A recent article on ProducersWeb.com suggested that Equity Indexed Universal Life (EIUL, or IUL) would serve your retirement needs well.  The article didn't discuss the use of Participating Whole Life Insurance (ParWL) as either an alternative or competitor to EIUL.

The author noted that EIUL has a lot of sizzle and that makes it an easier sale.  He also noted that the EIUL product is less than a decade old.  Why is that significant?

Here's the rub.  Life insurance is a 30, 40, 50 year commitment.  Universal Life (UL) and the variants built on a UL chassis rely on an ever-increasing cost of insurance, non-guaranteed returns, and undetermined administrative costs.  It seems the premise is that the policy owner...

• will either die before s/he runs out of the money that accumulates in the policy,

• or will not need the money and expects to benefit only from a secondary death benefit that may be guaranteed by the policy as long as all premiums are paid

As a planning strategy, that seems shortsighted at best and a bit frightening considering the lessons American's are learning in 2009.

ParWL on the other hand brings power, flexibility, and versatility to the retirement income equation with its strong guaranteed rates of return, 150+ year history of guaranteed protection, guaranteed accumulations, and consistent dividends, which are guaranteed once paid.

I believe that the UL companies that do not have participating whole life products cannot currently compete with the few remaining mutual companies that do.  However, I also believe that the basic UL product is maturing and becomes more viable with the addition of indexing capabilities.  Give it another 30 or 40 years and it will perhaps be able to compete with Whole Life...which will then be 200 years old and even further advanced than it is today.