Lecture Notes: Changing Indexing Strategies on an IUL

Introduction

• Topic: Changing indexing strategies on an Indexed Universal Life (IUL)
• Speaker: Doug Andrew, financial strategist and retirement planning specialist
• Background: Over five decades of experience in financial strategy
• Objective: Demonstrate the advantages of adjusting indexing strategies

Key Points

The Value of Adjusting Indexing Strategies

• Many people misunderstand that you can change IUL strategies
• Historical example: 2000 to 2010, clients who adjusted strategies earned 11.17% vs. 7.23%
• Importance: Allows for higher tax-free returns and capital growth

IUL as a Financial Vehicle

• Structured as a max-funded, indexed universal life policy
• Advantages:
  • Tax-free growth and withdrawals
  • No age restrictions like IRAs or 401Ks
  • Potential returns in 8-9% range gross
  • High net returns after costs

Rebalancing and Diversifying

• Annual reviews crucial for maximizing returns
• Strategy adjustments can increase returns from 8-9% up to 11% or higher
• Diversification among different carriers and within the same carrier
• Example: Clients rebalancing and diversifying achieved 11.17% average returns

Indexing Strategies

• Different strategies include one-year, two-year, five-year point-to-point
• Strategy selection based on market conditions and goals
• Example: After downturns like 2008, adjusting strategies can yield 14% returns
• Use of threshold strategies in special scenarios (e.g., market rebounds)

Historical Performance and Strategy

• Great Recession example: Clients who adjusted strategies fared better than those who didn’t
• Zero loss strategy during downturns protects principal while allowing profit during recovery
• Threshold strategy example: Clients achieved 61.33% return during COVID-19 market rebound

Practical Considerations

Frequency of Changing Strategies

• Can change strategies at the end of each indexing period
• Annual reviews recommended for reassessing strategies

Learning Resources

• Author's book "The Laser Fund" provides comprehensive guidance
• Free copies available with additional educational resources
• Webinars and personalized consultations offered

Conclusion

• Understanding and adjusting IUL strategies can significantly impact financial outcomes
• Importance of professional guidance in structuring and managing an IUL
• Encouragement to learn more through provided resources