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Started By
Message
re: IUL Life Insurance used as retirement
Posted on 8/8/18 at 4:20 pm to Lafayette Saint
Posted on 8/8/18 at 4:20 pm to Lafayette Saint
quote:
Whats COI?
Cost of insurance.
0
Posted on 8/8/18 at 6:33 pm to Lafayette Saint
Load is equivalent to a sales charge. If your premium is $100 monthly, only $92.50 is being contributed to the pot.
Posted on 8/8/18 at 7:00 pm to Lafayette Saint
I understand the interest in these type of investments if you’re already maxing out available 401k and traditional or Roth IRAs. To put this in front of those two vehicles seems like a commission money grab, imho.
Posted on 8/8/18 at 7:06 pm to Lafayette Saint
The 6% figure is a maximum variable loan rate. The load is a deduction of your premium up front. The variable loan rate is a charge against your cash value as you potentially borrow money in retirement.
The idea is that the net perfromance of the index will outpace 6%, thus creating positive arbitrage on the underlying borrowed cash value.
The idea is that the net perfromance of the index will outpace 6%, thus creating positive arbitrage on the underlying borrowed cash value.
Posted on 8/8/18 at 7:52 pm to Lafayette Saint
Run away Forest run away !!! This coming from an insurance agent.
This post was edited on 8/8/18 at 7:54 pm
Posted on 8/8/18 at 8:07 pm to Disgeaux Bob
I think good advice is to not invest in anything you don't understand until you understand it. It's apparent there are several layers to this investment and it's use as a retirement vehicle that you don't understand. Why the rush? Just do traditional stuff like IRAs and Roths first until you know all the ins and outs of this thing.
For example, when you go to use it in retirement, do you take "loans" from the cash value or are you taking withdrawals? Does the company charge interest on the "loans"? Are you still paying premiums to support the death benefit at that time or is it "paid up"? How does the cash value support the retirement withdrawals and the insurance if you no longer pay premiums...do you lower the death benefit at the time to make it more affordable?
Seems too complicated to me and you are about to commit to this for 60 years? I'd want more flexibility in funding my retirement over such a long time. Please learn more about it first.
For example, when you go to use it in retirement, do you take "loans" from the cash value or are you taking withdrawals? Does the company charge interest on the "loans"? Are you still paying premiums to support the death benefit at that time or is it "paid up"? How does the cash value support the retirement withdrawals and the insurance if you no longer pay premiums...do you lower the death benefit at the time to make it more affordable?
Seems too complicated to me and you are about to commit to this for 60 years? I'd want more flexibility in funding my retirement over such a long time. Please learn more about it first.
Posted on 8/9/18 at 12:45 am to Lafayette Saint
quote:
quote:
What are you buying it for?
Strictly an investment opportunity. The wife's company doesn't offer a 401K, and my agent feels that this investment is better than a roth or traditional IRA.
This is not a good idea.
Do not buy a life insurance product for the retirement benefit.
With the fees, COI, and surrender charges, it is not a good fit as an investment.
You would be much better with 100 other options.
If you said that you need life insurance and you want the tax deferred growth opportunity with less risk... then you are starting to get into the ballpark for this product. But there are still 20 reasons why it may not be a good fit (these are like marriages. If you keep them and are disciplined for 40 years, they can do what they are advertised to do. If you divorce it within 20 years, it may be one of the most expensive mistakes of your life).
There are a ton of great investment opportunities. If you are young, do not be risk adverse. Smart risk high reward away from something like this.
This post was edited on 8/9/18 at 12:47 am
Posted on 8/9/18 at 7:18 am to Lafayette Saint
quote:
Strictly an investment opportunity. The wife's company doesn't offer a 401K, and my agent feels that this investment is better than a roth or traditional IRA.
Wow, this is incredibly bad advice. Fire this guy and go elsewhere. Seriously. He is trying to steal your money and sell you a horrrible product.
Get her a trad or Roth IRA outside of work.
