Top Indexed UL for retirement income: Lincoln and Penn Mutual

In my ongoing series of comparisons, Penn Mutual earns a position with Lincoln as the top performing Indexed Universal life for retirement income. Both have fixed loan rates showing very impressive loan values.  Both outperform other carriers fixed and variable rates.   Some carriers variable rates right now show good results but those rates could increase significantly over time and that would have a strong negative impact loan values.

For example in the chart below: male age 44, $25,000 a year in premium for 20 years, then at age 65, for the next 20 years, taking the maximum out in tax free policy loans for retirement income while retaining sufficient policy values to maintain a death benefit to age 121.  The policy is structured for maximum cash value accumulation allowed by IRS rules for life insurance (MEC).   This maximum premium for the minimum allowable death benefit acts like a booster rocket for optimal thrust.


Carrier Cash Value
Year 20
Death Benefit
Year 20
Loan Amount
Years 21 -40
Cash Value
Year 41
Death Benefit
Year 41
Lincoln  1,078,593  1,598,593   146,428  831,161   1,121,364
Penn Mutual  1,148,802  1,738,802   145,609  522,606      841,829


Below are the loan interest rates.   Seeing product specifications are not as revealing as running a policy illustration and charting the rate of return.  Request a policy illustration.  It is the best way to evaluate how cost of insurance and other charges affects rate of return.


Lincoln:     “Lincoln LifeReserve Indexed UL  (2011)”

Fixed rates guaranteed at 6% years 1-10 and 5% years 11 to age 100, 3% thereafter


Penn Mutual:    “Accumulation Builder II IUL”

Fixed rate at 4.00%                     “Traditional Loan Option”
Fixed rate index loan at 6.00%      “Indexed Loan Option”


This comparison used Penn Mutual’s  “Indexed Loan Option”.  Penn Mutual’s initial face amount was $590,000 and Lincoln’s was $520,000.   This was the lowest face amount, rounded to the nearest $5,000, for each carrier that would prevent a modified endowment (MEC) for that amount of premim and product the the maximum loan amount.  Penn Mutual assumed a 8.41% index return and Lincoln 8.45%, both for Standard & Poor’s® Composite Stock Price Index, annual point-to-point.

Information and quotes are current and accurate to the best of my knowledge on November 25, 2011.  Product features and rates are subject to change.  Quotes are non-guaranteed projections based on current interest rates and cost of insurance. Tax information is general information only. Please seek professional tax advice for personal income tax questions and assistance.

Image source: Wikipedia Commons  (LCROSS) Centaur rocket stage and shepherding spacecraft, 2008, NASA


Sean Drummey

Contact me for a free quote
Phone: (910) 328-0447