The Nationwide IUL product can help you either supplement your retirement income or ensure your beneficiaries future by leaving them a nice tax-free death benefit. Obviously, you have many options when it comes to IUL policies, so you want to know how does Nationwide’s policy stack up against the competition? Let’s take a look.
- Pros & Cons of Nationwide IUL
- Key Features of Nationwide IUL Accumulator: 90/100
- The Details of Nationwide IUL Accumulator Illustration
- Financial Strength: 90/100
- Customer Satisfaction: 90/100
- Consumer Complaints: 95/100
- Digital Experience: 85/100
Pros of Nationwide IUL
- Above average customer satisfaction
- Excellent financial strength
- Flexible premiums available
- Accelerated terminal illness rider and 20-year no-lapse guarantee riders included at no charge
- Policy face amounts up to $25 million
- Nationwide is a mutual company, so you may earn dividends
Cons of Nationwide IUL
- No online quoting (for any policy, not just IUL)
- Must work with an agent, which tends to make policies more expensive
>>MORE: The Pros and Cons of Indexed Universal Life Insurance (IUL)
Key Features of Nationwide IUL Accumulator
Nationwide offers 2 IUL products. Generally speaking, the Accumulator II is focused on accumulating cash to supplement retirement income and the Indexed Universal Life Protector is focused on a low-cost way to leave a tax-free death benefit to your heirs. We focus our review on the Accumulator product.
With Nationwide Accumulator product, you can choose from a basic interest earning policy, or from five interest strategies with Nationwide’s plan for either of the two products.
- Basic interest plan which earns 2.75%
- One year multi-index monthly average strategy, which bases your interest rate on the average of three indices: the S&P 500, the Nasdaq 100 and the Dow Jones Industrial average. This has a cap of 11% and a floor of 0%.
- One year S&P 500 point-to-point indexed strategy follows only the S&P 500. Cap is set at 9.5%.
- One year uncapped S&P 500 point-to-point, which is uncapped and has a floor of 0%.
- One year high-cap multi-index, which bases your interest rate on the average of the S&P 500, the Nasdaq 100 and the Dow Jones Industrial average. This is capped at 20% and the floor is 0%.
- One year high-cap based on the S&P 500 with a cap of 12.50% and a floor of 0%.
When deciding between these options, it might help to look at the historical averages of each:
|1 yr. multi-index||6.6%|
|1 yr. S&P 500||6.61%|
|1yr. uncapped S&P||6.6%|
|1 yr. high-cap multi-index||8.51%|
|1 yr. high cap S&P||8.08%|
Cap refers to the amount of capital a corporation has, so a high-cap fund would include shares of companies valued over $10 billion. Usually, these companies grow at a slower rate than other companies but are less risky. In an index, the gains are distributed among many high-cap companies, which may be why these interest rates are higher.
>>MORE: Understanding Indexed Universal Life Insurance (IUL) – Why Is It Good for Retirement Savings?
The Details of Nationwide IUL Accumulator Illustration
In order to understand the Nationwide IUL policy better, we obtained an illustration of Nationwide IUL Accumulator for a woman of 35 years old, living in Texas, in good health. She pays $300 a month to the policy until she reaches 60 years old.
You can set up this policy so that you either leave as large a death benefit as possible to your heirs, or that you supplement your retirement income with yearly withdrawals. If you choose to supplement your retirement income from the policy, the policy will be set up for a minimum death benefit so that most of the premiums will be allocated to grow the cash value account in the policy. You can choose either to withdraw a large sum of cash from the policy when you retire or to withdraw an annual amount to supplement your annual retirement income. The large sum amount varies by age and it will increase as you get older.
The illustration of the Nationwide IUL policy shows that, after paying $300 a month (or $3,600 a year) for 25 years, from 35 to 60 years old, or a total of $90,000, below are the amount you can withdraw from the policy at different age, completely tax-free. The older you are when you withdraw, the more the sum amount will be:
- Age 60: $169,910
- Age 65: $225,715
- Age 70: $301,415
- Age 75: $403,218
- Age 80: $539,579
If you want to supplement your annual retirement income instead, you can start taking a $12,174 withdrawal at age 61, tax-free, and you can take that every year up until age 80 and you will still be able to leave $78,680 to your beneficiaries if you pass away at age 81.
You have a number of options for riders on any of these policies. The Accelerated death terminal illness rider is included at no charge. There are also:
- Overloan protection rider
- Waiver of monthly deductions rider
- Accidental death benefit rider
- Change of insured rider
- Long-term care rider
- Premium waiver rider
- Surrender valrue enhancement benefit
You may want to consider adding the long-term care rider, because the odds are that either you or your spouse (if you have one) will need long-term care.
>>MORE: Nationwide Long-Term Care Insurance Review
Something to note about Nationwide is that they recently settled a lawsuit on cost-of-insurance fees on Variable Universal life insurance policies. This was not a class-action lawsuit, so only two people were involved, but there are a few class action lawsuits pending with some other insurance companies (not Nationwide). It’s just something to keep an eye on. There is a class action lawsuit in California about IUL policies, saying they clients were misled about how much they cost and how they work. Indexed universal life policies are complex to explain and understand, so there’s no way of knowing if the agent didn’t explain the policy well or if the client just didn’t understand it. This could affect IUL policies going forward.
By sure to shop with a few companies or a digital broker who specializes in IUL policies such as Amplify. They are able to pull quotes from several companies to help you compare and select the best one for you:
>>MORE: The Best 6 Companies for Indexed Universal Life Insurance (IUL)
Financial Strength Rating of Nationwide IUL
Nationwide earns an A+ from A.M. Best, or superior. Nationwide has the resources it needs to be able to pay claims.
>>MORE: Indexed Universal Life Insurance (IUL) vs. 401K
Customer Satisfaction Rating of Nationwide IUL
Nationwide is the third-ranked company for customer satisfaction according to J.D. Power’s 2020 U.S. Life Insurance Study. This puts them above average in all categories.
>>MORE: Indexed Universal Life Insurance (IUL) vs. Whole Life Insurance: Which is Better?
Consumer Complaints Rating of Nationwide IUL
Nationwide has fewer consumer complaints than you would expect for a company of their size. The average complaint ratio is 1.0 according to the NAIC and Nationwide has a complaint ratio of .05.
>>MORE: IUL vs. Roth IRA: Which One is Better for Your Retirement Savings?
Digital Experience Rating of Nationwide IUL
You can start a quote for term insurance online, but to buy it you have to contact an agent. As IUL is more complex and there are more choices involved, you will need to contact an agent to purchase that. Once you have a policy, you can pay your bill online.
If you’re interested in an IUL product, Nationwide offers a solid product. There are many choices for what indexes you want your interest earnings to be based on, and customer reviews are above average. Make sure you read your policy carefully and ask any questions you have.
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