Overview:
- The launch announcement stated that Principal designed the IUL Flex to compete as a death benefit product, rather than an accumulation product.
- When running an illustration, Principal conservatively defaults the illustrated rate to the companys general account rate of 4.5%. This is the first time we have seen a company recognize that while IUL has upside potential, it is best illustrated at a reasonable rate similar to the options budget in order to set expectations appropriately. This is refreshingly counterintuitive to the marketing spin that proliferates the IUL market, especially considering the product performs much better competitively at the higher interest rates.
- The current maximum illustratable interest rate assumption is 6.85%. The IUL Flex is most competitive in the 7% solves, even though its maximum rate is below 7%. In these solves, the IUL Flex has the best premium in a handful of scenarios for Preferred Best, and breaks into the top quartile several times for nonsmokers. The Best Tobacco risk class, on the other hand, has premiums that typically rank among the worst in the market. Overall, this products premiums still rank somewhere in the middle.
- At both the maximum illustrative rate and at 5%, IUL Flex loses a little bit of competitiveness. It still breaks into the top quartile for a handful of scenarios (mostly for the Preferred Best risk class); overall, premiums fall in the bottom half of the market. At the maximum illustrative rate, premiums are about 23% higher than the best rate for full pays and 40% higher for single pays, while at a 5% interest rate the premiums are about 16% higher for full pays and 19% higher for single pays.
- Cash accumulation is pretty good at ages 60 and up, but is otherwise mediocre.
- Targets for this product are more in line with the UL market, so they typically fall toward the back of the IUL products.
- A maximum first-year premium limit per insured $2 million is in place for ALL Principals individual life products.
- IUL Flex was checked for competitiveness in Distribution solves, and it does not compete well for that type of sale.
The attached analysis includes all of the products we benchmark (18 Products Considered):
- Ranking for $1 CSV @ 121 Max IR%, $1,000,000 face amount (single, short & full-pay scenarios)
- Percent premium is above best rate for $1 CSV @ 121 Max IR%, $1,000,000 face amount (single, short & full-pay scenarios)
- Ranking for $1 CSV @ 121 7%, $1,000,000 face amount (single, short & full-pay scenarios)
- Percent premium is above best rate for $1 CSV @ 121 7%, $1,000,000 face amount (single, short & full-pay scenarios)
- Percent premium is below next best rate for $1 CSV @ 121 7%, $1,000,000 face amount (single, short & full-pay scenarios)
- Ranking for $1 CSV @ 121 5%, $1,000,000 face amount (single, short & full-pay scenarios)
- Percent premium is above best rate for $1 CSV @ 121 5%, $1,000,000 face amount (single, short & full-pay scenarios)
- Target Premium Ranking for $1 CSV @ 121 Max IR%, $1,000,000 face amount (single, short & full-pay scenarios)