#210 | The Opportunity in the Captastrophe

All indexed accounts may be created equally with general account yields and call options, but not all indexed account options are priced equally. Right now, there are screaming deals in non-cap indexed account options at life insurers that have been slow to set new rates – that is, of course, if you can get to them before they’re gone.


  • Products with S&P 500 spreads: Zurich Wealth Builder IUL (4%), Prudential Index Advantage 2018 (5%), Nationwide IUL Accumulator II (5%), American National Signature Performance IUL (5%), PennMutual Accumulation Builder Flex (6%), North American Builder Plus IUL 2 (6.5%), PacLife PIA6 / PDX 2 (Not Currently Available)
  • 4/3/2020 – PacLife announced that their No Cap Indexed Option, which has a currently declared spread of 5% and guaranteed maximum spread of 20%, will not be eligible for allocations until 6/15, effective immediately with no transition period. This is a huge deal and a shocking move. Right at the moment when this account is the most attractive, PacLife chose to simply eliminate it from the lineup. Any new allocations or maturing segments will sit in the fixed account until the No Cap account is eligible again. Why did PacLife choose to restrict the account rather than change the rate? Because, as wild as this might sound, the guaranteed 20% spread was probably not high enough for PacLife to still hit profitability. Alongside this restriction, PacLife is also increasing the Surplus Premium Load from 6% to 13%. The excess load will be applied to first year premiums greater than $3M or 10x Target, whichever is less. These are drastic moves by PacLife that are intended to stem the damage from the current option pricing environment – and they surely won’t be the last.
  • 4/1/2020 – Prudential released new rates for the Indexed UL products and while the cap in Indexed Advantage dropped 0.5% to 9.5%, the spread rate for the no-cap S&P 500 account increased from 4% to just 5%, which makes it an absolute screaming deal. If you’ve sold this product, I can’t find a reason why you wouldn’t recommend an allocation to the spread account considering that the spread is about 1/4 of what it should be.
  • 5/21/2020 – Prudential is finally catching up. May rates pushed the uncapped spread up to 11.75% and June rates were just set at 13%.