Posted on 8/9/18 at 8:25 am to Lafayette Saint
If you're maxing out your Wife's 401k, this could be an option. But I would talk to someone about setting up a T-IRA, Roth IRA outside of work. If dead set on this type of product, I would suggest looking at a Variable UL or a 10-20 pay WL from a high dividend mutual company (New York Life, Mass Mutual), you'll get about a 4.3% IRR.
Don't let post in this thread scare you away from a Paid up Whole Life or Variable UL product, they can be great vehicles for tax free income in retirement, based off your situation. Certainly max out your 401k and roth ira first and ask plenty of questions so you fully understand the product. To many people focus on "life insurance", not realizing products like this aren't designed for the death benefit like the Traditional Whole Life or UL. Not sure why so many people hate VUL, you're getting market exposure, tax free and no limit on yearly contribution.
Paid Up WL, IUL and VUL are investment opportunities, but should only be used to SUPPLEMENT your other plans. Depending on what you are wanting to contribute every year, I would look to set up a Traditional IRA first, then look at one of these products.
Does your guy have any designations? CLU, CHFC, CFP?
Don't let post in this thread scare you away from a Paid up Whole Life or Variable UL product, they can be great vehicles for tax free income in retirement, based off your situation. Certainly max out your 401k and roth ira first and ask plenty of questions so you fully understand the product. To many people focus on "life insurance", not realizing products like this aren't designed for the death benefit like the Traditional Whole Life or UL. Not sure why so many people hate VUL, you're getting market exposure, tax free and no limit on yearly contribution.
quote:
Strictly an investment opportunity. The wife's company doesn't offer a 401K, and my agent feels that this investment is better than a roth or traditional IRA.
Paid Up WL, IUL and VUL are investment opportunities, but should only be used to SUPPLEMENT your other plans. Depending on what you are wanting to contribute every year, I would look to set up a Traditional IRA first, then look at one of these products.
Does your guy have any designations? CLU, CHFC, CFP?
This post was edited on 8/9/18 at 8:54 am
Posted on 8/9/18 at 9:18 am to iknowmorethanyou
quote:
If he's showing you $150,000 policy with a $50 monthly premium...avoid.
Yeah, I got a 10k whole policy on me mixed with the amount my house has left on the principle which is $125,000, and 10k on each child for $43 a month. There is a 10k on my wife also but my wife and kids are only if they die. I'm not sure how I feel about that policy. I also have a $250,000 term policy through work that stated it is full till I'm 60 and then cuts in half and is good till 70, I'm late 30s. Then I find out later it expires when I retire which will be mid 50s at fire department. I think I've probably been fricked pretty bad with life insurance policies. The term one at work is $24 a month, and it's a 50k policy on my wife also, and 10k on each child, but like I said, someone told me it voids once I retire.
ETA: My wife works but doesn't make much money and we have 4 kids. If I die, I just want her taken care of, I didn't do all this insurance stuff as investment like as some mentioned, just in case I die. The whole policy was American Life, I think is name of company, called b/c I'm a fireman and they "work with firefighters" to give good rates. He came by house and was so nice my wife just said yes on everything. He wanted me to do a 30k whole and I agreed to do whole at 10k. I've never been a fan of whole but did like that it also pays out $125,000 to wife if I die.
This post was edited on 8/9/18 at 9:24 am
Posted on 8/9/18 at 9:44 am to windshieldman
Chances are your term policy at work is rated in 5 year bands. Meaning every 5 years the price will increase. Not necessarily noticeably, until you hit your 50s.
I would look into level term outside of my employment if I were you. Premium will be comparable and fixed rather than increasing.
I would look into level term outside of my employment if I were you. Premium will be comparable and fixed rather than increasing.
