listed are our top choices for IUL for building cash value and highest illustrated tax-free income. The companies are listed in order for highest illustrated distribution at retirement.
|Company||Year Established||Comdex Ranking||AM Best Rating||Policy Name|
|North American||1886||89||A+||Builder Plus IUL 3|
|Allianz Life||1979||93||A+||Life Pro+ Advantage|
|Lincoln National||1905||82||A||Wealth Accelerate|
|Ameritas||1887||79||A||FLX Living Benefit|
|National Life||1848||90||A+||Summit Life|
You can check out our review of each carrier here:
If the highest income is the main goal for your policy, then currently in first place is the Builder Plus IUL 3 from North American.
This indexed UL policy has multiple interest bonus opportunities, a new fixed interest participating loan, an uncapped fidelity multifactor yield index, and critical and chronic illness coverage.
Here is a brief overview of the Builder Plus IUL:
Compare the best IUL Companies
So it comes down to policy design. We design our plans around your savings goals.
When you compare the companies apples to apples, it is easy to see which carrier will work the best for you.
The policy designs we build out for you will include:
- Key definitions of policy
- Living benefits included
- Ledger of cash value and tax free income distribution amounts
- Expense reports and IRR reports
- A personalized review of the illustration with one of our team
We can prepare a personalized indexed universal life projection for you to review, we just need a few pieces of information from you.
I know all of this sounds like a lot to think about when selecting an indexed universal life insurance policy, but all are important. There are certainly more areas of importance but these are the biggest to look for. There are a lot of great policies available and we have helped thousands of clients choose the right policy. Let us help you understand all the ins and outs of an IUL.
Frequently Asked Questions
We have found that the following insurance carriers best meet the needs of our clients for Indexed Universal Life insurance.
- North American
- National Life
When we compare IUL policy expenses and fees that accumulate in an IUL over several decades with traditional retirement products, the IUL falls in line with traditional investments and in some cases they are much lower.
Check these 8 items to determine which carrier works best for you.
1. Index Cap and Floor rate
2. Money Sweep Policy
3. Low policy expenses and fees
4. Accelerated Benefits for chronic, critical, and terminal illness
5. Loan Options
6. Interest Bonuses
7. Interest multipliers
8. Overloan protection
It is very important to have your premium dollars go to work for you as soon as possible. The sweep options are daily, monthly, quarterly and yearly. We prefer daily sweeps so that no matter when you send your premium your money goes to the indexing account.