If you believe that markets will continue to have bucking-bronco volatility like they have over the last 81 years through depressions, recessions, world wars, hyperinflation, deflation, etc.. then the Pacific Discovery Xelerator may be the ideal vehicle to channel that volatility into tax-exempt retirement income. No one knows exactly how or when, but I think we can all agree that will markets go up and go down…sometimes violently. 9.00% Minnesota Life “Eclipse Accumulator Indexed Universal Life” 8.50% Lincoln “Lincoln WealthPreserve® 2 IUL “, “ Lincoln WealthAccumulate®2 IUL” 8.50% Pacific Life “Pacific Discovery Xelerator IUL” “Pacific Indexed Accumulator 6” Categories: Comments are closed. Regardless, this contractual “back-stop” that removes the PDX’s controversial extra charges and promises at least some sort of modest crediting made me feel a lot more comfortable about the Pacific Discovery Xelerator. We consider it our mission to balance the sea of opinions out there with indisputable facts coupled with critical thinking. Since you’re essentially paying additional charges for these extra silos of options (which is not meant to be a profit center for them), Pacific Life wants the Performance Factor to be a winning proposition to keep your policy alive and kicking. Regardless of the actual charges you’ve paid in your policy or how much crediting you’ve actually received, Pacific Life is always simultaneously running a hypothetical scenario right alongside your policy called the “Alternate Accumulated Value.”. VUL fell firmly out of favor, and IUL quickly became the product of choice for those looking to use life insurance for retirement and cash value accumulation. S&P 500. how safe are life insurance companies? Traditional Indexed Universal Life insurance products have contract language stating they can lower their IUL caps all the way down to 4% and triple their internal cost structure with the stroke of a pen. Pacific Life uses a higher schedule of charges at the onset of the policy if you elect an increasing death benefit. So if you choose the 2-year S&P 500 indexed crediting strategy capped at 30%, you have the opportunity to earn multiple silos of crediting up to 30% over the 2-years. They knew that the other IUL carriers offering significantly higher caps were defying the math. We will definitely be heading into the weeds of nitty-gritty life insurance details on the PDX if you’re into that sort of thing. Best of all there is a 1-year uncapped S&P 500 strategy where you can track the S&P 500’s growth above the first 5%. This credit is just too darn favorable if Pacific Life’s desire was to extract all your premiums and leave you without a policy someday. Pacific Life’s indexed universal (IUL) products have a cash value that grows based on an established index (typically the S&P 500, but you may be able to choose another with some products). Pacific Life offers something called an Overloan Protection RIder. This put egg on the face of the entire life insurance industry. review of pacific life’s pdx-iul – the pacific discovery xelerator unbundled famous entrepreneurs who used whole life insurance as their own bank. Throughout the mid-2000s IUL sales started steadily increasing. This article is separated into three sections. However, one of my unique gifts that God has given me is to make complex concepts simple to understand. What are the criticisms of the Pacific Discovery Xelerator? All the other top IUL carriers are competing vertically, meaning who has the highest cap? They thought outside the box and decided to add value horizontally instead of vertically. 4. Rao Garuda, one of my friends and colleagues in the business has a saying that I love: “It’s not too good to be true, but it’s too good to be FREE.”. Although the Performance Factor’s exact details remain confidential for the time being, hopefully this simplified explanation removes some of the mystery and makes it more of a “light gray box.”. Pacific Life did not want to go down that road at the expense of compromising their long-term commitment to equal treatment to their entire block of business. Unlike many carriers, Pacific Life staunchly maintains a “what’s good for the goose is good for the gander” philosophy when it comes to offering the exact same caps and indexed crediting strategies for both old and new products. And remember, these are the three worst periods I can find in the S&P 500’s last 81-years, and they’re not that bad (even without any Performance Factor). 