Among the numerous sessions offered today at the annual NAILBA conference was one focusing on Indexed Universal Life (IUL). Speaking on the topic were Alan Grissom of S&P Dow Jones Indices and Dick Weber from The Ethical Edge Inc. Both are equally knowledgeable in the field.
During this in-depth session, attendees took a close look at what goes on inside the policies and pricing of indexed life, while investigating some of the more important pieces beyond the normal scope of products.
IUL has grown from about $100 million to $1.3 billion in premiums and industry professionals think that growth is going to continue as many anticipate the appeteite to remain strong.
The second quarter 2013 sales and market report from Wink a life insurance and annuities research firm, shows that in 1998 the IUL market stood at $64.7 million, growing to $1.3 billion in 2012 and $668 million for the second quarter of 2013.
"We are up 15 percent for the year again," said Grissom. "Clearly we’re seeing tremendous growth with this. It’s a good story."
But what's the best crediting strategy for IUL? The most popular are:
- Annual point to point;
- Term end point;
- Montly averaging.
- Participation rate: Typically in the IUL role about 100 percent;
- Cap: Typically 10-14 percent (100 percent PR rate);
- Term: Higher cap rate comes with higher expenses;
- Crediting formula: Best long-term performance tied to highest cap rates.