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Started By
Message
IUL Vs Roth IRA
Posted on 11/14/14 at 1:23 pm
Posted on 11/14/14 at 1:23 pm
I'm late to invest for retirement (28). My brother in law works for WFG on the side. He is suggesting I put money into a IUL instead of a Roth Bc there is a cap on how much I can put in. There's also the life insurance plus too. What do y'all say?
Pros and cons please.
Pros and cons please.
Posted on 11/14/14 at 1:27 pm to 337tigergirl
you're late, but not too late. no
Posted on 11/14/14 at 3:08 pm to 337tigergirl
quote:
Pros and cons please.
Considering the reserves state regulators require for life insurance, the new regulatory measures that I believe just were passed (can't use line of credit as reserves anymore) and the fees that are required as administrative maintenance on life insurance, buying life insurance as an investment is equivalent to putting money in a barrel full of lighter fluid and throwing it on a fire.
Posted on 11/14/14 at 4:40 pm to 337tigergirl
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.
Posted on 11/14/14 at 4:56 pm to 337tigergirl
Hell no to IUL. Definitely go with the Roth
ETA: Sorry I didn't provide pros and cons.
ETA: Sorry I didn't provide pros and cons.
This post was edited on 11/14/14 at 4:57 pm
Posted on 11/14/14 at 7:02 pm to jeepfreak
quote:
to transfer wealth to your sister via the insane commissions
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
This post was edited on 11/14/14 at 7:03 pm
Posted on 11/14/14 at 10:14 pm to GenesChin
But the downfall I was told about a Roth is that there's a cap on how much I can put in ($5500)
Posted on 11/14/14 at 10:16 pm to 337tigergirl
$5500 per year.. Do you have a 401K with your company? You can contribute up to $17,000 or so per year in that after you max out your $5500 Roth limit.
Posted on 11/14/14 at 10:33 pm to TigerTatorTots
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
Posted on 11/14/14 at 10:37 pm to 337tigergirl
quote:For every 1 down year, you have 4-5 better years (and possibly more).
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
You are still young so you should be cheering for a market crash. That way you can be contributing to your Roth and 401 at a lower price.
This post was edited on 11/14/14 at 10:39 pm
Posted on 11/15/14 at 6:37 am to 337tigergirl
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.
As others have stated, don't use life insurance as a primary source of your retirement funding.
Posted on 11/15/14 at 9:58 am to 337tigergirl
I do not qualify for a Roth IRA but do own an IUL plan. I agree, It should not be your first and only choice but is worth looking into down the road when you are rolling in the dough and need another investment harbor.
My plan guarantees me 2% if the market goes red given each 12 month cycle with a cap of 14%.
If you max it out, this is a gem of a policy. If you contribute the monthly minimum, don't waste your money.
My plan guarantees me 2% if the market goes red given each 12 month cycle with a cap of 14%.
If you max it out, this is a gem of a policy. If you contribute the monthly minimum, don't waste your money.
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