3. Substantially higher charges supporting this unique opportunity for additional indexed crediting, A mysterious formula as to how these credits will be applied. I’m not sure why that was deemed bad for consumers, but we can no longer do that. Sure, Whole Life insurance has a guaranteed premium supporting a guaranteed death benefit. As you saw in the formula above, policy charges are the numerator of the formula which means that higher charges increase the Performance Factor. Indexed life sales for the second quarter were $494.9 million , down 6.0% when compared with the previous quarter, and down 14.3% as compared to the same period last year. Pacific Life knew that given the state of bond yields, they could not support that high of a cap for their entire book of business. !H-,�+�\?y�1Lh�g �*�W�W�^1���-Vu��d �2B�UC�?¢^pX§V�1$�G�Ī�\ kkU da�m� Let’s see if my “chicken-scratch” can help your comprehension. ; In the second section, we get into the different indexed universal life insurance pros and cons, starting with the benefits. Below is an example of the PDX earning 0% with its normal charges on an age 48 male with a standard non-tobacco rating (which is the fourth from the top). All companies that offer IUL reserve their right to increase their charges by more than triple. %PDF-1.6 %���� It offers death benefits and accrues cash value on a tax-deferred basis. Pacific Indexed Accumulator 5 – perfect … Pacific Discovery Xelerator IUL; Pacific Indexed Performer LT2; Pacific Indexed Protector 2; Variable Universal Life Insurance. Click here to thoroughly understand all the pros and cons of Indexed Universal Life insurance. Pacific Life’s Discovery Xelerator IUL (PDX) has been available for a few months now and analysis is beginning to build an excellent picture of just how competitive the carrier is in this space. Click here to read more details from Pacific Life about these 125 different pricing improvements and the savings they passed on to consumers. If for some bizarre reason Pacific Life’s honorable philosophy were to change in the future, we will be discussing the contractual safeguards available to PDX policyholders in this article below. 1. In fact, the PDX often wins using their fixed loan against other companies’ participating loans (even when the participating loans are illustrated showing an ongoing 1% percent positive arbitrage on loaned money throughout retirement). I highly recommend that anyone who buys the PDX add Pacific Life’s very low cost “No-Lapse Guarantee” rider to the policy. 1. Indexed Universal Life Insurance does not directly participate in any stock or equity investments. 2. Click here to learn the difference between mutual vs. stock insurance companies. 2. When this happened in the past, policyholders were left with a big tax bill once their policy lapsed from taking too much retirement income. Thankfully, Pacific Life Regional Vice President Evan Ohs and Field Representative Elijah Robles gracefully took the flack as 12 elite agents from my study group skeptically lobbed a barrage of loaded questions at them. The current (and relatively young) management regime has adamantly expressed their continued commitment to policyholders and mutuality. Note: Certain loan and withdrawal protocol needs to be followed within the PDX policy in order to qualify for the Overloan Protection Rider. Review those sequence of returns above and think about how those uncapped indexed returns could get multiplied by the Performance Factor and translate to spurts of robust growth inside your cash value account. Today, Pacific Life Insurance Company (Pacific Life) announced two new indexed universal life insurance (IUL) products: Pacific Discovery Xelerator IUL 2 (PDX IUL 2) and Pacific Indexed Accumulator 6 (PIA 6). The client also bears the additional expense risk if the insurance company happened to misprice their product, or if a market crash erases a big chunk of cash value needed to support the policy. At Pacific Life, creating analysis for indexed products usually means you will see a graph they call a “Galaxy Chart”. Pacific Life has a 2-year S&P 500 strategy with a 30% cap. Pro-Tip: Pacific Life’s software cannot illustrate monthly income withdrawals from their IUL policies until the 15 policy year. Indexed Universal Life Insurance does not directly participate in any stock or equity investments. If you take a fixed loan during your first 5 policy years, the cash value backing the loans gets guaranteed crediting of 2%. Indexed UL Sales – its PDX is the #1 Selling IUL plan. For international exposure, there is also a capped 1-year strategy that blends the performance from the Euro Stoxx, Hang-Sang, and Emerging Markets indexes. After reading from critical online sources that the PDX was the worst kind of “trust me” product relying on some sort of mysterious “black box,” I knew there must be more to the story, and that I needed to learn more. Pacific Discovery Xelerator IUL – designed for protection and supplemental income; Pacific Discovery Protector IUL – great solution for insurance protection and wealth transfer. Hopefully, this piece helped to clarify a lot of the mystery shrouding the new Pacific Discovery Xelerator product and its mysterious Performance Factor. Pacific Discovery Xelerator IUL 