Life Insurance

Case Study: Comparing two Index Universal Life (IUL) Products

Peachie Thompson · December 28, 2023

Here's a real-life example for you. Hopefully it helps you understand why partnering with an agent who has an in-depth knowledge of insurance products and underwriting can make a world of difference for you. Recently, this expertise proved crucial for a client who came to me and asked to "beat" two life insurance (IUL) Illustrations from another agent. We are going to refer to the carrier as Jack Carrier.

Type of Agent

The first thing that jumped out is that the Jack Carrier illustrations were from a captive agent who is bound to sell that carrier's products first. I explained to the client that Peach Insurance Services is an independent brokerage, so brokers need my firm to get access to different carrier contracts, and I personally can sell various insurance policies, including those from carriers like Jack Carrier. Do you want to be limited to one carrier's product suite or do you want a thorough analysis of the marketplace for your options?

The Policy Design

  1. Underwriting Class Dictate Cost: The captive/career agent also illustrated preferred rates. When it comes to underwriting, there's a huge difference between preferred and standard rates. Without knowing your specific health, situation, and lifestyle, illustrating preferred rates up front is simply wishing that the underwriter will like you so much, they'll give you preferred rates. I've had clients come to me after working with other agents, and say that they felt that other agents used a "bait and switch" tactic on them by showing cheaper rates first then they ended up paying a lot more than what was originally illustrated once "underwriting was done".

  2. Be Careful with Premium Discount Programs: Jack Carrier has a discount program and it works like this: you buy JC's product, you enroll in this discount program. The paid version gives you discount on fitness devices, travel and a one year Amazon Prime membership plus more. It also give you a discount (platinum, gold, silver or bronze level) on your life insurance premium, if you meet certain lifestyle requirements for as long as you or your policy is alive. If you do not meet the requirements, the premium discount goes away. The free version of this discount program does not give you life insurance premium discount.

    I'm a fan of discount programs. What I'm not a fan of is how it is illustrated by agents. In this case, the captive agent showed the illustration with a Gold level discount. Which would give a significant premium discount. What this does to the illustration is it makes the premium look cheaper than it actually is. I've been around long enough to see clients sign up and pay for this program then after a year or two, not meet their discount program mandates so they end up paying the true rates - which would be more expensive. What do you think happens then?

  3. Illustrating Rates Too High: The captive agent used 6.70% for the projected interest rates. My approach to interest rates, like using a conservative max 5-6%, isn't about being overly cautious. It's about ensuring that the projections you see are realistic and achievable.

Shopping the Marketplace

The prudent step would be to first, talk about your health so that I can match your health and lifestyle with the carrier best suited for your situation. Your health and lifestyle dictate your underwriting class. Your underwriting class dictates your premium. After this part is done, I am happy to do a cost comparison for you of any carrier that would give you a great underwriting class. Doing it this way, make the numbers as close to reality as possible.

For this client's request, I found a competitive IUL from another highly rated carrier, we will call this carrier Jill Carrier.

Comparison Results (Jill Carrier versus Jack Carrier)

Using the same male age 44 Preferred rates, $200K of death benefit and paying $6K a year to his age 65, here are the results of the two carriers comparison. NOTE: I used 6.63% for Jill Carrier (a little conservative compared to Jack Carrier's 6.70%)

Even with the lower interest rate and no discount program: Jill beats Jack any day. See below.

Option 1 (Increasing DB) comparison at age 66: Jill's surrender value is at $227,458 (Jill 1) versus Jack's $194,469 (Jack 1). Jill's death benefit on the same year is $332,089 and Jack's is at $280,658. Jill's guaranteed death benefit is to age 79 while Jack's is to age 73 only.

Option 2 (Level DB) comparison at age 66: Jill's surrender value is at $223,431(Jill 2) versus Jack's $190,006 (Jack 2). Jill's death benefit on the same year is $410,165 and Jack’s is at $390,006. Jill's guaranteed death benefit is to age 76 while Jack's is to age 72 only.

Option 1 Jack Carrier

Option 1 Jill Carrier

Option 2 Jack Carrier

Option 2 Jill Carrier


It's crucial for you to work with a knowledgeable independent agent who can analyze the entire marketplace for you. My role involves conducting detailed comparisons, presenting you with the most advantageous and realistic options. In our comparison - you clearly see that Jill Carrier's offerings showed better value in terms of surrender value, death benefits, and guarantee periods, even without a discount program and illustrated at lower interest rate. This is just the tip of the iceberg. When you throw in the underwriting matrix into the mix as well as policy internal costs, the landscape could change dramatically.

Email me at to talk about your specific situation.

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