In our previous blog post, we looked at IUL's costs and showed that it's actually less than 401(k) or other regular investments, over lifetime of the investment. Now we will look at another key assumption - annual return.
Most IUL's crediting features are similar - 0% floor and 11%-14% cap, the specific return will be based on the underlying index's performance.
For example, if the crediting is tied to S&P 500 index's annual performance, if S&P 500's actual return is -10%, IUL's return will be 0%, if S&P's actual return is 10%, IUL's actual return will be 10%, if S&P's actual return is 20%, IUL's actual return will be the cap level.
We have created an online tool so you can use it to back date test the IUL's average historical annual return. As the actual historical return chart below shows, IUL actually is a portfolio stabilizer - its average annual return is typically between bonds and stocks.
Most IUL's crediting features are similar - 0% floor and 11%-14% cap, the specific return will be based on the underlying index's performance.
For example, if the crediting is tied to S&P 500 index's annual performance, if S&P 500's actual return is -10%, IUL's return will be 0%, if S&P's actual return is 10%, IUL's actual return will be 10%, if S&P's actual return is 20%, IUL's actual return will be the cap level.
We have created an online tool so you can use it to back date test the IUL's average historical annual return. As the actual historical return chart below shows, IUL actually is a portfolio stabilizer - its average annual return is typically between bonds and stocks.
In our next blog post, we will compare IUL with 401k and see if IUL could actually be a good retirement saving tool.
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