On Monday, May 13th, Lincoln released the WealthAdvantage IUL, which replaces LifeReserve IUL Protector. Overall, this new product is significantly more competitive for death benefit protection; however, competitively, it falls somewhere in the middle-of-the-market.
Compared to the replaced product, premiums improved for ages 25 to 70. Most premiums experienced double digit decreases for males and roughly 5% for females. Assuming a lower interest crediting rate further enhances the decrease in premium. Wealth Advantage IUL is best positioned when assuming a 5% interest crediting rate, where it ranks anywhere from 5th to 10th. As expected, and what we’ve come to see across the market, cash accumulation values underperform due to the low-cost premium.
Unexpectedly, maximum distribution solves perform really well. When directly comparing LifeReserve IUL Accumulator by using the same interest rate assumption, WealthAdvantage IUL offers roughly 10% to 15% higher distribution amounts. That said, the cap is 2% lower than the LifeReserve IUL Accumulator 14; so, depending on the approach and intent, the accumulator product may still be the better product. Either way, Wealth Advantage IUL ranks well among its peers, so we also include it in the maximum distribution solve strategies.
WealthAdvantage IUL has two interest bonuses: a persistency bonus of .55% in year 16 and an “Index Bonus”, which encourages allocation to the indexed account. Both bonuses are touted as guaranteed though the index bonus references “a factor” to be applied in its calculation. Even with these bonus features, a key disadvantage is the 10% cap; if the new IUL proposed regulations are approved, the max illustrative rate will most likely fall to roughly 6%.