Posted on 8/9/18 at 9:57 am to iknowmorethanyou
quote:
Chances are your term policy at work is rated in 5 year bands. Meaning every 5 years the price will increase. Not necessarily noticeably, until you hit your 50s
I'll check that out, I should be coming up on 5 years I've had it, the one from work. The other one with whole I just got a couple months ago, it's not through work. They've just been hitting up all the fire departments in our area lately. I do know the American Income Life one I was told is fixed, the one I just got. Thank you
ETA: The one from work is directly taken out of my paycheck, technically it's not a policy from the city, just another insurance company that I can't remember the name. The newer one is just taken out of my bank account every month. Not that it matters, but didn't want people thinking the city pays us big term policies like that
This post was edited on 8/9/18 at 9:59 am
Posted on 8/9/18 at 10:09 am to windshieldman
quote:
Yeah, I got a 10k whole policy on me mixed with the amount my house has left on the principle which is $125,000, and 10k on each child for $43 a month. There is a 10k on my wife also but my wife and kids are only if they die. I'm not sure how I feel about that policy. I also have a $250,000 term policy through work that stated it is full till I'm 60 and then cuts in half and is good till 70, I'm late 30s. Then I find out later it expires when I retire which will be mid 50s at fire department. I think I've probably been fricked pretty bad with life insurance policies. The term one at work is $24 a month, and it's a 50k policy on my wife also, and 10k on each child, but like I said, someone told me it voids once I retire.
Most Group Life policies aren't portable when you retire. Being in your 30s, you should have no problem finding 750k 20yr term for $55-$65 per month, depending on health. That plus your group will have $1mm in life insurance to take care of your family. I always tell my clients to take advantage of Group Life insurance, but have a private plan as well.
Posted on 8/9/18 at 10:14 am to bstew3006
quote:
Most Group Life policies aren't portable when you retire. Being in your 30s, you should have no problem finding 750k 20yr term for $55-$65 per month, depending on health. That plus your group will have $1mm in life insurance to take care of your family. I always tell my clients to take advantage of Group Life insurance, but have a private plan as well.
Thanks. I feel pretty good with investing, budgeting, etc, but insurance policies and taxes frick me up pretty bad. I never read the fine print like I should or ask good questions, especially regarding insurance. My head just spins when figuring out taxes and insurance policies. Thankfully my wife is good with the taxes, but horrible with everything else money wise. When I read 70 I just assumed it didn't expire till I was 70 I was mid 30s and thinking that's pretty damn good term policy right there, not realizing it expires when I retire.
Posted on 8/10/18 at 8:26 am to Lafayette Saint
quote:
Strictly an investment opportunity. The wife's company doesn't offer a 401K, and my agent feels that this investment is better than a roth or traditional IRA.
This agent is a moron.
I'm probably one of the biggest proponents of properly done permanent life insurance on this board, and this advice is idiotic. I particular don't like most UL policies anyways, so that doesn't help, but nobody worth their salt would say purely as an investment vehicle, a UL will be better than an IRA. Can it end up performing better? Sure. Back when I did this, I saw some amazing 50+ year old policies that kicked the markets arse. It was beautiful.
I can guarantee this guy is not an CFP. Not a single one if following a fiduciary standard would say purely as an investment vehicle, the UL is better than a Roth. Do not use this guy.
Permanent life insurance can be used as purely an investment/retirement vehicle, but that should be after you've exhausted all other tax advantaged methods. Until then, it should primarily be treated as life insurance, with the investment side being an additional benefit to factor into the analysis.
Posted on 8/10/18 at 8:28 am to bstew3006
quote:
Does your guy have any designations? CLU, CHFC, CFP?
If he has this one, it needs to be revoked.
Posted on 8/10/18 at 8:46 am to GoCrazyAuburn
quote:
If he has this one, it needs to be revoked.
Exactly.
Agents like this are who give otherwise reasonable products a bad name. If you're not maximizing qualified contributions, you shouldn't entertain LIRPs.
Posted on 8/10/18 at 9:33 am to slackster
quote:
Exactly. Agents like this are who give otherwise reasonable products a bad name. If you're not maximizing qualified contributions, you shouldn't entertain LIRPs.
Agents that suggest a VUL/IUL/P-up WL as a one stop shop for retirement make my day a living hell.
Posted on 8/10/18 at 3:19 pm to Breadcrumbs
I have been in the insurance industry for nearly 20 years. Life insurance is a lousy investment. It almost never turns out like the proposals used at the point of sale. Variable annuities and Universal Life (Variable and soon to be indexed) products have created more unrealized expectations then any other investment/insurance product on the market......well except for the insurance companies.
This post was edited on 8/10/18 at 3:21 pm
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