Life Solutions

Protect What Matters
Indexed Universal Life Doomed for Failure                                                           Part 14

Now, let’s assume that instead of receiving $581,220 over a thirty-year period, your beneficiary receives $500,000 in one lump sum. Let’s further assume that he/she puts the $500,000 into an interest-bearing account earning 2%, and makes an annual withdrawal for thirty years. What would that look like?


First off, your annual withdrawals would be $22,300 per year instead of $19,374. Second, your total income would be $669,00 instead of $581,220; that’s a difference of $87,780. What if you could get 3% or even 4%. How nice would that be. Well, let me ask you this; what do you think the insurance company is really doing with your money during this 30-year period? You guessed it. They are investing that money and earning a higher interest rate, 5% at the very minimum. So, what does this look like for the insurance company, who supposedly took a beating by absorbing the high cost of insurance so that your policy wouldn’t lapse?


Here it is: By earning just 5% on the $500,00, the insurance company will end up with $770,881. Out of this amount, you get paid $581,220; but, remember that $200,000 came from your cash value, and $81,220 came from interest. So, how much did the insurance company actually pay out? Only $300,0. The end result is that by electing the Death Benefit Optimizer, the insurance company made $370,881. The Death Benefit Optimizer optimized the deal alright, but not for you. It optimized it for the insurance company.


You must understand this kind of stuff when dealing with an IUL. There is always some “gotcha” embedded in these policies that you are not told about, or misinformed about. And, when the floor comes tumbling down on you, these marketing companies and their agents will most likely not be around. Unfortunately, these so called “professionals” have forgotten that the main purpose is to help you, not deceive you. The tables have been turned; now it is all about how much can I sell, how much can I make?


IULs have a good story when presented. However, that’s where it ends; that’s all the goodness it has, its story. We have taken the IUL apart and have exposed the deceit, the lies, and the lack of knowledge of these so called “professional” agents. We have also exposed many of the weaknesses of the IUL, and you can now see and understand why the IUL is not a good product. It has not been proven yet, it has not passed the test of time. Anyone who buys an IUL is still in the first generation and is much like a guinea pig being used to test the product. IULs are only 20 years old and many of the first ones issued have already lapsed.


Let me end this section on a positive note. There are some very good uses for permanent life insurance. Now, it is not for everyone; but when it fits, it fits very well. Whole Life dividend paying mutual companies have been around for almost 200 years. Some of them have not missed a dividend payment in as much as 170 years straight. Companies with that track record are the only companies that I will work with. A well-designed policy, tailored to your objectives can do wonders for you and your family in terms of your financial future. If you are concerned with the safety of your money, predictability of your assets, protection against excessive taxes, getting an attractive income stream, and your family’s overall financial wellbeing, then a well-designed policy can bring fantastic benefits for you and your loved ones.