I’m Buying IUL Policies for My Kids! Why Aren’t You?
Where to start with this newsletter?
1) I’ve been talking about IUL (Indexed Universal Life) as an asset class for years.
2) My book Retiring Without Risk is the #1 book in the industry for those who want to educate consumers on the benefits of IUL. If you’ve not read this book, you can DOWNLOAD it for FREE by clicking on the following link:
https://advisorshare.com/download-rwr
3) I also created the industry’s most accurate IUL comparison software (compares IUL to brokerage accounts, 401(k) plans, and ROTH IRAs). To watch a VIDEO on how it works, click on the following link: https://advisorshare.com/iul-comparison-software
Why am I buying IUL for my children?
1) The costs in an IUL policy for insureds in their 20s is stupid low.
2) It’s an asset class that will grow tax-free.
3) Money can be removed tax-free in any year (a nice hedge against higher taxes).
4) Gains are locked in every year (so it’s a nice hedge against investment risk).
My kids are ages 23 and 18. Let’s look at the projected number for my 23-year old daughter.
I’m going to fund $6,000 a year into the policy for only 10 years. I’ll let the money grow until age 55 and then show tax-free borrowing from 56-85.
Why age 55? I’m assuming she’ll want to retire early and will need cash flow from something other than a qualified retirement account.
I’m going to use my favorite IUL policy and I ran the illustration at 15% lower than the default rate (so it’s a conservative illustration).
How much could my daughter borrow from the policy from ages 56-85?
$22,656 (annually tax-free)
If she funded a ROTH RIA (assuming the same rate of return as the IUL) how much could she remove each year from ages 56-85?
$11,705 (annually tax-free)
Don’t believe me? You don’t have to! Just download the comparison numbers from our OnPointe IUL comparison software. Click on the following link to download the 17-page report:
https://advisorshare.com/laurens-iul-illustration
Why is $6,000 a year significant?
Because that’s the amount she could fund into a ROTH IRA where the money could also grow and come out tax-free.
So, this comparison ISN’T my daughter funding a brokerage account or a tax-deferred IRA, it’s her funding a ROTH IRA.
Why aren’t more advisors using IULs as an asset class?
I ask myself that question multiple times a week when I talk with advisors who know nothing or very little about IULs. That’s an outrage if the advisor is a CFP® or Series 65 licensed (meaning they are “fiduciaries“). I sort of expect Series 7 licensed advisors not to know much about IUL because their B/Ds don’t want them to sell it.
Why are you (the reader) not using IULs as an asset class?
Please feel free to email me and give me your opinion as to why IULs should not be an asset class that should be considered in financial plans for clients (and for yourself and/or your children (if you have children)).
I will take the time to answer every email that asserts that IUL policies shouldn’t be considered a viable asset class.
Highest MYGAs Rates IMOs Don’t Have Access to!
If you missed last week’s newsletter, I put out information on a MYGA carrier that has some of the highest rates but virtually NO IMOs have access to. If you want to learn about this carrier and it’s products, click on the following link:
https://advisorshare.com/highest-rated-mygas
Roccy DeFrancesco, JD, CAPP, CMP
Founder, The Wealth Preservation Institute
Co-Founder, The Asset Protection Society
269-216-9978
roccy@thewpi.org