2. Prior to AG-49, an agent could illustrate actual S&P 500 return sequences through Pacific Life’s illustration software. It is not a recommendation of any specific insurance or financial product. Choose from the Pacific Discovery Xelerator IUL 2, Pacific Indexed Accumulator 6 (PIA 6), or Pacific Discover Protector IUL. 2 … 19-70 1 of 6 CLIENT GUIDE PACIFIC DISCOVERY XELERATOR IUL 2 Flexible Premium Indexed Universal Life Insurance 2 Otherwise, we could show you how the PDX can really benefit from market volatility. This is a rarity in our industry. However, Pacific Life has never raised their charges above what was illustrated, nor have any of the top IUL carriers which are mainly mutual companies. Do you think you can qualify for a Standard or Preferred rating if you did formally underwrite. This policyholder could surrender the policy for over 92% of your premiums paid in 15 years when run at 0%. Therefore, you will find a direct relationship between prevailing bond yields and IUL caps. This is because you continue earning compounding on your entire cash value balance including the amount you borrow against. You can click here for a link to Pacific Life’s explanation of how the Performance Factor applies additional crediting to a PDX policy. Get excited: as of February 27th, 2017, the Pacific Discover Xelerator IUL is available! Back-tested average of 7.05% for Pacific Life’s 1-Year Uncapped S&P 500 Strategy after the 5% threshold from 1937-1950, Back-tested average of 6.19% for Pacific Life’s 1-Year Uncapped S&P 500 Strategy after the 5% Threshold from 1962-1975, Back-tested average of 6.66% for Pacific Life’s 1-Year Uncapped S&P 500 Strategy after the 5% Threshold from 2000-2013. Take a gander at these actual raw indexed returns that can no longer be run through Pacific Life’s illustration software. Accumulator 5; PDX (Pacific Discovery Xelerator) Protector; Performer LT 2; PDX2 IUL. However, I was told by multiple sources that the crux of the mysterious black box works like this: “It was my understanding there would be no math.” – Chevy Chase impersonating Gerald Ford on SNL. If you choose either the 1-year uncapped S&P 500 option or the 5-year uncapped S&P 500 option, there’s no telling how much indexed crediting you can earn, especially during a jolting bounce-back rally following a market crash. We spent a lot of this article discussing what happens if things go WRONG with the PDX. If, however, for some crazy reason all you had was that guarantee, you could at least spend other retirement assets more aggressively while you’re alive knowing that the contractual death benefit would fill up the bucket for your surviving spouse. That means you could apply these types of historical return sequences against the projected charges based on the exact PDX policy illustration you were considering. 1 Both life insurance products continue in the tradition of providing flexible death benefit protection for individuals and businesses. Pacific Life Pacific Discovery Xelerator IUL 2 $24,160 17% $200,967 $412,392 John Hancock Accumulation IUL 19 $21,787 5% $199,135 $422,199 American General QoL Max Accumulator+ IUL w/MLSB and SIR $21,714 5% $199,911 $433,494 American General QoL Max Accumulator+ IUL w/MLSB $20,707 0% $199,911 $429,248 Global Atlantic Global Accumulator IUL Click here to understand how Whole Life promises guaranteed growth. Pacific Life Insurance Company, policy form #P15IUL and S18PDX2 or ICC15 P15IUL and ICC18 S18PDX2, based on state of policy issue. Indexed Universal Life Insurance does not directly participate in any stock or equity investments. Use an increasing death benefit. Elijah said it best. Indexed Universal Life Insurance does not directly participate in any stock or equity investments. Frankly, this piece alone didn’t get me to a place of full understanding with the product. Designing their PDX Performance Factor in this way gives your policy cash value the opportunity to overcome (and then some) the additional Performance Factor charges experienced in down years. So, they lowered their caps identically on all their IUL policies including the new offerings. Right next to the raw returns of the S&P is a column titled “Limited Return %.” What’s being represented there is the hypothetical back-tested crediting of Pacific Life’s 1-year uncapped S&P 500 strategy where you earn 0% when the S&P 500 earns 5% or less in any given year. An Overloan Protection Rider essentially locks down what little cash value remains right before it gets eclipsed by the swelling loan interest. The latest addition to Pacific Life's line of IUL products is designed for death benefit protection with competitive long-term cash value accumulation potential after year 15. Also, Pacific Life’s fixed-interest loan is the lowest in the industry locked at 2.25% for the life of the policy. 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