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As Promised; Expenses Exposed for EIUL October 21, 2009

Posted by shaferfinancial in Finance.
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So many people speak about EIUL expenses as something extraordinary.  Here are some facts; actual expenses exposed for you. The following are the expenses for an EIUL of a 45 year old man, good health, who puts in $10000 a year for five annual payments premium.  The assumed interest credit is 8.21% or a full 1% below what the 20 year look back is [if you had  bought this policy 20 years ago what the average interest credit would have been].

Age Prem  prem Ch COI Pol Iss    Other  Accu Value   Surr Value  Death Value

45  10,000 -550 –   223 –   875 –     60.0        8,973                 2,563         223, 429
46 10,000 -550 –    245 –  875 –       60. 0     18,659                12,355        233,115
47 10,000 -550 –    269 – 875 –       60 .0      29,114                22,918        243,570
48 10,000 -550 –     282 – 875 –      60 .0      40,413               34,328        254,869
49 10,000 -550      -297 – 875 –     60 .0       52,624              46,653        267,080
50 0                  0 –           71 -875 –   120 .0       55,790              50,190       103,212
51 0                   0 –          72 -875 –     60. 0        59,281               55,081        105,520
52 0                   0 –          74 -875 –     60 .0        63,056             60,256         107,825
53 0                   0 –          79 -875 –     60. 0        67,136              65,735         110,102
54 0                   0            -84 -875 –    60 .0         71,544             71,544          112,325
55 0                   0 –           90      0 –      60. 0         77,256            77,256         115,884
56 0                   0 –         101  –    0        60 .0         83,425             83,425         121,800
57 0                   0 –         111        0 –    60. 0          90,089             90,089        127,926
58 0                   0 –         118        0 –      60 .0        97,293             97,293        134,264
59 0                   0 –         125        0        -60 .0    105,081           105,081        140,808
60 0                   0 –         131        0        -60.0     113,501           113,501          147,551
61 0                    0          -148        0 –       60 .0   122,595           122,595          156,921
62 0                   0 –         167         0 –       60. 0  132,414            132,414          166,841
63 0                   0 –         188         0 –       60. 0  143,016             143,016          177,340
64 0                   0 –         209         0 –       60 .0  154,467             154,467          188,450
65 0                   0 –         228         0 –         60 .0 166,837             166,837         200,205

The internal rate of return at age 65 is 7.55% meaning the total cost of all the expenses and fees and cost of insurance is 1.66%.  The internal rate of return rises the longer you hold the policy.

So, yes there are expenses that are mostly front loaded, but less than the average mutual fund.

What tax bracket do you think you will be in at retirement?  Think you will pay more than 1.66% tax rate?

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