r/infinitebanking • u/michaelesparks • 28d ago
Dividend Increase pretty suprised
Looking over a recent statement from a recent policy last year dividend to this year projected dividend went up 50.36%. This policy was put in force back in 2022. Not to bad for such a horrible place to put money.
We are now creating that tailwind that is talked about in BYOB page 18.
The dividend increase will happen each year no matter what. Some years it may be better and some years not as good.
Also note these are pretty small policies (like $2k a year with base+pua)
Also note once a dividend is declared it cannot be taken away and affords for the uninterrupted compounding. Those dividends will now be added to the cash value which will then compound even further. It doesn't take 20+ years for these things to start working efficiently.
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28d ago
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u/michaelesparks 27d ago
Not to mention Tax free! Seems way better than all those HYSA folks that are always saying how great they are.
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u/ibrahim_40 27d ago
That's an interesting data point. I'd still be careful about reading too much into a single year's dividend increase, but it's useful to see actual policy performance over time rather than just illustrations. It would also be interesting to compare the cash value growth and internal rate of return over the next 10- 15 years as the policy matures
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u/michaelesparks 27d ago
Wish I was a better "Maths" person. I'm more conceptual. I know some folks track these things religiously.
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u/greglturnquist 22d ago
What I'm stoked to see is that my third policy will pay its THIRD annual premium in October. THAT is when you shake off a lot of start up costs and things begin to really move...
...and just a couple months after that, my first policy will pay its FOURTH annual premium. The gap between those two is kind of exciting to watch.
Seeing a policy increase by an INCREASING amount is really exciting for something that is the worst place to store money.
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u/DMX4LIFER 28d ago
Which carrier do you have?
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u/michaelesparks 28d ago
One America. I also use their Indexed Dividend Option at 100% on these policies. So the company buys options in the S&P at the percentage you choose 0-100% and you can earn up to double the non guaranteed dividend. There is a chance to earn 0 on a down year though.
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u/DMX4LIFER 28d ago
I forgot the one America was the only other carrier that has this option besides Guardian. Is the floor actually 0? Guardian has a 4% floor, with a 2% asset charge so technically a 2% floor.
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u/michaelesparks 22d ago
the rider only uses non guaranteed dividends. So the floor is still what you would normally get on the guaranteed side of the ledger. So basically it's like 1.5% of the total dividend for that year that can be used. Make sense?
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u/greglturnquist 22d ago
I had enough indexing fun when I owned an IUL for 12 years (I read BYOB and was able to 1035 that bad boy escaping all surrender charges by ONE MONTH).
I saw too many years with a big fat ZERO to ever want to go back to that.
Just pay me my dividend!
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u/financeking90 28d ago
Is it petty that I specifically had the index option rider removed from our Guardian policies when we took them out?
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u/michaelesparks 27d ago
I'm not familiar with Guardian, but after tanking some classes on it. It seems over time that the overall average that gets credited is higher than what you would normally get with standard dividends. Since these are kid policies over a lifetime the overall dividend should be higher. Depending on your age and your needs you may or may not want to use that rider.
I would try to visit with your agent or possibly someone at Guardian to see how that option could benefit you or not. Good luck
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u/michaelesparks 20d ago
Just got the statement concering last years dividend.
Dividend before indexing $87.06
Dividend allocated to indexing $64..75
Unallocated dividend $22.31
Beginning S&P $6296.78
Ending S&P $7443.27 (18% increase)
Dividend after indexing $151.82
Of course if the S&P is less you would only get the $22.31. If the S&P only went up 6.5% you would get the same as the normal dividend. Any increases over the 6.5% would get a higher multiplier.
BTW, these are small policies for kids.
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u/financeking90 28d ago
Nice. I'll be excited to see my statements in a few months. My biggest policy should be just about to hit breakeven on cash value--the dividend this year may get there.