re: IUL Vs Roth IRA

quote:

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to transfer wealth to your sister via the insane commissions

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Essentially you are paying a company to do the same thing as put money in a roth and invest in index funds.

When you purchase a life insurance product your money goes towards

1- Claims Reserves (large chunk)
2- Commissions (sometimes as high as 10% through 10 years and often closer to 100% in year 1 )

3- Policy administration and business expenses (all the costs like claims staff and processing, sales management, executive, marketing etc)
4- Company profit (surprisingly little due to regulations)


Then whatever is left over after all those expenses gets thrown into your account that tracks index funds.



When you invest in a roth- You basically pay no fees to track identical index funds. You may pay some fund fees that are fairly minor like 1.5% You can take your savings and buy a huge term life if you want the insurance side of things