IUL Vs Roth IRA

you're late, but not too late. no

It's a great way to transfer wealth to your sister via the insane commissions your b-I-l will be getting. Put your money in the Roth.

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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

But the downfall I was told about a Roth is that there's a cap on how much I can put in ($5500)

Yea I have a 401k already. I guess it sounded great Bc even in a down year I wouldn't lose money as opposed to a Roth or 401

A LIRP is what you're referring too (life insurance retirement plan). Usually they come into a financial plan when all other avenues of retirement plans have been exhausted and fully funded. Also if you start throwing major cash into one of these you can make it into a MEC and therefore make it taxable.

As others have stated, don't use life insurance as a primary source of your retirement funding.