Indexed universal life insurance- wise choice?

by Guest » Mon Feb 07, 2011 05:24 am
Guest

I've saved up about 20k to invest with (aside from my regular 401)and the financial agent that my father, brothers use advised that I sink it all into a indexed universal life insurance policy. This is the first I've heard of it. When I googled the term to do my research it was hard to find any positive feedback about it. Now, I'm 47 and healthy, mother of one, and I expected I'll be working....forever. Even though this financial advisor is a family confidante I can't help feel this would be more of wise choice for him(commission) than me. On the other hand, I really want to put my money somewhere I can forget about it. Like I currently do with my 401. The advisor says to put in enough money for that to recieve my employer's match and then as much as I can toward the IUL. Thoughts on IUL's? are they a wise choice? Thanks ahead of time for your input.
Lori

Total Comments: 7

Posted: Tue Feb 08, 2011 01:57 am Post Subject:

Investments are for investing and insurance is for insurance. Do you want or need life insurance? Are you concerned about leaving something behind for your child, or do you want to? Are there debts to pay off? Do you have any other life insurance now?

I think you will regret buying an IUL policy if it does not perform as you expect/hope, especially if you are just looking at it as an investment. If not properly funded, the policy can "crash" leaving you with no cash value and no death benefit. There is only one IUL policy that I know of with a death benefit guaranteed forever. Buy life insurance for the death benefit and invest your money elsewhere, especially if you haven't established an IRA or Roth IRA already. Just my opinion.

Posted: Tue Feb 08, 2011 06:28 pm Post Subject:

Lori, I will basically parrot what dgoldenz has told you.

Life insurance is rarely a wise choice unless the PRIMARY reason for buying it is to leave money behind at death.

Posted: Wed Feb 09, 2011 04:47 am Post Subject:

Thank you for your opinions. Its the enticement of savings to gain the benefit of tax free retirement income for me, as well as, a TAX Free Death benefit for my son that draws me. Sounds so efficient. They claim it has no principal risk and an average of 9.51% over the past couple of decades. The only other insurance I have is through work and is not transportable. Other than mortage, no other debts.

Posted: Wed Feb 09, 2011 05:00 pm Post Subject:

Lorih, a little bit of knowledge is a dangerous thing.

The money grows tax deferred and not tax free.
I am going to ask you a question and you won't know the answer. Ask your agent, and he probably won't know the answer. However, you absolutely can't buy this product without knowing the answer to this question and the impact on the policy.

"What is the cost of insurance at age 50? age 60? Age 70? Age 80? Age 90?

Posted: Wed Feb 09, 2011 11:46 pm Post Subject:

x2 on the above. The average interest rate could be 20%, but if the cost of insurance is greater than the interest returned, it didn't matter that you got 20% because you still ended up with nothing. No principal risk is laughable....ask him what happens to your principal if you stop paying the premiums.

If you want tax free retirement money, start investing in a Roth IRA. If you want life insurance, buy life insurance. Insurance is for insurance and investments are for investments. Combining them is not going to be efficient.

Think about this - if you buy the policy, will you even remember what the agent told you 15 years from now when it's not meeting the rosy picture you've been painted?

Posted: Wed Feb 16, 2011 05:39 am Post Subject:

Actually, he provided a table that specifically states what the net cash value, net death benefit would be for each year of age at different assumed index rates; 3%, 8.5%. It's with allianz. I guess that's the key term: ASSUMED index rate. He can't guarantee those index rates?

Posted: Wed Feb 16, 2011 06:06 am Post Subject:

He didn't give you an illustration showing the guaranteed values? Wow...

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