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New EIUL from Minnesota Life August 14, 2014

Posted by shaferfinancial in Finance.
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On Monday, Minnesota Life will introduce a new EIUL product, the Omega Builder. At first, I did not think it was going to be something my clients would benefit from. But, after an in-service this week, it is clear that for many of my clients this will be a great product.

It functions the same way as the existing Eclipse EIUL, with one difference. There is an income protection agreement. The agreement locks in a death settlement that is not simply a pay-out of the death benefit to beneficiaries. Instead the client chooses what percentage of the death benefit is paid out upon the death and the remaining amount is paid out over time [between 10 and 30 years]. There is a fixed interest rate paid on the un-paid out amount which adds to the overall total payment. Now, when I first saw this, I was not impressed that my clients would benefit as most of them are planning to use the cash value for living benefits in their retirement years.

But here is the kicker. Because the death benefit is not paid out entirely at death, the insurance costs that run in the policy are radically reduced [up to 50%]. This reduced insurance expense means that more of your premium is put into the savings side of the policy annually. And with more money getting interest credits every year, your cash value increases and the amount of cash you can pull out increases. The best part of this is that nothing changes on the top end. In other words, I can still minimize the death benefit down the same amount and stay within IRS regulations. The end result is up to 30% more distributable cash.

Minnesota Life has again placed itself on top of the EIUL ratings with this product. While, the Eclipse still remains one of the top performing products, a couple of other companies had products that had just as good of performance over the last couple years. With the Omega Builder, ML has created a space between it and the rest of the EIULs again.

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