Author Topic: Are IULs just a pipe dream?  (Read 1732 times)

jeromedawg

  • Magnum Stache
  • ******
  • Posts: 2856
  • Location: Orange County, CA
Are IULs just a pipe dream?
« on: July 01, 2015, 02:15:52 PM »
Had never heard of them before until my sister-in-law mentioned them to my wife and I as we were discussing finances and retirement at a high-level. My brother and SIL, I'm guessing, are making ridiculous amounts of money (probably in the ballpark of at least $200-300k per year if not more). They recently met with a financial planner whom they trust and it was recommended to them that they get IULs; her logic is "if we're going to buy whole life insurance anyway, why not get IUL?" - I kept my mouth shut at this and quickly diverted over to using HSAs as a tax-shelter and how I may do this within the next year... Anyway, IUL *sounds* like a great idea on the surface since you can invest money into something that tracks the S&P 500 or whatever. But what about all the potential fees as well as the fact that you're still paying a premium for whole life insurance? She did point out that if you put enough money into it, since you can apparently pay more on top of the premium and it'll just go into the IUL account pre-taxed, that you could essentially cover the cost of the premium (via the interest made off of the investments) and the whole thing would end up paying for itself... that sounds a bit too good to be true, especially after reading this - http://www.hcplive.com/physicians-money-digest/personal-finance/dahle-5-reasons-not-to-buy-iul-insurance

I don't know, are IULs just for people who are too rich and need/want something to throw their money at?
« Last Edit: July 01, 2015, 02:32:06 PM by jplee3 »

MDM

  • Walrus Stache
  • *******
  • Posts: 9285
Re: Are IULs just a pipe dream?
« Reply #1 on: July 01, 2015, 02:37:28 PM »
are IULs just for people who are too rich and need/want something to throw their money at?

Close.  They are for financial salespeople who want to be rich and seek someone to fill in the blank: "a ____ and his money soon are parted."

jeromedawg

  • Magnum Stache
  • ******
  • Posts: 2856
  • Location: Orange County, CA
Re: Are IULs just a pipe dream?
« Reply #2 on: July 01, 2015, 02:44:46 PM »
are IULs just for people who are too rich and need/want something to throw their money at?

Close.  They are for financial salespeople who want to be rich and seek someone to fill in the blank: "a ____ and his money soon are parted."

Haha interesting way to put it. As an anecdote, I recently overheard my rich [but extremely smart and financially savvy] anesthesiologist cousin mentioning how he hired a CPA to figure out all the avenues of "tax sheltering" he could take given his current [also ridiculous] income. Simply because he doesn't have time for it as he's been working his butt off at the hospital he's at. I'm pretty sure by the end of the year he'll be a millionaire if not already. Anyway, this seems like perhaps the better way to go when you have so much money... hire a CPA and when the IRS comes a knockin: "I don't know anything... ask my CPA" hahaha.
« Last Edit: July 01, 2015, 02:47:03 PM by jplee3 »

regulator

  • Bristles
  • ***
  • Posts: 469
Re: Are IULs just a pipe dream?
« Reply #3 on: July 01, 2015, 03:14:36 PM »
IUL is a terrible idea.  It is inevitably a ripoff for the customer.  There are so many better vehicles that whoever is singing its praises is either earning a commission or has drunk deeply of the Kool-Aid.