Exciting News regarding Income Advantage IUL – 7702 & GRO Rider

Have you heard the news?

Mutual of Omaha’s Income Advantage IUL product is now compliant with section 7702 as of July 8, 2021.  This change has dramatically increased our competitive position in the “Cash Accumulation/Income” IUL marketplace.  In addition, to our competitive position, the Income Advantage has some of the lowest internal costs in the industry.  When you combine the GRO rider, low cost structure, competitive income values and our no cost Chronic/Terminal Illness or available LTC rider, the Income Advantage IUL should be considered one of your top “go to” IUL products.

This change comes as a result of IRC Section 7702 changes that were part of The Consolidated Appropriations Act, 2021 which went into effect on January 1, 2021. This act allows a new minimum interest rate assumption for the life insurance cash value accumulation test (CVAT) and guideline premium test (GPT) calculations. These new rates allow more premiums to be placed in permanent life insurance without violating these tests or creating a modified endowment contract (MEC).

See for yourself how it lines up:
We have a Male proposed insured, age 57, PNT, $1,000 ANBP/month

Min Face/Max Fund for Income Advantage IUL

PRE 7702                                                      POST 7702
Max Funded Minimum Face                          Max Funded Minimum Face
$201,817 in Death Benefit                             $145,059 in Death Benefit (Face amount 28% less)
$369,000 = Cash value in 20-years               $381,000 = Cash value in 20-years (3% increase in cash value)
$737,000 = Cash value in 30-years               $772,000 = Cash value in 30-years (5% increase in cash value)

And the good news keeps coming!

For all new IUL applications signed July 8^th, 2021 or later, we have increased the maximum benefit amount on our Guaranteed Refund Option (GRO) rider from 50% to 80% of the specified Death Benefit!  This rider is included at no additional cost on qualifying Income Advantage IUL as well as our Life Protection Advantage IUL products.   GRO allows clients to surrender their policy for a 100% refund of premium after years 20, 21, 22, 23, 24 and 25 (up to a maximum of 80% of the specified Death Benefit).  This rider provides the client with an extra “safety net” and peace of mind with their IUL policy.

While we are not making any additional changes to our life insurance products due to 7702, we will be allowing clients to add additional funds to Income Advantage IUL policies that are dated January 1, 2021 or later.

If you haven’t looked at Mutual of Omaha’s Income Advantage IUL lately, now is a great time to run an illustration to see what you may be missing!