David breaks down a recent article by financial advisor Brian Manderscheid on what insurance agents don’t tell you about Indexed Universal Life (IUL).
David talks about the risk of consuming financial content online without seeking professional advice when making significant financial decisions.
David reveals how the claims made by financial influencers tend to be overly promissory and exaggerate what the IUL can actually do for your retirement portfolio.
He further adds that IULs were never exclusively available to the wealthy, and you should not expect 10% plus returns.
In Brian’s article, he describes why you must have a life insurance need before investing in an IUL.
If the IRS is willing to give you the benefit of a nearly unlimited bucket of tax-free dollars, you have to be willing to pay for life insurance and have the need for life insurance.
According to Brian, you need to structure your IUL correctly if you are to enjoy all the perks that come with owning an IUL.
David agrees with Brian’s views on the proper way to structure an IUL.
In order for the IUL to work, you must buy as little death benefit as the IRS requires and pump in as much money as the IRS allows. Your goal is to go after all the benefits of a Roth IRA without all the limitations of owning a Roth IRA.
According to David, IULs only work when considered as part of a balanced, comprehensive approach to tax-free retirement.
David talks about the lies peddled by financial influencers online – they focus less on creating reliable and accurate content and more on likes and views.
As an investor, it’s very important not to conflate actual historical returns with retro-engineered returns when considering an IUL. Anyone can create a retro-engineered index that looks great on paper.
David is much more impressed with an actual track record, even if that track record nets you only 5 to 7% net of fees over time.
One of the things not discussed in Brian’s article is how most solid IUL carriers give you the ability to receive a death benefit in advance of your death to pay for long-term care.
For David, Brian’s piece is one of the more accurate IUL articles on the internet today.
Mentioned in this episode:
David’s books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code
PowerOfZero.com (free 3-part video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David’s Tax-free Tool Kit at taxfreetoolkit.com